Managing Change in Organizations

How, what and why?

Nadja Sörgärde, Stefan Svenningson

• Publisher: SAGE Publications Ltd
• Year: 2019
• ISBN:
  9781529700305
• Edition: 1
• Topic: Negocios y empresa
• Subtopic: Comportamiento organizacional

In Managing Change in Organizations, Stefan Sveningsson and Nadja Sörgärde explore a broad range of perspectives on change management, encouraging critical reflection and making sense of a complex field of theories. Their unique approach based around three key perspectives of change will help students understand:

• How change is accomplished – the tool perspective
• What change means for those involved – the process perspective
  And
• Why is change initiated (and is it necessary) – the critical perspective

This focus on the common how, what and why questions offers students the chance to learn pragmatic tools for managing change, as well as gain an in-depth understanding of different theories and their value.

The book is complemented by a range of online resources including PowerPoint Slides, Multiple Choice Questions, and a selection of SAGE Business Cases and journal articles.

Stefan Sveningsson is Professor of Business Administration at the School of Economics and Management, Lund University, Sweden.

Nadja Sörgärde is a Senior Lecturer at the School of Economics and Management, Lund University, Sweden.

1 Introduction

Learning Objectives

When you have completed your study of this chapter, you should be able to:

• Recognize organizational change as a potentially complex and multifaceted phenomenon and understand the usefulness of adopting a reflective, multidimensional approach when studying it.
• Be aware of the tendency for managers to be (overly) positive and optimistic towards initiating organizational change and what the reasons for this could be.
• Recognise the three perspectives on organizational change that are presented in this book – the tool-based perspective, process perspective and critical perspective.
• Understand the basis for and rationale behind the idea of framing change in terms of what, how and why.
• Be familiar with the broader purpose of the book and its structure in terms of the three perspectives on organizational change.

In contemporary society, organizational change is often seen as a natural part of everyday organizational life – as something as inescapable as income taxes and death. Organizations are increasingly faced with demands and expectations to engage in organizational changes in order to keep up with ever changing markets and customer preferences, technological development, globalization, institutional and political changes, demographic and cultural shifts and fashionable management ideas and recipes. Thus, the external environmental forces of organizational change in current society are numerous. In addition, these forces are also mutually influencing each other in complex ways that often make them vague and ambiguous rather than something that provides clear guidance on how to cope with them in terms of managing change. Moreover, organizational change is also often driven by internal organizational forces such as when organizations that emphasize innovation rely on a creative workforce for strategic change and development. Internally-driven change can also be the result of managerial actions to reduce costs and improve efficiency in order to enhance competitiveness. But regardless of whether it is triggered by largely external or internal forces, change is something that organizations are significantly challenged by, and consequently is something that is becoming increasingly important to understand and manage.

A company that seems to understand environmental forces well and is able to turn these insights into productive managerial actions is the American company Amazon, which seem to thrive on organizational change more or less continuously.

Mini Case 1.1
Organizational change at Amazon

Being one of the most successful global companies of the 21st century, Amazon shows that organizational change can be an inherent part of the way an organization is managed and developed. Established in 1994 by Jeff Bezos as a digital platform for selling books, it has become a leading digital platform offering a wide variety of different products and services – music, film, toys, tools, food, clothes, streaming-services, cloud-services, etc. – on a global level. In 2018 Amazon represented 4% of the total retail commerce in the US and 44% of the e-commerce market. It is characterized as a company that is obsessed with customer orientation and that has managed to create an extremely well-oiled machine that strives for efficiency in all parts of the value chain in order to rapidly provide customers with low-priced products. As Amazon states:

Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. (HUI Research Council, 2018)

Regarded from an organizational change perspective, Amazon offers several valuable insights. The company’s revenues have expanded by approximately 29% a year since 2003 and it has been profitable since 2002. The steady growth has been possible by its constant reinvestment of profits in its operations in order to provide for innovation through a substantial research and development focus. In 2017 Amazon invested $16.1 billion in R&D, which makes it one of the largest companies investing in operations. It is important to note how Amazon has very successfully exploited a variety of external developments in society, such as technological development (digital media, cloud-services), the globalization of markets, changing customer preferences (e-commerce), etc. However Amazon is also driven by internal forces, in particular by a strong culture of innovation and feedback systems, which encourage learning and continuous development and change (HUI Research Council, 2018). For instance they have invented new forms of logistics, which facilitate efficient and fast deliveries. This culture is supported by the long-term oriented practice of reinvesting profits in the organization.

Netflix is another example of an organization that has successfully been drawing on changing customer preferences and technological development, and has accomplished continuous growth in its innovative streaming services. Starting out as an online DVD rental company in 1998, Netflix a few years later realized the potential in streaming services and began a change process that made them the largest streaming company in the world with close to 140 million subscribers as of 2018 (BBC News, 2018; Lawrence, 2018; Statista, 2019). Part of the success of Netflix is often said to be their culture of change, where people are encouraged to be critical of the status quo and to be honest about business prospects even if it means antagonising others (Taylor, 2018). Both Amazon and Netflix illustrate the value of a culture that triggers innovative change by drawing on market and technological forces. In addition to these organizations one should also mention some of other classic consumer-product companies, such as Coca-Cola Co., Procter & Gamble Co., and Carlsberg Breweries, which adapt to constantly changing customer preferences by organizational changes that maintain strategic development in terms of new products.

