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    Cracking The Code of Change: Written by Nitin Nohria & Michael Beer

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    rk85mishra
    The document summarizes two theories - Theory E and Theory O - for managing organizational change. Theory E focuses on short-term economic incentives like layoffs and restructuring to boost shareholder returns, while Theory O emphasizes developing organizational culture through communication, teamwork and trust-building. The summary notes that while Theory E can quickly increase value, it fails to build long-term capabilities, and that Theory O builds commitment but CEOs may delay tough decisions. It concludes that combining aspects of both theories may be necessary for successful change management.

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    Cracking The Code of Change: Written by Nitin Nohria & Michael Beer

    Uploaded by

    rk85mishra
    65 views10 pages
    The document summarizes two theories - Theory E and Theory O - for managing organizational change. Theory E focuses on short-term economic incentives like layoffs and restructuring to boost shareholder returns, while Theory O emphasizes developing organizational culture through communication, teamwork and trust-building. The summary notes that while Theory E can quickly increase value, it fails to build long-term capabilities, and that Theory O builds commitment but CEOs may delay tough decisions. It concludes that combining aspects of both theories may be necessary for successful change management.

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    ACS_Group8_Cracking_The_Code.pptx

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    The document summarizes two theories - Theory E and Theory O - for managing organizational change. Theory E focuses on short-term economic incentives like layoffs and restructuring to boost shareholder returns, while Theory O emphasizes developing organizational culture through communication, teamwork and trust-building. The summary notes that while Theory E can quickly increase value, it fails to build long-term capabilities, and that Theory O builds commitment but CEOs may delay tough decisions. It concludes that combining aspects of both theories may be necessary for successful change management.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    65 views10 pages

    Cracking The Code of Change: Written by Nitin Nohria & Michael Beer

    Uploaded by

    rk85mishra
    The document summarizes two theories - Theory E and Theory O - for managing organizational change. Theory E focuses on short-term economic incentives like layoffs and restructuring to boost shareholder returns, while Theory O emphasizes developing organizational culture through communication, teamwork and trust-building. The summary notes that while Theory E can quickly increase value, it fails to build long-term capabilities, and that Theory O builds commitment but CEOs may delay tough decisions. It concludes that combining aspects of both theories may be necessary for successful change management.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 10

    Cracking the Code of Change

    Written by
    Nitin Nohria & Michael Beer
    Submitted by Group 8

    Theory E and Theory O

    Theory E Economic Value


    Focus on shareholder returns Financial markets push the corporate boards for
    rapid turnarounds
    Boosts returns through economic incentives, drastic lay-offs and restructuring
    General Dynamics in 1991 reduced workforce by 71,000 through diversification
    and attrition by focusing only on economic value
    AI Dunlap tripled shareholder value to $9 Billion using this approach, but failed to
    build the capabilities needed for sustainable competitive advantage commitment,
    coordination, communication and creativity

    Theory O - Organizational Capability


    Focuses on developing corporate culture employee behaviors, attitudes, capabilities
    and commitment
    Patiently building trust and emotional commitment to the company through teamwork and
    communication
    Champion Intl used this approach to achieve complete cultural transformation that
    increased in productivity and employee commitment

    Limitations of Theory E
    CEOs distance themselves from their employees to ease down their pain
    and guilt.
    CEOs become less inclined to adopt O-style change strategies.
    CEOs fail to invest in building the companys human resource.

    Limitations of Theory O
    CEOs are not able to take tough decisions because of their soft
    strategies.
    CEOs try to postpone the hard decisions in the hope of rising productivity
    will improve the business situation.

    Combining Theory E and Theory O

    The Need for a Corporate Global Mind-Set


    Written by
    Thomas M. Begley & David P. Boyd
    Submitted by Group 9

    Global Consistency vs.


    Local Responsiveness

    GLOBAL
    CONSISTENCY

    High

    Maximize
    Maximize worldworldscale
    scale systems
    systems

    Balance
    Balance global
    global
    with
    with local
    local
    concerns
    concerns

    Export
    Export
    domestically
    domestically
    produced
    produced
    products
    products

    Encourage
    Encourage local
    local
    autonomy
    autonomy

    Low

    Global mindset: Ability to develop,


    interpret & implement criteria for business
    performance that are not dependent on
    the assumptions of a single country,
    culture or context

    Companies that short change global


    reach lose opportunities to maximize
    efficiencies and consolidate costs;
    Low

    LOCAL
    RESPONSIVENESS

    High

    Companies that shortchange local


    responsiveness endanger market
    share and alienate employees.
    Eg.- Marketing : local tastes
    Finances : globally unified approach

    FORCES FOR GLOBAL


    CONSISTENCY

    High

    Low

    dependence
    dependence on
    on global
    global
    systems.
    systems.
    -- Standardized
    Standardized process
    process
    maximize
    global
    uniformity.
    maximize global uniformity.
    -- Unilateral
    Unilateral decision
    decision push
    push
    global
    adherence.
    global adherence.

    -- Formal
    Formal guidelines
    guidelines support
    support
    interdependence
    interdependence of
    of global
    global and
    and
    local
    local units.
    units.
    -- Custom
    Custom components
    components around
    around aa
    standard
    core
    balance
    global
    standard core balance global with
    with
    local
    local processes.
    processes.
    -- Participation
    Participation builds
    builds global-local
    global-local
    consensus.
    consensus.

    -- A
    A global
    global structure
    structure does
    does not
    not

    -- Informal
    Informal guidelines
    guidelines protect
    protect

    -- Formal
    Formal rules
    rules legislate
    legislate

    exist.
    exist.
    -- Global
    Global processes
    processes do
    do not
    not
    exist.
    exist.
    -- A
    A global
    global power
    power orientation
    orientation
    does
    not
    exist
    does not exist..

    Low

    independence
    independence of
    of localized
    localized
    adaptations.
    adaptations.
    -- Customized
    Customized process
    process
    accommodate
    accommodate country-specific
    country-specific
    conditions.
    conditions.
    -- Delegation
    Delegation encourages
    encourages local
    local
    autonomy.
    autonomy.

    FORCES FOR LOCAL


    RESPONSIVENESS

    High

    The Three Tensions of


    a Global Business

    Structure Tension: Mix of rules vs


    guidelines.
    Process Tension: Blend of uniformity and
    uniqueness.
    Power Tension: Locus of power in the
    exercise of worldwide decision making.
    Within Policy Consistency: Consistency
    across the grid is desirable.
    Eg.- HPs insurance coverage policies.

    Between Policy Consistency: Fitment with


    other company policies.
    Eg.- Compaqs acquisition of Digital
    Equipment and Tandem.
    Policies Consistency with Values:
    Alignment with the corporate values.
    Eg.- Texas Instruments -> from Defense to
    high-technology products market.

    Thank you!

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