According to Jones (2013) in his book, organizational change is defined as a transformation of an

organization from the current situation by using new or improved management methods to a
looked-for state to increase their effectiveness and efficiency. The very aim of change strategies
is hence increasing the organizational performance and creating more value. Changes are
believed to be a vital element during the development of any organizations because it allows
managers to increase advancement and competitive pressure in the industry (Teece, Pisano and
Shuen, 1997; Cummings and Worley, 2008). The purpose of this essay is, thus introducing and
comparing cases in which two organizations in the technology industry successfully applied
strategies to manage changes. This hopefully would shed a light on how to deal with changes in a
proactive and effective way.

To begin with, there are several aspects that force the organization to make a decision to change
(Teece, Pisano and Shuen, 1997). Some of them are the respondents of the organizational to
rapid changes in the external environment such as trends in technology and management. Some
often are results of internal competences such as R&D, organizational learning and technology
transfer. Generally, the organizations would manage its change in two approaches that are
structure and culture so that they can achieve their desired goal (Jones 2013). They are two
approaches of human resource management, in fact. Structural change involves in the
reorganization of employees and is not limited to downsizing. In other word, it focuses more on
how to allocate the human resources to achieve the organizational objective. Organizational
culture change, on the other hand, deals mainly with the employee behavior in the company. A
set of values which is the core element of the organization controls how people within the
organization interact with each other. Both of the two approaches can have impacts and change
the process of other one. However, within the framework of this essay, these two approaches are
represented by Microsoft’s organizational restructuring and IBM’s organizational change in the
view of two separate approaches.

One Microsoft

Founded in 1975 by Bill Gates and Paul Allen, Microsft Corporation is a technology based
company headquartered in Washington, the United States. During the early years of

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establishment, the company focused on developing the software products such as Microsoft
Windows and Microsoft office suite which are also the best known products until now. During
the development, the company has been expanding into multiple market. As for the hardware
software, it now focuses on the Xbox game consoles, Microsoft phones and the Microsoft
Surface notebook with touch screen. In the segment of software products which has been its
advantage, the company is growing its service with Outlook – a personal email management
service, One Drive – cloud storage, and Skype – a messaging software. This is not limited to the
virtual assistant named Cortana which is built based on artificial intelligence. These mentioned
products are to illustrate a diversity of Microsoft products. The richness of products partly shows
the large appearance and market share of Microsoft in the market of IT. However, it also brought
some issues to the company. Firstly, although each product is under the name of Microsoft, they
show a lack of cross connection between those features. Moreover, the lack of support even leads
to the to the fact that products even became rivals in the market. For example, from the
acquisition of Skype in 2011, there was two messaging software under control of Microsoft
which was Skype and MNS Messenger.

In order to deal with the issue of connectivity among products, Microsoft take several steps with
the aim at reinforcing its operation and redefining innovation. The new strategy that the company
took was to redesign and reorganize the structure. The strategic was named as “One Microsoft”.
Before the reorganization, each product was developed and controlled by a development team.
However, afterwards, the organizational structure was rebuilt to concentrate on three
fundamental aspects: platform product and services, business services and entertainment
services. Each one of these aspects which is relative to a unit is managed so that they are under
administration of one top manager (Dhillon & Gupta, 2015). This practice was actually
following another successful case of “One Sony” as Sony faced the same problem with its wide
range of product line.

As it can be seen, there was a decentralization in the organizational structure. According to

Sassower in 2013, decentralization would help the organization in taking faster and progressively
successful decisions in contrast with brought together effective leadership. The organization
would not need to experience chains of directions for making decisions. This will allow the

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organization with reacting to conditions and go to issues effectively and rapidly. Every unit will
be under their very own administration so there will be no abundance layer of the board to block
the procedure of the administration. It is also worth noting that decentralization makes ready for
extension and development of the organization. Along these lines Microsoft will probably
concentrate on techniques that will expand its benefit, since every one of the predefined aspects
will almost certainly center around the objectives and destinations of the division. It will help
these units with focusing on new innovation that are demanded by the organization. As a result,
the work overload will be reduced. In the case of Microsoft, the reorganization enables new
strategies and direction of development for the company. It allows managers to have more
control over a segment and increase the effectiveness. Moreover, although the decentralization
involves in smaller level of management, the new dimension of management contributes to the
utmost objective of the company which is to create value and to increase its profitability. This
also assisted the company with competing with other competitors such as Google and Yahoo.

IBM’s organizational culture change

IBM is another information technology company based in the United States. Its products and
services include hardware and software provision as well as consulting services related to
computer technology. Since the establishment in 1911, the company has built its firm values
which is called “Basic beliefs”. The ‘beliefs’ here are “respect for the individual,” “the best
customer service,” and “the pursuit of excellence. Thanks to these core values that the company
developed to the position of a powerful multinational corporation as it is today. However, there
was a time when the company had to cope with a problem of neglection on the individual benefit
due to over focus on the company’s profitability. The issue started with comments on the IBM
ignoring the employee’s value. Some employees also complained on the human resource
appraisal. On the other hand, the service that they saw negative feedback in terms on customer
service satisfaction.

