Managing Tech & Org Change

Prof. Urban Wemmerlöv, Wisconsin School of Business, Fall 2018

Section 1 – Introduction To Change Management

• Concepts, issues, frameworks, and

models in Change Management

The Congruence Model

 Managing Change is About Moving an
Organization from a Current State
to a Future, Desired State of Operating

Current state Future state

How do we describe and analyze the current and future states?

And how do we know what to change to get the outcomes we want?
Catalytic events
Opportunities
(the triggers) Enterprise
Outcomes
Analysis

Gap analysis
(based on metrics)

Strategy Capabilities

Symptoms
Rethink mission, Translation – (we’re unable to …)
vision, and strategy How??

What may trigger strategic rethinking?

(symptoms, gaps, external disturbances, opportunities)
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 Organizational Problem-Solving
1. Basic problem: What outcomes are we trying to
achieve?
2. What capabilities do we need to reach targeted
outcomes?
3. How do we need to change work to accomplish this
(org structure, job design, processes, technology)?
4. How do we need to change our management
systems to plan, measure, and control work?
5. How do we need to develop people to accomplish it
(employee training, leadership development)?
6. How do we ultimately need to shape our culture to
help support, spread, and sustain these changes?
 Enterprise
Outcomes
Analysis Organiz. Mgt.
structure Systems

Strategy Processes Technology Capabilities

Informal
People
The Congruence Org.
Model (after Nadler
& Tushman)
 The Congruence Model
– Enterprise Perspective
(Modified after Nadler and Tushman, 1980)

Environment/History/Resources Influence Strategy

Environment: The external world:

• Political/economic/cultural environment
• Technological environment
Stakeholders:
• Customers (and competitors)
• Employees and their organizations
• Suppliers
• Institutions and agencies
 Enterprise Perspective, cont’d
History: Key events in the organization’s past:
• Ownership history
• Leadership/managers and their styles
• Development of current culture/informal
organization
• Significant threats and opportunities and
how they were dealt with
• Significant shifts in strategy
• Experience and lingering effects of past
organizational changes
 Enterprise Perspective, cont’d
Resources: Key assets on which the firm can capitalize:
• Employee skills (all levels)
• Knowledge about environments
• Technologies
• Buildings and land
• Patents and brand names
• Established customer base
• Distribution network
• Public “image”
• Investment capital
 Congruence Model
- Strategy
What is Strategy?:
Decisions made to acquire, deploy, or
divest the firm’s resources to meet
threats and take advantage of
opportunities in the environment.
 Strategy: Planned vs. Delivered
Strategy as a Plan(s) by which the
document: organization is intending to
gain a competitive advantage.
Focus is on HOW do we gain the
advantage?
De facto The pattern of decisions over
strategy: time that shaped the
organization’s competitive
capabilities.
 The Dynamics (and Reality)
of the Strategy Process
“The most effective strategies of major
enterprises tend to emerge step-by-step from
an iterative process in which the organization
probes the future, experiments, and learns
from a series of partial (incremental)
commitments rather than through global
formulations of total strategies.”
(Quinn, 1980)
 The Dynamics of Strategy, cont’d
“Our most significant strategic decision was
not made in response to some clear-sighted
corporate vision but by marketing and
investment decisions of frontline managers
who really knew what was going on.”
(Andy Grove, Intel; from Bartlett & Ghoshal, HBR, 1994)

Intended strategy Deliberate strategy Realized strategy

Unrealized strategy Emergent strategy

Intended Strategy as a Cause-
Effect (Business) Model
Example of causality thinking:
 Investments in employee training lead
to improvements in service quality;
 Better service quality leads to higher
customer satisfaction;
 Higher customer satisfaction leads to
increased customer loyalty;
 Increased customer loyalty generates
increased revenues and margins.
 EFFECT CAUSE

O G S M The OGSM Model

Procter & Gamble

Five Hows
- strategy to action
The Multiplier Effect in Strategy
Deployment
How many people are involved in strategy
deployment?
 For each Objective, there can be multiple
strategies
 For each Strategy, there can be multiple
action plans
 For each Action Plan, there can be several
teams
 For each Team, there will be multiple
employees involved
 Congruence Model
- Strategy
Note that “Strategy” in the Congruence
Model is an umbrella term for:
– Mission
– Vision
– Values
– Strategy

But, most of the time, Strategy = Strategy

 Harley-Davidson’s Mission
We fulfill dreams through the experiences
of motorcycling, by providing to
motorcyclists and to the general public an
expanding line of motorcycles and branded
products and services in selected market
segments.
 W.W. Grainger’s Vision
To be the world leader in offering solutions
that help businesses and institutions save
time and money as they maintain, repair,
and operate their facilities.

