Why do organizations change?

I Content

1. Introduction

2. Why do organizations change?

3. The Change agent
3.1 The negotiator
3.2 The nurturer
3.3 The teachers and learners
3.4 Curriculum developer

4. Change process

5. Trust relations

6. Resistance to organizational change
6.1 Demonizing approach
6.2 Celebrating approach
6.3 Challenges
6.4 Power-resistance relation and change

7. Forms of change
7.1 Episodic form of change
7.2 Continuous form of change
7.2.1 Change as disintegrative
7.2.2 Change as dynamic
7.2.3 Change process as endogenous
7.2.4 Change processes as asymmetric

8. Power relation
8.1 Sources of social power
8.2 Expert power approach to change
8.3 Negotiation of power and change

9. Critical view of organizational change

10. Conclusion

II. Literature

Empirical studies indicate that change efforts often fail. Still organizations seem to initiate more change than ever. Outline some explanations of this phenomenon and discuss in whose interest it is that organizations change.

1.Introduction

Before I start to answer the question above, I would like to give a short practical example of a famous organization, which has demonstrated how an organization has the ability to change.

The Finnish company Nokia started its business in 1865 with manufacturing paper products.^[1] Due to stagnation in the 1960s Nokia was forced by the government to merge with two companies that manufactured electronics. In 1962 Nokia developed its first electronic device: a pulse analyzer for use in nuclear power plants. One year later, they developed radio telephones for the army. Nokia expanded its market and continued to exchange paper products for Soviet oil until the oil crisis in 1973. 2 years later, Nokia´s CEO, Kari Kairamo, became a leader in electronic technology by purchasing 20 electronic companies throughout Scandinavia. 1986 Nokia reorganized the management structure and introduced the mobile telephone as the first product into the international market due to the company’s advancement in telecommunications.

Around 1990 an economic depression challenged Nokia´s viability. Nokia acquired a the British company Technophone, which led to a sustained advantage selling digital phones. Shortly afterwards, the thriving company changed its logistics operation which became the biggest competitive advantage. In 2000, Nokia had become number one in cellular phones worldwide.

After 14 years of being the leading company in the telecommunication sector, Nokia missed out the chance to invest in smartphones, which caused a huge loss of market shares and consequently financial problems.

Is the organization flexible enough to manage change once again?

According to their corporate website they are “always adapting”.

Nokia: “Changing with the times, disrupting the status quo – it’s what we’ve always done. And we fully intend to keep doing it.”^[2]

2.Why do organizations change?

As seen in the example of Nokia, there are plenty of reasons why organizations tend to change whether it’s a small or large change, it is all possible. Factors in both internal and external environments can be seen as triggers to initiate change in organizations.^[3] Modified technologies, government regulations, industrial relation issues, competition, changed customer taste and cash flow issues are often reasons for organizational change. Additionally to that, there might be other reasons that could affect the managerial way of doing business in meaning of alter or enhance the process of growth of the organization.^[4] Any changes that are undertaken aim to improve the performance “[…] in terms of, for example, higher profits, better responsiveness to the market, and long-term competitive advantage.”^[5]

Other literature says that sometimes change is necessary to correct failures that were made in the past.^[6] Change provides opportunities for growth and development. Decision makers who are not willing to change, might miss out the chances of bringing innovative ideas to the practice before someone else does. Being the second or the third company to realize an idea can be too late to take a competitive advantage or innovations. Putting ideas into practice (implementing change) “[…] is a major determinant of outcomes.”^[7]

3.The Change agent

The change agent has the major responsibility for the change process and is one of the most important factors in effective change.^[8] His or her quality of presence, expertise and competence can make the difference between success or failure. The agent may be someone from inside the organization e.g. internal manager, staff member, or an external consultant. Both have advantages and disadvantages. An internal person knows the political situation, the organization and the employees already, but could be too close to the situation to view it objectively. An external person needs time to learn the organizational coherences and understand the politics, but is unbiased and the risk that he pursues his own target during the change process is out of question. No matter where the change agent comes, he shapes and is shaped by the context in which he works.^[9]

Role of the change agents

In the literature there are several different classifications between roles of change agents. Rust & Freidus (2001) distinguish between four different roles:^[10]

3.1The negotiator

The agent tries to bring together different stakeholder with diverse perspectives and conflicting interests. The negotiator tends to make the collaborative process work and help the individuals and the groups to identify their needs.

3.2The nurturer

This role describes the agent as very helpful and supportive. Personal and interpersonal factors are often neglected which can be important for motivation to learn and to explore new ideas. The relationship between learner and knower has to be solid, trustful and honest. The change agent can use his experience and understandings of adult learning, families and communities.

3.3The teachers and learners

The agent needs time and ways to guide new practices in order to construct new knowledge by the process of drawing on prior understandings. He must handle the different variations of learning stages that the employees go through and despite the similar experience and backgrounds, he must be aware on how to respond to new experience in different ways. Finding the right balance between guiding and letting go is the hardest task.

3.4Curriculum developer

The agent is supposed to develop strategies and skills that support employees in order to incorporate both instructional methods and habits of mind that ensure longevity of the innovation. A good communication level and a good understanding of the innovation are necessary.

4.Change process

In a lot of literature there are many different possibilities that claim the best way for initiating the change process. In the article “How to effectively manage change” in “Management Guidelines” by Davis Woodruff, the change process can be divided into 5 steps:

Plan the changes carefully,

Clear communication with employees,

Analyze the entire process,

Overcome resistance,

Provide real leadership.^[11]

Another, and probably better widespread theory of change, was developed by the psychologist Kurt Lewin (1958). He only distinguished the process into three phases that might overlap.^[12]

The first phase is about unfreezing the system. It means that the “frozen” or stable system should be destabilized. It makes it permeable and loosened for a period of time which makes it easier to overcome resistance. Ways for accomplishing that are exploiting existing stress or dissatisfaction, initiating training for the need of change or showing discrepancy between desirable and existing behavior.^[13]

[...]

^[1] Cf. Myers P., Hulks S., Wiggins L., 2012, p. 13.

^[2] Nokia, 2012, accessed 10.11.2012.

^[3] Cf. Myers P., Hulks S., Wiggins L., 2012, p. 11.

^[4] Cf. Mills J., Dye K., Mills A., 2009, p. 10.

^[5] Vithessonthi C., 2005, p. 25.

^[6] Cf. Lewis L., 2011, p. 7.

^[7] Lewis L., 2011, p. 8.

^[8] Cf. Caluwé L., Vermaak H., 2003, p. 255.

^[9] Cf. Rust F., Freidus H., 2001, p. 4.

^[10] Cf. Rust F., Freidus H., 2001, p. 6.

^[11] Cf. Woodruff D.in «How to effectively manage change»

^[12] Cf. Burke W., 2011, p. 122.

^[13] Cf. Cummings T., Worley C., 2009, p. 24.