Implementing Organizational

Change: Theory and Practice

Bert Spector

Chapter 1

Strategic Renewal
and Change

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Examples of Strategic
Responsiveness
Company Altered Strategy
EG&G Government contractor ⇒ Commercial
vendor
Enron Energy production ⇒ Energy trading

GE Commodity product ⇒ Value-added

products and services

Grand Union Low-cost ⇒ High-end grocery store

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Examples of Strategic
Responsiveness
Company Altered Strategy
IBM Products ⇒ Service/consulting

Marks and Traditional, conservative adults ⇒ Young,

Spencer trendy shoppers

Renault French-based ⇒ Internationally focused

Walgreens Store-based chain ⇒ Chain and Internet

sales

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Strategic Renewal and
Organizational Change

Shifting Competitive
Environment

Organizational
Strategic Renewal
Change

New
Opportunities
Altering Behavior
Patterns of
Employees

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Popular Approaches to
Change
Approach Key Points Examples
Employee Participation in General Motors
involvement decision making Hampton Inn Hotels
SAS Airlines

TQM Continuous process Globe Metallurgical, Inc.

improvement Motorola
Westinghouse
Process Redesigning work flow Hewlett-Packard
Reengineering to drive out waste Lotus Development
Southwest Airlines
Concurrent Integration of design, British Aerospace
Engineering manufacturing, and Carolla Development
support Comdial Corporation

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Popular Approaches to
Change
Approach Key Points Examples
Six Sigma Statistical control of AlliedSignal
variance; process General Electric
improvement Motorola

Value-Chain Coordinating primary ComputerWorld

Integration value-producing IBM Electronics
activities Microsoft

Business Model Refine customer IBM

Reinvention acquisition and Ikon Office Solutions
retention Southwest Airlines

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Targets of Strategic Behavior
Renewal Efforts

Individual Team
Follow procedures Act creatively
Short term Long term
Follow plans Flexibility
Avoid risks Take risks
Do Learn
Subordinates = Followers Subordinates = Partners
Keep information Share information
Defend turf Coordinate efforts
Hide mistakes Learn from mistakes
High expectations Outstanding performance

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Three Faces of Change
Type Target Rationale
Improve return on
Turnaround Costs shareholder
investment

Technology Internal processes Increase efficiency

Creating capacity for

Behavioral Employee actions implementing
and interactions strategy and
sustaining
performance

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Trigger Events for Change
Trigger Response
Globalization Increased complexity; managing
coordination
Labor markets Employee recruitment and
retention
Diversity Managing competing points of view

Financial market salience Managing needs of multiple

organizational stakeholders
Regulation/Deregulation Adaptation; tolerance for
uncertainty
M&A Managing the blend of cultures

Internet Managing complex coordination

efforts; building commitment
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Examples of Trigger Events
Company Altered Strategy Trigger Events

EG&G Government End of Cold War

Shifts in U.S. Defense
contractor ⇒
Policies
Commercial vendor
Enron Energy production ⇒ New leader (Jeff Skilling)
Desire for new business
Energy trading
model

GE Commodity product Recession in 1990s

New leader (Jack Welch)
⇒ Value-added
products and
services
Grand Union Low-cost ⇒ High- Declining performance
New competitors (Wal-
end grocery store
Mart)

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Examples of Trigger Events
Company Altered Strategy Trigger Events

IBM Products ⇒ Declining performance

New competitors
Service/consulting
New leader

Marks and Traditional, New competitor (Zara)

Fragmenting of retail
conservative adults
Spencer ⇒ Young, trendy business model

shoppers
Renault French-based ⇒ Stagnant market
New leader (Carlos
Internationally
Ghosn)
focused
Walgreens Store-based chain ⇒ New technology
(Internet)
Chain and Internet
sales
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The following are optional slides to
consider including in Chapter 1

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Learning Objectives
 Identify the role of strategic renewal in
propelling change.
 Focus on the behavioral aspect of
organizational change.
 Analyze the dynamics of motivating
employees to alter their behaviors.
 Define non-behavioral approaches to
change.
 Understand the role of external events in
triggering strategic renewal and
organizational change.

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Key Terms
 Strategic renewal: change in an
organization’s strategy through a
process of creating new products,
services, capabilities, and knowledge
bases.

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Key Terms
 Incremental strategic renewal:
gradual shifts in strategic focus.

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Key Terms
 Transformational strategic
renewal: fundamental shifts in
strategic focus intended to redefine
market dynamics, change relationship
with customers, and/or their core
business model.

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Key Terms
 Behavioral change: the process of
motivating employees to alter their
patterns of behavior in order to enable
the organization to achieve and sustain
outstanding performance in a dynamic
competitive environment.

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Key Terms
 Change program: a change effort
adopted because it promises a simple
solution to certain problems.

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Key Terms
 Behavior: the enactment of roles,
responsibilities, and relationships by
employees within an organization.

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Key Terms
 Trigger event: a shift in the
environment that precipitates a need
for organizational change.

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Key Terms
 Evolutionary change: small,
incremental improvements in
organizational processes and
technologies.

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Key Terms
 Revolutionary change: long-term,
large-scale reorientation of most of the
aspects of the organization.

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Three Pillars Supporting
Strategic Renewal

Strategic Renewal

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