Difference Between Organisational Development And Organisatioanl Transformation
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Organisations today recognise the need for change. The “new economy” of the twenty-first century requires organisations to adapt to changing markets, innovate new products or services, expand customer bases, trade or deliver goods and services in new ways like e-commerce, manage rapid growth or decline or become global in their outlook. The purpose of organisational change is to improve organisational efficiency, effectiveness and productivity. To draw on the metaphor of an organisation as a living organism, an organisation has to change in order to survive; not changing could mean death.
Two main forms of change that this essay will look at are: Organisational Development (OD) and Organisational Transformation (OT). This essay will also look at the difference between OD and OT.
ORGANIZATIONAL DEVELOPMENT (OD) What is organizational development? Over the years there have been a number of definitions provided by various authors, they all suggest that the central characteristic of OD is the fusion between knowledge and organizational practice.
” A system wide application of behavioral science knowledge to the planned development and reinforcement of organizational strategies structures and processes for improving an organizations effectiveness” (Cummings and Worley, 1993, page 2).
“OD should improve the internal operations of the organisation by opening up communication, by decreasing internal destructiveness, such as win-lose conflicts, and by increasing creativity in problem solving.” (Berry and Houston, 1993, page 514) LEVIN’S THREE PHASE MODEL AND ORGANIZATIONAL DEVELOPMENT Practitioners argue there are three models that underpin any OD effort. They are, action research model, Levin’s three-step model of system change and phases of planned change. Managers can use change models as valuable tools in facilitating the process of change.
Lewin’s (1958, in Burke, 1994) three-phase model of change uses an ice cube analogy, unfreezing, movement and refreezing. This model, though simple, ultimately results in new behavior needed for successful change. The unfreezing step is the dissolving of the present social systems or behavior. This may require some confrontation or reeducation. The next step, movement, involves actions taken to change behavior from the old to the new. This may require restructuring or interventions. The final step, refreezing, requires actions to establish the new behavior and make it permanent (Burke, 1994).
OD is an expansion on Lewin’s model that involves action research, where direct action is taken on the interpretive indications of research data through a process of feedback, and planned phases of change (Burke, 1994). OD is as Burke (1994, p 54) defines as a planned process of change in an organization’s culture through the utilization of behavioral science technology and theory. It is a long-term process that aims to reinforce new behaviors and institutionalize change. It usually requires the use of an external change agent rather than led by management. Burke (1994, p72) describes the seven phases to be followed by an OD consultant as entry, contracting, diagnosis, feedback, planning change, intervention and evaluation.
These gradual, humanistic models aim to anchor behavioral change in an organisation by affecting a cultural change. These models can produce the behavioral changes that typify a successful change initiative.
Lippitt, Watson and Westley (1958, in Burke, 1994)) model of planned change expands Lewin’s three-step model to five phases. The five phases are: 1. Development of a need for change (Lewin’s unfreezing) 2. Establishment of a change relationship 3. Working toward change (moving) 4. Generalization and stabilsation of change (refreezing) 5. Achieving a terminal relationship Organizational Development emphasis is on process, its models are linear, and focuses on incremental and continuous change. OD places great dependence on the change practitioner, usually an outsider. Earlier thinking about change emphasized the role of the change agent as a data collector, interpreter, feedback provider, and so on. More current practices of OD emphasize the role of the practitioner as a facilitator.
ORGANIZATIONAL TRANSFORMATION What is Transformational change? OT is a process that radically alters the organizations strategic direction, including fundamental changes in structures, processes and behaviors. It is the second generation OD.
Organizational Transformation aims to create a new vision and to develop capacity for continuous self-diagnosis and change. It promotes paradigmatic change and helps the organisation better fit or create desirable future environments.
For organisational transformation to operate change is required in strategy and structure. Tushman and O’Reilly state, (1996, p11) “long-term success is marked by increasing alignment among strategy, structure, people and culture.” Successful organizations are those that gain fit among their strategies, structures and skills with the environment.
Tushman and O’Reilly (1996) state that older, larger, successful organizations develop what they call “structural inertia” and “cultural inertia”. Structural inertia is resistance to change, which has roots in the organization’s structures, systems, procedures and processes that are tied to organizational size, complexity and interdependency. Cultural inertia is more pervasive than structural inertia. It comes from age and success. As an organisation becomes older the lessons from success of the past becomes embedded in the shared expectations, stories, values and norms of the way things are to be done in the organisation. The more institutionalized the culture, the more arrogant and complacent an organisation becomes. Culture is an effective way of managing people without the need for strict control systems (Tushman and O’Reilly, 1996). Managing culture is an important aspect of managing change when an organisation is confronted with a more complex environment than the stable one it may have had success in.
By influencing an organization’s values, norms and processes, even by political means, culture can be changed. Sathe (1983, p398) states “culture has a powerful influence on organizational behavior because the shared beliefs and values represent basic assumptions and preferences that guide such behavior.” Change in organizational behavior means a change effort has been successful.
Beer, Eisenstat and Spector’s (1990) focus in not on affecting behavior by cultural change, but on concentrating on task alignment. They suggest that by reorganizing employee roles, responsibilities and relationships to solve specific business problems behavioral change will follow. They suggest that their six-step process fosters a self-reinforcing cycle or commitment, coordination and competence among employees where top management direct and encourage change initiatives at the periphery of the organisation (Beer et al, 1990).
The steps are: 1. Mobilize commitment to change through shared diagnosis of problems.
