Why organizations need to change?

An organization is more inclined to change

over which the law of negative entropy is
necessarily applicable.
Law of Entropy
All systems “run down” and disintegrate unless they
import more energy than they use.

Law of Negative Entropy

For its survival, a system is required to produce more
output for certain enough inputs in order to continue
the state of self-maintenance and keep the system
from “running down”.
For the law of negative entropy to be true for
an organization the organizations are
required to be acting as an open system.

Open systems require two kinds of feedback,

External Feedback and Internal Feedback.
 Open System Theory of Organization
The Crux
The open system
organizations amidst
the dynamic
environment have no
other option but to
Organization
respond to the
environmental needs
and adapt accordingly.
Environment
and Through-
Input Output Users
Environment put
al Trends

Internal interface External interface

feedback feedback
mechanism. mechanism
What does it specify? What does it specify?
 Environment and Environmental
Trends

Environment includes people, customers, suppliers,

competitors, social and economic forces, government
and regulatory bodies, technological conditions,
financial institutions, other organizations, and special
interest groups.
 Environment affects organizations in three ways:
It introduces demands
Environmental demands include, customer requirements
and preferences determine the quantity, price, and
quality of the offerings the organization can
successfully provide.
It imposes constraints
Environmental constraints include input limitations like
insufficient capital, technology, raw materials and HR,
economic and political disorders, legal prohibitions
rooted in government regulations, and market
competitions.
It provides opportunities
Such as new market possibilities resulting from
technological innovation, government deregulation
etc.
 Input
Input of an organization includes the elements
that, in any point in time, constitute the set of
“givens” with which it has to work with.
Inputs include capital, technology, raw
materials, equipment and HR etc.
 Throughput
Throughput refers to the transformation process in
the organization wherein the inputs are changed
into outputs. It includes following elements:

The Work
this general term is used to describe the basic and
inherent activity engaged in by the organization, its
units, and its people in furthering the company’s
strategy.
Understanding the work requires analysis of the nature
of the tasks to be performed, anticipated workflow
patterns, knowledge and skill it requires, the rewards it
offers, and the stress and uncertainty it involves.
The Formal Organization
This is made up of the structures, systems, and
processes each organization creates to group people
and the work they do and to coordinate their activity
in ways to achieve the strategic objectives.
The People
People’s importance in the organization is identified
in terms of what knowledge and skills do they bring
to their work? What are their needs and preferences,
what rewards they expect to flow from their work?
The Informal Organization
It refers to unwritten guidelines that exert a powerful
influence on people's individual and collective
behaviour – encompassing a pattern of unwritten
processes, practices, and political relationships that
embody the values, beliefs, and accepted behavioural
norms.
 Output
It refers to the pattern of activities, behaviour, and
performance of the system that is ultimate purpose of the
system to produce.
Output of the system must align with the purpose and
needs of the environment. If the environment does not
need these outputs, the organization shall cease to exist.
 Nadler’s Congruence Model of
Organizational Change

Input
Informal
Organization
Environmen
t

Formal Output
Resources Strategy Work
Organization

History

People
According to the Nadler’s congruence model of
organizational change:
1.most of the organizations are open systems; rather
than being closed, with permeable boundaries, in that
they permit exchange of information, resources, and
energy between system and environment.
2.Issues, events, forces, and incidents outside the
organization are not viewed as isolated phenomenon,
but seen as affecting the issues, events, and forces
within the organization.
3. Within the organization, changing one part of the
system influences other parts as well, so:
 interaction between each set of organizational
components is more important than the components
themselves.
 in result of a change in one set of organizational
components, a new congruence among all components is
to be achieved.
When organizations can afford status quo?

Organizations can afford status quo:

1. When they act as a close system i.e.
 Law of negative entropy is not necessarily
applicable to them and they can survive without
exchanging output for the input. They reside in
protected environment and resources intake by
them is converted into low-grade-energy/waste.
 They are insulated from fluctuations of demand
and supply. Though there seems no perfectly
closed system organization, organization theories
presented by Max Weber present organizations
that are closer to this concept.
2. When organisations reside in a relatively
static environment
In static environment organizations soon attain the
state of static homeostasis.
3. When organizations have monopoly in the
market
when they are not required to compete with other
organizations