It was when IBM sought for a solution for the destructing organizational culture. The first and
foremost action that the company decided to take was re-bringing the “Basic beliefs” to its
starting point (Heckscher, 2017). In other word, IBM started with the company’s vision first. The

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top managers together constructed a new set of values based on the vision of an excellent
service. The new set values, then, was under several forms of testing and gaining feedback.
There was a survey done on a focus group and another one done on the scale of around 1000
IBM staff. Another channel of feedback and comments was four company forums for different
purposes. The forum received a large number of constructive comments from the opening stage.
The next step that IBM took is to give line managers more control and responsibility to take the
risk in their decision making. It resulted in several teams winning valuable contracts (Jones,
2013).

These actions that IBM managers made can be included in the process of empowering its staff.
The change in the organizational culture of IBM starts with revoking the original culture that had
been destructed during the time. At the point when staff feel they have more control and
authority over their organization, or they have a more important role in the development of the
organization, they would progressively make effort to engage more on the business of a company
in general (Pradhan et al, 2014). This is the core value of the organizational culture when
employees are more engaged and contributive to the overall operation. Once the culture has been
changed, the employee behavior would change accordingly to a positive extent and they become
more productive. More importantly, when the culture is understood by the whole staff, it shapes
the attitude of the front line employees who are spreading the culture to the network of its
customers. Furthermore, the contracts that teams won showed that the new culture now serves as
a motivation for staff to work. As the responsibility and duty are granted to a specific individual,
he or she would become more driven and active in the task. At this time, success did not pay off
their effort but also the belief of the company.

From the two examples of two companies above, it can be seen that managing change has an
essential role in the sustainability of each country. Both of Microsoft and IBM had some internal
issues when they expanded to a very large scale. At that point, the development path of the
company may be out-tracked from what was founded. Therefore, there should be a change to
reshape the operation of both the companies and bring back the companies the competitive
advantages to compete with other rivals. Another similarity of the two cases was the importance
of leadership in realizing the vision and the mission of the company. For Microsoft, the

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restructuring happened in 2014 when Satya Nadella took over the position of CEO. Similarly,
Sam Palmisano was appointed in 2002 and he was the one who gathered managers to rebuild the
culture. As seen in the cases, the changes started with the ability of CEOs to figure out the
current need of change and how to implement the transformation. Change strategies also act as a
measure of strategic management ability of the leaders which according to Gill (2003) “while
change must be well managed, it also requires effective leadership to be successfully introduced
and sustained”. The key element of change management is the effective leadership. However,
due to the different in the issues, the strategies were hence different. In the case of Microsoft, the
reorganization of company design was conducted to guide the company to increase the
profitability. It focused more on the output of the business. Therefore, the actions made are in a
smaller process when the units’ structure were re-structured. As for the case of IBM, they did not
have problem with profit but the core values were changed. Therefore, the company needed a
reform in the organizational culture. The transformation rooted from the change in the behavior
which took more time and more phases. Nevertheless, the approaches that each companied
followed, the successful achievement was gained showing efficiency and effectiveness of the
change strategies.

In conclusion, the practices of Microsoft and IBM demonstrated clearly the definition of
organization change as well as showing obvious proof for the importance of change strategies in
the process of strategic management. As a result of internal and external driving forces within the
organization, organizational change management have becoming managers’ top priorities.
Today, as at no other time, company leaders ought to be searching for new better approaches to
facilitate and inspire their employees to build up values to their organization.

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 PREFERENCES

Cummings, T. G. & Worley, C. G. (2008). Organization Development & Change. 9th Edition.
Cengage Learning.

Dhillon, I., & Gupta, S. (2015). Organizational Restructuring and Collaborative Creativity: The
Case of Microsoft and Sony. IUP Journal of Business Strategy, 12(1), 53.

Gill, R. (2002). Change management--or change leadership?. Journal of change

management, 3(4), 307-318

Heckscher, C., Bernier, C., Gong, H., DiMaggio, P.J., & Mimno, D. (2017). “Driving Change by
Consensus”: Dialogue and Culture Change at IBM.

Jones, G.R. (2013). Organizational Theory, design, and Change. 7th edition. Boston, MA:
Pearson/Prenctice Hall Company

Pradhan, P., Kamlanabhan, T.J., Thulasiraj R.D. & Muraleedharan, V. (2014). Employee
Empowerment. Journal of Multidisciplinary Research in Healthcare, Chitkara
University, Punjab.

Sassower, R. (2013). Postcapitalism: Materialism, Decentralization, and Globalization.

In  Digital Exposure: Postmodern Postcapitalism 19-34. Palgrave Macmillan UK.

Teece, D.J., Pisano, G, & Shuen, A. (1997). Dynamic Capabilities And Strategic Management
Strategic Management Journal, 18(7), 509-533