Organizational Renewal
The Challenge of Change
The Challenges for Change
➢ Change is the name of the game in management today.
➢ Market, product, and competitive conditions are rapidly changing.
➢ Under these pressures, organizations are changing.
➢ They are downsizing, reengineering, flattening structures, going
global, and initiating more sophisticated technologies
➢ However, many organizational changes, such as downsizing,
often have unintended effects or consequences on the
productivity of the individual work unit
The Challenges for Change
➢ As the environment changes, organizations must adapt if they are
to be successful.
➢ For example, through changing times 3M has managed to keep
its creative spirit alive. Almost everyone now uses Post-It notes,
yet they were an accidental discovery by 3M scientist
➢ Art Fry, who became the product champion for Post-Its.
➢ The outcome is a big company that still manages to develop new
products faster than its competition.
➢ The reason: commitment to innovation and lack of corporate rules
leave room for plenty of experimentation—and failure
Organization renewal
➢ Organization renewal requires that top managers make adaptive
changes to the environment.
➢ One study suggests that the strategic models of top managers
play a crucial role in directing organizational responses to keep
pace with changing industry conditions.
➢ In today’s business environment more than at any time in history,
the only constant is change
Organization renewal
➢ As author and consultant Robert Waterman has noted,
“Somehow there are organizations that effectively manage change,
continuously adapting their bureaucracies, strategies, systems,
products, and cultures to survive the shocks and prosper from the
forces that decimate their competition. . . . They are masters of
renewal”.
Organization renewal
➢ The fact is that managers are going to have to become masters
of change and renewal to be effective in the future.
➢ The changes facing management in the twenty-first century are
likely to be even more dynamic and challenging than in the past.
➢ Therefore, the focus of organization development is on changing
organizational systems, stressing the situational nature of
problems and their system-wide impact
Organization renewal
➢ In solving a given problem, managers must analyze the
organization, its departmental subsystem interrelationships, and
the possible effects on the internal environment.
➢ This approach, termed the systems approach, provides a way of
observing, analyzing, and solving problems in organizations. The
systems approach, then, is concerned with relationships among
departments and the interdependencies between these elements
and the external environment.
Example of the Changing Conditions
➢ An example of the changing conditions that face organizations
can be seen in the sudden decline in the sewing machine market,
as compared to the projected increase in the demand for cell
phones. Singer N. V. (the Singer Company) has had to
reorganize after coming out of bankruptcy, sell off unprofitable
units, and change its marketing strategy because the number of
people buying sewing machines has declined drastically.
➢ Meanwhile, the market for cell phones, virtually nonexistent a few
years ago, today constitutes a several-billion-dollar market.
Constant Change
➢ Because of the rapid pace of technology, firms are confronted
with the early technological obsolescence of products.
➢ In the past, companies could grow during the long lifespan of a
proprietary invention, but today their innovations are often quickly
overtaken by competitors with technological improvements.
➢ These problems are the result of the increasing rate of change
and are made more difficult because of the impact of future shock
➢ on management.
➢ Managers today face risk situations unlike those of the past, and
in an era of accelerating change, managerial excellence derives
from the ability to cope with these changes.
Constant Change
➢ Because of the rapid pace of technology, firms are confronted
with the early technological obsolescence of products.
➢ In the past, companies could grow during the long lifespan of a
proprietary invention, but today their innovations are often quickly
overtaken by competitors with technological improvements.
➢ These problems are the result of the increasing rate of change
and are made more difficult because of the impact of future shock
➢ on management.
➢ Managers today face risk situations unlike those of the past, and
in an era of accelerating change, managerial excellence derives
from the ability to cope with these changes.
Organizational Renewal
➢ Managing effectively is a major challenge facing organizations
today.
➢ When an organization fails to change, the cost of the failure may
mean its very survival.
➢ Because the environment is composed of systems outside the
immediate influence of the organization, the organization must
adapt itself to these forces by introducing internal changes that
➢ will allow it to be more effective
Organizational Renewal
➢ Herb Kelleher, chairman of the board and founder of Southwest
Airlines, was asked in an interview with Fortune Magazine how
one could renew a big organization.
➢ He replied, “The way that we accomplish that is that we
constantly tell our employees . . . think small and act small, and
we’ll get bigger. Think big, be complacent, be cocky, and we’ll get
smaller
Organizational Renewal
➢ Organizational renewal is important.
➢ If a company is to survive in an increasingly competitive
marketplace, the organization must continuously adapt to its
environment: without renewal, management cannot maintain
excellence.
➢ Organization renewal may be defined as an ongoing process of
building innovation and adaptation into the organization
➢ Robert Waterman has identified eight key factors that typify
leaders who generate excellence and how they find ways to
renew their organizations
Lessons in Corporate Renewal
1. Informed Opportunism Renewing organizations set directions,
not detailed strategies. They treat information as their main
strategic advantage and flexibility as their main strategic
weapon.
2. Direction and Empowerment Renewing companies treat everyone
as a source of creative input. They give up some control over
subordinates to gain what counts: results.
3. Friendly Facts Renewing companies treat facts as friends, and
financial controls as liberating. They love facts and information
that removes decision-making from mere opinion.
Lessons in Corporate Renewal
4. A Different Mirror The leaders of renewing organizations get their
determination from their ability to anticipate crisis. This stems
from their willingness to listen to all sources—to look into a
different mirror.
5. Teamwork and Trust Ren ewers constantly use such words as
“teamwork” and “trust.” They are relentless at fighting office politics.
6. Stability in Motion Renewing companies know how to keep things
moving. They undergo constant change against a base of underlying
stability.
Lessons in Corporate Renewal
7. Attitudes and Attention In renewing companies visible
management attention gets things done. Action may start with
words, but must be backed by behaviors.
8. Causes and Commitment Renewing organizations run on causes.
Commitment results from management’s ability to turn grand
causes into small actions so that everyone can contribute
Approaches to Change
➢ An organization that operates in a mature field with a stable
product and relatively few competitors needs a different adaptive
orientation than a firm operating in a high-growth market, among
numerous competitors, and with a high degree of innovation.
➢ A stable environment is characterized by unchanging basic
products and services, a static level of competition, a low level of
technological innovation, a formalized and centralized structure,
and a slow, steady rate of growth.
➢ A hyper turbulent environment, on the other hand, is
characterized by rapidly changing product lines, an increasing
and changing set of competitors, rapid and continual
technological innovation, and rapid market growth.
Approaches to Change
➢ An organization that operates in a mature field with a stable
product and relatively few competitors needs a different adaptive
orientation than a firm operating in a high-growth market, among
numerous competitors, and with a high degree of innovation.
➢ A stable environment is characterized by unchanging basic
products and services, a static level of competition, a low level of
technological innovation, a formalized and centralized structure,
and a slow, steady rate of growth.
➢ A hyper turbulent environment, on the other hand, is
characterized by rapidly changing product lines, an increasing
and changing set of competitors, rapid and continual
technological innovation, and rapid market growth.