Organizational changes that necessarily follow from acquisitions and mergers are often seen as being particularly challenging, but here too we find some telling illustrations that seem to counter conventional wisdom. For example, while there are some well-known cases of failed mergers within the car industry – Daimler & Chrysler, General Motors & Saab, Ford & Jaguar – there are also encouraging illustrations that suggest that the organizational changes following a merger can be productive for organizational change and strategic development. When Zhejiang Geely Holding Group acquired Volvo Cars from Ford Motors in 2010, many observers were afraid that the Chinese owners would transform Volvo’s high-quality brand into a low-cost image. In contrast, however, Geely facilitated Volvo’s engagement in technological development and maintained its reputation as an innovative producer of high-quality cars, partly by establishing a new innovation centre aimed at increased digitalization and the development of the self-driving car. As a member of Volvo’s management team, Lex Kerssemakers, commented when talking about Geely and its founder, Li Shufu, the man behind the acquisition of Volvo: ‘He gave us balls again’ (Gruley & Butters, 2018).

There is no shortage of illustrations of successful organizational and strategic change. A number of examples can be found in the business press. These examples can be inspirational and provide change agents with encouragement and optimism about the possibility to accomplish the often complex and multifaceted task of formulating and implementing organizational change. They can also provide us with some clues and insights about what needs to be considered when engaging in change. In addition to that, critical reflection upon the actual need to change is also important. In some situations, cherishing and strengthening the established business with its core competences, and thus not embarking upon radical change, could be a wise choice. This book takes as its starting point the huge interest in organizational change in modern organizations and looks at it from different angels. The broad aim is to provide a qualified overview and review of ideas, models and concepts – the language of organizational change – in order to facilitate a critical understanding of change as well as support managerially driven efforts to formulate and implement change.

The rest of this introductory chapter will be structured as follows. We continue by discussing the background of this book in more depth. In particular, we will stress the importance of developing a varied view of organizational change, where its importance as well as its challenges and complexities are taken into account. We will then show how the literature on change differs in focus in terms of what key questions are asked and answered (the how, what and why of change). This way of structuring the field forms the pedagogical framework of the book, which more specifically differentiates between a tool-based, process and critical perspective on organizational change. Finally, we will further clarify the purpose of the book and give an outline of the different chapters.

Background

In terms of what is often seen as being crucial for the success of contemporary organizations, there is hardly anything that is more important than the understanding and managing of organizational change. When we hear about organizational success it is often related to having productively completed some form of change, as was illustrated in the introductory cases. But successful change is complex and often calls for reflection and thoughtfulness rather than merely following fashionable trends and recipes and models for how to realize change. A central tenet in this book is that reflection and thoughtfulness about organizational change are enabled by having a broad repertoire of concepts and models of change, a repertoire that recognizes the variety within the field and facilitates a differentiated approach to the subject. Environmental forces and organizational challenges and problems are seldom clear-cut and unambiguous in terms of what needs to be changed, which is why any change agent will benefit from having appropriated a broad and nuanced understanding of what change is about and how it can be managed. Therefore, our basic premise is to go beyond sweeping views of change and to recognize that organizational change – in spite of all the success stories indicating otherwise – is challenging and often requires differentiated knowledge that facilitates an intimate understanding of the local and situational contingencies. The challenges that come with trying to critically understand and manage change thus forms the background of this book and its pedagogical framing of organizational change in three different perspectives: the how, what and why.

In order to provide an overview of the research on organizational change in terms of how, what and why, it is natural to acknowledge the historical background of writings on organizational change. The history of research on organizational change dates back several decades and even if many concepts have been around for years, some are still valid and significant in understanding as well as managing change. Furthermore, managerial ideals tend to reoccur, why the historical lessons learned about the effects of certain managerial practices, still can be highly relevant for contemporary organizations. We will devote a substantial amount of space to the history of organizational change by reviewing some of the classic traditions and the concepts that developed from these traditions, especially in Chapter 4 where we discuss concepts of change from the early classics of the Human Relations tradition to the highly popular Organizational Development (OD) approach to change that established itself during the 1950s and 1960s. Approaches and concepts of change have become increasingly sophisticated and inclusive, especially in terms of recognizing people (as more than cogs in the machinery), relations, interactions, group dynamics, organizational culture as well as broader orientations such as strategy.

In acknowledging the increasing sophistication of the field and the various approaches to change that have emerged during the last decades, it is also important to recognize that managing organizational change often means a lot of additional coordination such as managing projects, motivating, allocating resources, controlling, influencing organizational culture, etc. Following this, it goes without saying that change is difficult and messy, as there are plenty of traps and pitfalls that may lead to failure. There can be many reasons for the lack of success. Sometimes there is a lack of realism – the need for time, knowledge and insights quite simply is underestimated when change programmes are formulated and implemented. Sometimes it is due to a lack of understanding of the importance of existing organizational arrangements, such as the routines, organizational culture and structure. Often the importance of history and traditions are underestimated when attempting to make changes. Sometimes it is due to a lack of commitment, will or knowledge among those who are set to actively implement the transformation, which can ultimately be connected with too narrow a view of what it really entails to implement more extensive changes. As most people who have been involved in change attempts surely know, there is much that can go wrong.

Nevertheless, change management is still characterized by great optimism, and new radical and comprehensive chan...