Change Management

Duane P. Truex, Ph.D.

Associate Professor
Robinson College of Business Department of
Computer Information Systems

Two Change Management Truisms

1. We prefer the familiar to the comfortable.

2. We prefer the comfortable to the better.

So our role is
-to make ‘the better’ both familiar and comfortable.

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 Look Familiar?

The Natural Reaction to Change

Productivity

Deny the change Accept it

Resist it Consider it
Reject it

Time
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Types of Organizational Change Programs

• Structural change (e.g., a ‘machine model of organization’)
– Organization parts are sets of functional parts.
– Management shifts, eliminates, changes the parts.
– Driven from the top down
– Examples: mergers, acquisitions, divestiture
• Cost cutting
– Elimination of non-essential activities; squeezing cost from operations
• Process change (e.g., BPR)
– Focus on how things are done
• Cultural change
– People-sided
– From command-and -control toward participative management
– From product-push to customer-orientation

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 Two different approaches to change

• Change drivers
– Near-term economic improvement (or
turnaround)
– Improvement in organizational capabilities
– Termed ‘Theory E’ or ‘Theory O’
• (HBS Michael Beer and Nitin Nohria)

‘Theory E’ and ‘Theory O’

• Theory E: Economic
– Dramatically and quickly improve shareholder value
– Measured by improved cash flow or share price
– All implicit contracts between company and employees are
suspended; produce or you are gone; failure is NOT an option
– All organizational elements are like chess pieces on a
chessboard
– Non value-add elements are especially valuable
– Top-management and ‘inner-circle’ driven
– Examples: GE under J. Welsh; IBM under L. Gerstner

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 Theory O
• Goal is to change
– Organizational culture to one supporting learning and
high performance
– Committed, capable, relatively autonomous employee
is best asset
• Implicit contract can never be broken
– May be incompatible with top-down direction
• Highly participative from within the ranks
– Examples: Schwab, Merck, 3 M, Intel, Microsoft

E, O which is best? Neither is a shoe in

• Theory E may lead to short-term gains but
hurts long term
– Look at the IBM example
– And may backfire
– 1990s downsizing did not guarantee higher
performance
• Theory O is a huge, multi-year project
• Hybrid approaches generally preferred

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 Comparing Theories of Change

Seven steps to Creating Change

1. Mobilize energy and commitment through joint
identification of problems and solutions
2. Develop a shared vision
3. Identify the leadership
4. Focus on results, not on activities
5. Start at the periphery, then let it spread
6. Institutionalize success through policies and structures
7. Monitor and adjust as you go
 People will quit, elements will fail, the setting may change

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 Eight Factors for Successful Change Management

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Critical points in the change process

Old status quo Foreign element introduced
Reject

Try to reject foreign element

Can’t reject
C
Accommodate
Try to accommodate foreign H
element in old model A
Can’t accommodate
Transforming Can’t transform O
idea Try to transform old model to
receive foreign element S
Transform
Can’t integrate
Try to integrate
Integrate

Master Can’t master

Practice to master
New status quo transformed model

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 Change management process

• Change management vs. Change Control

– Change management is a construct focusing on
the organizational elements
– Change control largely concerned with the
technical
• assessing, choosing, implementing changes to the
technical system

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Change management approach

While change
• Create a project team dedicated to change
• Communicate the vision and goals of this team
• Monitor people/organizational issues
• Determine change management processes/practices
• Reorganize to support processes and practices
• Implement processes and practices
• Monitor completion of the plan; tasks and milestones
• Communication feedback, revise processes and practices as
required
• Further the buy-in with continuous training/skills updating
Repeat 14
 Where should we direct change efforts?

High

Form Innovate
Relationships
Market
Differentiating

Who Cares? Keep Pace

Low

Low Mission Critical High

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Caveats
•Changing behaviors is a pain, …
however, being properly aligned and focused might be
the most important work we do.
•What differentiates today can be parity tomorrow (i.e. Fast
Pay).
•Constantly evaluate and re-evaluate previous decisions and
priorities.
Then make adjustments, a.k.a. change
•There are no complexity initiatives
-they seem to happen by themselves.

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