Leadership and Change Management

Chapter 12 : Understanding Change

Evolution of an Organization

The Creativity stage
The Stage of Direction-setting
The Stage of Decentralization The Stage of Coordination The Stage of Collaboration

Factors that Inhibit Change

Classification of Change

Dramatic Change
Systematic Change
Organic Change

Mode of Change

Revolution
Reform
Rejuvenation

Chapter Summary

As an organization evolves from one based on creativity to one based on coordination, it goes through tumult. These testing times demand major changes in its culture, skills and operations. In the early stages of an organization, its founders focus primarily on creating a product and a market. Founders are usually technically and entrepreneurially oriented.

They have aversion to management and bureaucracy. All their energies are directed at making a new product and selling it. As the organization scales up to produce products in large numbers, an understanding of manufacturing efficiencies becomes crucial. Once an organization emerges successful from the first round of transformation, it can continue to grow at a healthy rate for some time.

Under a new leadership, a functional organizational structure replaces the earlier erratic, informal and autonomous structure. Lower-level employees face a peculiar situation. As they have first-hand experience, they sometimes understand markets and machinery better than the people who set policies and guidelines. They are pulled between competing alternatives: acting on own, which might benefit the organization; or sticking to procedures.

Thus emerges the crisis of autonomy. An organization can grow further only after it has been decentralized. Managers of manufacturing plants and sales territories get more autonomy, authority and responsibility. Over a period of time, this management style leads to another type of problem. The top management realizes that it is losing control over the diverse operations in the field.

At this stage, special coordination techniques are adopted. Top-level executives take on the responsibility of introducing new systems. Formal systems are put in place to ensure greater co-ordination. Formal planning procedures, and intense reviews of these plans, become a desirable course of action. Staff members placed at the headquarters guide the line managers on setting up control and review programs.

Eventually distrust develops between line managers and staff employees. Once again the time is ripe for the organization to undergo a major change. At this stage, an emphasis is laid on interpersonal collaboration to minimize the red-tapism that existed in the stage of coordination. Teamwork is stressed and efforts are made to minimize interpersonal differences. Many US organizations are in this collaborative stage.

Even this style of working is not without problems. Evidence suggests that employees get physically and emotionally exhausted when working in teams. Working in teams can be demanding as team members are under pressure to put forward innovative solutions. As Greiner says, new structures and programs are necessary to address this problem of exhaustion.

Employees might need time to rest, reflect, and revitalize their energies. A dual organizational structure may be an appropriate solution at this point. Companies often fail to change and make the most of new opportunities because they are focused on getting the best out of old opportunities. Obsolete steering mechanisms downgrade or ignore market signals.

Rigid steering mechanisms ignore complaints and unwelcome feedback, which can be valuable if put to the right use. According to Henry Mintzberg, and Quy Nguyen Huy, change can be classified into three categories: Dramatic change, Systematic change, and Organic change. A synthesis of these three types of change appears in three modes: Revolution, Reform, and Rejuvenation.

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