Chapter 3

Why
Organizations
Change

McGraw-Hill/Irwin Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
 Why Change?
Why Change?

Images of
Managing Change Change is a risky activity many
External organizational changes fail or do
Pressures
-Fashion
-Mandated
not realize their intended
-Geopolitical
-Market decline
-Hyper-
outcomes. This raises the
competition
-Reputation & question: why is change is so
credibility

Role of the
prevalent?
Environment
Pressure to change comes from:
Internal Pressures
-Growth
-Integration &
External, environmental pressures
collaboration
-Identity
-New broom
Internal, organizational pressures
-Power & political
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 Images of Managing Change
Why Change?
Images Pressures for Change
Images of
Managing Change Director Change is a result of strategic pressures and controllable by
managers ability to direct the organizations response
External
Pressures Navigator Strategic change is in response to internal and external
-Fashion pressures. Multiple pressures facing managers will need to
-Mandated be taken into account.
-Geopolitical
-Market decline Caretaker Managers have little control over the inevitable pressures on
-Hyper-
competition
the organization. Managers have little choice in the
-Reputation & organizations actions.
credibility
Coach Pressures for change are constant and result in the need to
Role of the develop and shape the organizations capabilities to better
Environment enhance organizational outcomes.

Internal Pressures
Interpreter Pressures for change are internal and external and
-Growth managers need to understand and give meaning to these.
-Integration &
collaboration Nurturer Pressures for change are large and small and the managers
-Identity role is to enhance the adaptive capacity of the organization.
-New broom
-Power & political
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 Environmental Pressures
Why Change?

Images of
Managing Change
Pressure Examples Description
External
Pressures Neo-institutionalism: mimetic
-Fashion Fashion Boeing isomorphism. Managers imitate
-Mandated
-Geopolitical pressures Co. practices associated with successful
-Market decline organizations
-Hyper-
competition Neo-institutionalism: coercive
-Reputation &
credibility Mandated Chevron isomorphism. An organization
pressures Texaco changes through formally or
Role of the
Environment
informally mandated requirements.
Macroeconomic changes (or crises)
Internal Pressures Geopolitica
-Growth 3M place pressure on organizations to
-Integration & l pressures
collaboration change the way they operate.
-Identity
-New broom
-Power & political
3-4
 Environmental Pressures
Why Change?

Images of
Pressure Examples Description
Managing Change

External
Market When current markets begin to
AOL Time
Pressures decline decline there is pressure to find
-Fashion
Warner
pressures newer, more viable markets.
-Mandated
-Geopolitical
-Market decline The highly intensified rate of
-Hyper-
competition
business including shortened
Hyper-
-Reputation & product life cycles and rapid
credibility competition Gateway
responses by competitors
pressures
Role of the produces pressure for change at
Environment the organizational level.
Internal Pressures In light of recent corporate
-Growth Reputation governance scandals, the
-Integration & Walt Disney
collaboration and credibility pressure to maintain a good
Company
-Identity pressures reputation and high level of
-New broom
-Power & political credibility has increased.
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 Debate: Role of the Environment
Why Change?

Images of Organizational learning vs. threat-rigidity

Managing Change whether external pressures facilitate or inhibit the
process of change.
External Environment as an objective entity vs. environment as
Pressures
-Fashion
a cognitive construction
-Mandated The former treats the environment as an objective entity
-Geopolitical to which managers must respond. The latter
-Market decline
-Hyper-
emphasizes the centrality of managers interpretations
competition of environmental conditions as the key determinant of
-Reputation & behavior.
credibility
Forces for change vs. forces for stability:
Role of the External forces can vary; they either promote change or
Environment promote stability.
Bridging (adapting) vs buffering (shielding):
Internal Pressures
-Growth These represent either strategies that can maintain
-Integration & effectiveness by adapting parts of the organization to
collaboration changes happening in the outside environment
-Identity (bridging) or focusing on efficiency by avoiding change
-New broom through shielding parts of it from the effects of the
-Power & political
environment (buffering).
3-6
 Internal Pressures
Why Change?

Images of Pressure Examples Description

Managing Change
Existing systems and processes in
External Growth an organization may no longer be
Pressures Microsoft
-Fashion pressures applicable when the size of the
-Mandated organization increases.
-Geopolitical
-Market decline
-Hyper-
Integration Integration and creating
competition and economies of scale can lead to
-Reputation & EDS
credibility
collaboration pressure for change in
pressures organizations.
Role of the
Environment A common organizational identity
and the unified commitment of
Internal Pressures staff in different
-Growth Identity Forte
-Integration & areas/departments of an
pressures Hotel
collaboration organization can be difficult to
-Identity
-New broom manage and may encourage
-Power & political change.
3-7
 Internal Pressures
Why Change?

Images of
Managing Change
Pressure Examples Description
External
Pressures
-Fashion Change at the senior
-Mandated
-Geopolitical New management level particularly of
Bank of
-Market decline broom CEO - can often be a catalyst for
-Hyper- America
competition pressures significant changes in an
-Reputation & organization.
credibility

Role of the
Environment Power and Power relationships and
Morgan
political politicking can change internal
Internal Pressures Stanley
-Growth
pressures processes and decision making.
-Integration &
collaboration
-Identity
-New broom
-Power & political
3-8