2. Develop a shared vision of how to organize and manage for competitiveness.
3. Foster consensus for the new vision, competence to enact it and cohesion to move it along.
4. Spread revitalization to all departments without pushing it from the top.
5. Institutionalize revitalization through formal policies, systems and structures.
6. Monitor and adjust strategies in response to problems in the change process.
Although not affecting culture, this model also aims to entrench new behavior for a successful change program. Some aspects of OD, such as the institutionalization and monitoring of change are present in this model.
According to Leifer (1989) “organizational transformation implies a change not only to the organizations mission, structure and management but, also to changes to basic social, political and cultural aspects of the organisation.” One model that looks at the ever-changing environment is the dissipative structure model. It is characterized by four components.
1. Singularity 2. Transformation utilizing radical strategies 3. Inefficient acting and experimentation, and 4. Resynthesis As Leifer (1996) suggest, “the difficulties of applying dissipative structure models and organizational transformation principles are that they are foreign to the way most manager are educated and trained.” Basically this model focuses on providing responses to change rather than stability, and responses to organizational transformation rather than organizational equilibrium.
Normal organisations seek stability and equilibrium while change and uncertainty are out of balance. However due to increasing environmental uncertainty and complexity, change should be viewed as normal.
The key principle to organizational transformation is leadership. Leaders are there to empower key people and trust them. A transformation is more likely to occur when leaders delegate these activities to a developmental team.
Change leaders should set direction from the top and engage the people below. The focus should be equally on structures and systems and organizational culture. Planning needs to allow for spontaneity. Incentives are used to reinforce change, but not drive it and consultants are expert resources who empower people (Beer and Nohria, 2000, p137).
Stace’s (1996) research demonstrates that the organizations that are most successful at change are those that have a contingency approach to change. In those organizations change is eclectic, pragmatic, and culturally and situationally attuned (Stace, 1996, p566). Stace argues that there are four styles of change management; coercive, directive, consultative and collaborative and the scales of change range from fine-tuning and incremental adjustment to modular and corporate transformation.
This model proposes that an organisation needs to move down “paths of change” so that the style and scale of change always is in tune with the environment. An organisation that has adopted a fine-tuning/consultative approach to change may need the move to a radical coercive/corporate transformational turnaround for it to survive a rapidly changing environment. After the turnaround is complete, to ensure long-term success the organisation should then move to a more consultative and directive incremental adjustment so the organisation can cope with constant change in shifting markets and environments (Stace, 1996).
Finally, Kotter (1995) has proposed an eight-step model for managers to follow to ensure success of a change initiative. He includes the key elements discussed in the previous models but also recognizes other important issues. Acknowledged are the roles of leadership and vision in change and the importance of communication during change to counteract individual responses to change such as resistance and cynicism.
1. Create a sense of urgency by examining the environment for crises and opportunities. (Situational tuning, unfreezing.) 2. Form a guiding coalition by assembling a team with enough power to lead the change. (Positive use of politics.) 3. Creating a vision to direct change and creating strategies.
4. Communicate the vision by every means possible, and many times over. Use the guiding coalition as examples to follow.
5. Empower others to act on the vision by removing obstacles to change or change structures and systems that do not allow it. Encourage risk-taking and new ideas or actions.
6. Plan and create short-term wins. Proclaim the improvements and recognize and reward people involved in them.
7. Consolidate the improvements and produce more change using increased credibility from successes. Develop employees’ roles that implement the vision. Reinvigorate with new projects, ideas and change agents.
8. Institutionalize the new approaches, demonstrating the links between new behaviors and success. Anchor the new culture. (Refreezing.) (Kotter, 1995, p61) ACHIEVING FIT In a particular business environment leaders of change may find that their preferred method of change, or dominant espoused ideology (Stace, 1996, p565) has produced a successful change for the organisation. Unfortunately for these organizations, the environment rarely stays the same over the years. The means of change that proved so successful in the past may actually impede the changes needed in new, complex times. Stace (1996) gives the examples of IBM and Westpac who followed OD ideologies to become leaders in their respective businesses, but found that this very ideology proved to be an obstacle to radical changes that were required to keep up with new environments. This demonstrates that models or ideologies that produce success in one era may lead to failure in another. Organizations must therefore respond to conditions in the environment and external influences. An organization’s culture may produce low performance if there is a misfit between change strategies and the environment (Stace, 1996).
There is a pattern that describes organizational growth and all organizations evolve following the familiar S curve. Over a long period of success, there are inevitably changes, sometimes by new strategies or new ways of competing.
To succeed over the long haul, firms have to periodically reorient themselves by adopting new strategies and structures that are necessary to accommodate changing environmental conditions. These shifts often occur through discontinuous changes “” simultaneous shifts in strategy structures skills and culture.
CONCLUSION Tushman M., O’Reilly C (1996) state “the dilemma confronting managers and organizations is clear. In the short run they must constantly increase the fit or alignment of strategy structure and culture. This is the world of evolutionary change. But this is not enough for sustained success. In the long run managers may be required to destroy the very alignment that has made their organizations successful. ” Stace (1996) suggests that the style of change, the style of change leadership and the scale of change need to situationally attuned to the organization’s need of the time that is responsive to the environment. His research shows that organizations that have adopted a fine-tuning approach to change over a period of time may need a painful complete turnaround to revitalize for new environments. Organizations that radically change with shock tactics may be successful in the short-term but could fail in the long-term if they do not then modify that style of change to a more developmental, task-focused style.
Organizational behavior remains static when organizational culture change has not been affected, task roles and responsibilities have not been altered, the incorrect approach to change has been taken or the style and scale of change does not fit the business environment.
The environment is always changing. The competent, successful manager is one who can lead an organisation through change, ensuring its survival in today’s complex business environment.
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