Leadership Challenges
MANAGING CHANGE IN ORGANIZATIONS

Abstract:

Managing change in an organization is a herculean task as it involves changing the organizational culture. The article explains the factors that inhibit change in organizations and how to manage change.

Companies grow by expanding into new competitive space, attaining a complex mix of financial, material and knowledge assets, expanding market scope, and replicating and standardizing their wins in similar market spaces. Competitive spaces undergo change, new technologies emerge, and customers change. But companies sometimes fail to change and make the most of new opportunities because they are still trying to get the best out of the old opportunities. They find this convenient and less risky.

Steering mechanisms[1]in organizations grow as the organizations get involved in more complex activities. These steering mechanisms are essential required to make meaning out of the innumerable activities that go on inside the organization. Steering mechanisms are created to align the organization with the founder’s vision, and also to align the company’s vision with changes in the marketplace. But these objectives may be contradictory. The founder’s vision might not be relevant in the new market scenario. While most of organizations have mechanisms that are aligned with their visio n, there are a few organizations in which mechanisms are aligned with the realities in the business environment. Only organizations in which mechanisms steer the organization in line with business realities can remain tuned to change.

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.

As managers rely on steering mechanisms, whenever an unexpected circumstance arises, they tend to ignore any information that does not fit into the existing mechanism. Mechanisms have a limited period of validity; they may have served the company well in the past when a particular strategy was successful. But the usefulness of the mechanisms may be limited when managers address new problems. In such situations, managers are often perplexed as to why their decisions go wrong.

As Chris Argyris [2]says, any newly espoused strategy, however explicit and sensible, inevitably comes up against an implicitly enacted strategy supported by all the aged, compounded steering mechanisms that the company already has in place[3]. This is largely because people fear uncertainty. They fear that if they embrace change, their current status maybe adversely affected. Defensive mechanisms stop an organization from adapting to change.

TRANSFORMING AN ORGANIZATION:

Transforming an organization requires initiative, cooperation, and a willingness of the employees and managers in the organization to make sacrifices. Though change involves a certain amount of pain, according to John P. Kotter,[4] an organization attempting to change can minimize this pain by establishing a sense of urgency, creating a guiding coalition, developing a change vision and strategy, communicating the change vision, empowering employees for broad-based action, generating short-term wins, and consolidating change. Each step is part of the process of change, and lasts for quite a long time. Mistakes made in any of these steps can undermine the momentum of the change process significantly. The steps are explained in detail below:

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[1]Steering mechanisms are the processes, assumptions, rules, and behaviors that are woven into systematic choice at all levels of the organization and in every discipline: budgeting and resource allocation, training, codes of conduct, strategy development, product development, norms of authority and succession.

[2] Professor at Harvard Business School and an expert on organizational learning.

[3] Changing the mind of the corporation, by Martin Roger, Harvard Business Review, Nov/Dec 93, Vol. 71, Issue 6.

[4] Professor at Harvard Business School, and author of the best-selling book “Leading change.”