CHAPTER 1: Organizational Change
Main Teaching Point Organizations engage in a process of strategic renewal in order to respond to changes in their competitive environment. But in order to make strategic renewal work, leaders must find ways to alter the behavioral patterns of their employees through involvement and participation.
Learning Objectives 1. Identify the role of strategic renewal in propelling change. 2. Focus on the behavioral aspect of organizational change. 3. Analyze the dynamics of motivating employees to alter their behaviors. 4. Differentiate the three faces of change. 5. Understand the source of both employee resistance to and support for change.
Opening Case—Tales of Woe at Concord Bookshop Theory to practice of case: Effective strategic change requires not only recognition of the need for change but also a successful implementation process. Case Summary: Concord Bookshop is a 64-year-old independent bookstore in New England with a national reputation for sound bookselling and a local reputation for customer service and interesting programming. The owners want to hire a new general manager to reconsider policies and programming. Three top managers and five more long-time employees are resigning, and local authors and customers have expressed outrage. Analyzing the Case 1. From whose point of view is the case told? The case is told mostly from the perspective of former employees and managers as well as concerned customers.
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2. What is Concord’s change project? Concord is experiencing major competition from national bookstores. President Sannounced that a new general manager will be hired who will examine some of the store’s programs and policies in order to remedy the dire financial situation of the company. 3. Why is Concord doing this? Profit margins for independent bookstores like Concord have gotten very tight over the past few years, due to extensive competition from Barnes & Noble, Borders and Amazon.com. 4. What behaviors will need to be changed? Concord will need to find a way to get all of the people involved on board in the change process. Since all of them seem to really care about the survival of the organization, the major issue might be one of communication, involvement and persuasion. 5. How should Concord executives go about creating the change? This question is key to the entire text. Owners, employees, customers and suppliers all wanted to support the organization’s viability. However, Smith’s approach to change created resistance, conflict and resentment. Organizations need to respond to external changes but they need to do so in a way that also effectively manages internal dynamics.
Lecture Outline I. Strategic Responsiveness Theory to practice: • • Strategic responsiveness to a dynamic external environment demands organizational change. To implement a renewed strategy, organizational leaders need to engage in a change process.
A. Strategic renewal is a change in an organization’s strategy with the intent of regaining sustainable competitive advantage (company examples in exhibit 1-1, p. 4). B. Strategic renewal requires organizational change (exhibit 1-2, p. 4). Leaders need to align internal processes, structures and systems with the demands of Copyright © 2010 Pearson Education, Inc. publishing as Prentice Hall 2
that strategy. New organizational capabilities – employee talents and skills – need to be developed to support the strategic renewal. II. Strategic Renewal through a New Business Model Key Learning Points: • • It is possible to gain competitive advantage through the creation of a new business model, but changing your existing model will create specific change challenges. Adaptation of a new business model within a corporation will require organizational change.
A. A company’s business model is its approach to generating revenue and profit: the nature...