Grainger = supplier of facilities maintenance products

 Harley-Davidson’s Values
• Tell the truth
• Be fair
• Keep your promises
• Respect the individual
• Encourage intellectual curiosity

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 Congruence Model
- Strategy
Strategic decisions:
• Are grounded in mission/vision/value
statements (belief systems)
• Can be restricted by rules (boundary systems)
• Are triggered by performance and
environmental monitoring (mgt control systems)
• Result in “action plans” that develop
capabilities to accomplish strategic objectives
Strategy drives changes in the organizational components
 The Congruence Model
– Organizational Structure
• Organizational units, their relationships,
supervisory structures, and
communication mechanisms
• (Physical) work environment
• Job design (job roles and work rules)
 The Congruence Model
– Management Systems
• Measurement systems (e.g., accounting)
• Compensation systems
• Human resource management system
• Forecasting system
• Production planning and control system
• Quality assurance system
• Maintenance system
• Continuous improvement systems
and associated decision-making processes
 The Congruence Model
– Processes
Work in organizations is carried out using
processes. Processes exist at various levels of
aggregation.
Major business processes for a manufacturing
firm:
 Marketing and selling
 Product/service design and development
 Order management (including purchasing and scheduling)
 Production
 Shipping/distribution
 The Congruence Model
– Technology
Process or information technologies supporting
or performing work:
• Fabrication processes (e.g., welding)
• Equipment or devices for making / moving /
connecting / regulating / storing …
• Computers, devices
• Software, IT architecture
 The Congruence Model
– People in the Workplace
Employee characteristics:
• Leadership style/qualities/reputation
• Knowledge and skills
• Experience and accomplishments
• Needs and preferences
• Aspirations and expectations
• Tenure in the organization
• Other characteristics (e.g., country of origin,
language)
• Etc.
 The Congruence Model
– The Informal Organization
• Informal work units and their interactions /
communication patterns
• Power and politics
• Culture (norms, values, and beliefs)
 The Congruence Model
– Capabilities
What are “capabilities?”
• Expertise
• General skills
• Core competencies
• Abilities
that the organization has developed over
time and which support design, production
and delivery of goods and services.
 The Congruence Model
– Capabilities
• The organizational components
(org. structure, mgt systems, etc.)
together create the organization’s
capabilities.
• In turn, the capabilities represent the
basis for the firm’s outcomes.
 The Congruence Model
– Outcomes
Performance - measured at the organization,
group (work unit)/process, and individual
levels:
• Outcomes can be measured in financial
and/or non-financial terms
• Group/process and individual-level
measures are most often non-financial
• Organization-levels metrics often financial
 Managing Change is About Moving an
Organization from a Current State
to a Future, Desired State of Operating

People Change? People

AS IS TO BE

Technology Change? Technology

AS IS TO BE

Mgt Systems Change? Mgt Systems

AS IS TO BE

Same for Processes, Structure, and Culture

 Seeking “Congruence”
(Modified after Nadler and Tushman, 1980)

Organizational Management
structure systems

Enterprise Perspectives Outcomes

Business and

}
• Environment Technology
• History
• Resources
Strategy
Strategy work processes Capabilities
Capabilities
{ Individual
Group
Organization

People in the The informal

work place organization

Look for misaligned elements that cause

inefficiencies/waste or implementation hurdles
 Look for misaligned elements
-current and future
Strategy and Structure
.
•
.
• Strategy and Informal org (culture)

As well as all internal components vs. each

other:
• Structure and processes
.
.
• People and technology
 Enterprise
Outcomes
Analysis

Gap analysis

Strategy Capabilities

What factors prevent

Core strategy What in the organization vs. support goal
left intact should be modified? achievement or
reaching higher
goals?
What may trigger strategic fine-tuning?
(internal analysis of goal achievement)
 Enablers (strengths)
and Barriers (weaknesses)

 Organizational Structure
 Management Systems
 Processes (incl. customer relationships)
 Technology
 People (incl. leadership)
 Informal org (culture)

Can we capitalize on strengths and eliminate

weaknesses to reach or extend our goals?
 A Narrow View of Org Change

Enterprise Perspectives Outcomes

Business and

}
• Environment Technology
• History
• Resources
Strategy
Strategy work processes Capabilities
Capabilities
{ Individual
Group
Organization
 Controllable vs. Less Controllable
Factors in Change
Organizational Management
structure systems

Enterprise Perspectives Outcomes

Business and

}
• Environment Technology
• History
• Resources
Strategy
Strategy work processes Capabilities
Capabilities
{ Individual
Group
Organization

People in the The informal

work place organization

In STS Theory: Green boxes=Technical System, Red Boxes=Social System

 The Reinforcing Mechanisms of Culture
Organizational Management
structure systems

Enterprise Perspectives Outcomes

Business and

}
• Environment Technology
• History
• Resources
Strategy
Strategy work processes Capabilities
Capabilities
{ Individual
Group
Organization

People in the Organization’s

work place CULTURE Behavior

Previous reading on culture: Culture to Behavior to Outcomes,

Outcomes to Strategy to Structure/….. /People to Behavior to Culture 37
 The Ten Step Model
1. Analyze the organization’s need for change
2. Create a guiding coalition led by capable leader
3. Develop a compelling vision
4. Communicate and create a sense of urgency
5. Line up supporters
6. Organize for the change process, develop
solutions, and begin implementation
7. Prepare for and remove obstacles
8. Produce short-term results
9. Institutionalize change
10. Consider the need for more change – go back to
Step 1
 Linking the Congruence Model
and the Ten Step Model
(designing states vs. managing change processes)

Ten Step Model

Current state = Future state =

Congr Model 1 Congr Model 2
 The Congruence Model
and Project Management
When a project is planned, the CM model can
be used as a template for summarizing what is
to be changed:
 Change to strategy
 Change to org structure
 Change to management systems
 Change to processes
 Etc.
Appendix on Culture Change
(for die-hards)
 Culture as a Factor in Strategic Change
- a Gap Analysis perspective
Organizational Management
structure systems

Enterprise Perspectives Outcomes

Business and

}
• Environment Technology
• History
• Resources
Strategy
Strategy work processes Capabilities
Capabilities
{ Individual
Group
Organization

People in the Organization’s

work place CULTURE

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Diagnosing Required Cultural Change
1. Identify critical strategic challenges
2. Link the strategy for meeting these challenges
to the critical tasks needed to implement it.
3. Identify the N/V/Bs that will help accomplish
critical tasks.
4. Diagnose the N/V/Bs that characterize the
current culture.
5. Identify gaps between the N/V/Bs needed and
existing ones.
6. Decide on actions needed to reduce these gaps
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Diagnosing Required Culture Change
(Adapted from Tushman and O’Reilly, Winning Through Innovation, HBSP, 2002)

1. Identify critical strategic challenges

- who are our customers and which are our
products/services and market segments?
- what capabilities do we need to develop,
and what resources do we need to acquire, in
order to be competitive in the future?

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Diagnosing Required Culture Change

2. Link the strategy for meeting these

challenges to the critical tasks needed to
implement it.
- what are the (six or so) tasks that absolutely
must be accomplished if we are to
successfully execute our strategy?
- are the set of tasks complete and internally
consistent?
(think of “tasks” as lower-level strategies)
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Diagnosing Required Culture Change
3. Identify the norms and values that will help
accomplish the critical tasks.
- what value, if widely shared and strongly
held, would further the accomplishment of
the critical tasks (repeat for each task)?
- what specific attitudes and behaviors would
be consistent with the values and ensure that
the critical tasks are accomplished?
- does our reward system support these?
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Diagnosing Required Culture Change

4. Diagnose the norms that characterize the

current culture.
- use several focus groups of managers and
employees (to assess ‘intensity’ and ‘agreement’).
- ask questions to elicit both positive and
negative norms:
What to do to get ahead? What behavior should be
avoided? What behavior is really rewarded?
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Diagnosing Required Culture Change

5. Identify gaps between the norms needed and

existing ones.
- do the existing norms hinder execution of
the critical tasks?
- are there norms important for the
accomplishment of critical tasks that are not
now valued?
- are there inconsistencies between what we
say is important and current culture?
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 Diagnosing Required Culture Change
6. Decide on actions needed to reduce these
gaps
- are the right outcomes and processes being
measured?
- is the reward system aligned with the
needed norms?
- do people have the requisite skills and
motivation to adopt new attitudes and
behaviors?
- is senior mgt reinforcing desired norms? 49