What doesn't kill you makes you stronger. In the past decades, hundreds of organizations, including government sectors, small companies, and large MNCs, have attempted to make change to themselves. Some succeeded, but many failed. In this presentation we discuss the nature and process of organizational change. We use text book models and explain them with real cases. The presentation end with the case that Starbucks return to its root, adapted from Robbins' "Organizational Behavior 15ed."

1. Organizational
Change
Waseda
Business
School
Global
MBA
2015
Organizational
Behavior
Seminar
Instructor:
Prof.
Norihiko
Takeuchi
Facilitator:
William
(
LIU,
Shih-­‐Wei
)

2. The
Adaptation
in
Nature
Source:
Taiwan
Mountain
Magazine,
issue
90

3. How
Many
Moths
Are
in
the
Picture?
Source:
Taiwan
Mountain
Magazine,
issue
90

4. “It
is
not
the
strongest
of
the
species
that
survives,
nor
the
most
intelligent,
but
the
one
most
responsive
to
change.
“
—Charles
Darwin,
The
Origin
of
Species,
1859

5. The
Nature
of
Change
Source:
CartoonStock

6. The
DeXinition
of
Organizational
Change
• Any
alterations
in
the
people,
structure,
or
technology
of
an
organization
– Ex:
Total
Quality
Management,
Reengineering,
Rightsizing,
Culture
Change,
Turnaround
• Any
change
in
an
organization
may
have
effects
extending
beyond
the
actual
area
where
the
change
takes
place.
– Ex:
When
Northrop
Grumman
installed
a
new
automated
production
system,
employees’
training,
compensation
system,
and
recruitment
criteria
are
also
changed
Stephan
Robbins,
Mary
Coulter,
Management
9th
ed.
Ricky
GrifXin,
Fundamentals
of
management
5th
ed.

7. Source:
Northrop
Grumman
webpage
<www.northropgrumman.com>
Automa'c
Produc'on
Employee
training
Compensa'on
system
Recrui'ng
criteria
Quality
control

8. Forces
For
Change
Nature
of
the
Workforce
• More
cultural
diversity
• Increased
immigration
and
outsourcing
Ex:
Expatriate
management
Technology
• Mobile
computers
and
handheld
devices
• Emergence
and
growth
of
social
networking
sites
Ex:
E-­‐commerce
Economic
Shocks
• Financial
crisis
• Global
recession
Ex:
Bankruptcy
of
GM
Competition
• Global
competitors
• Mergers
and
consolidations
Ex:
Merger
of
Daimler
and
Chrysler
Social
Trends
• Increased
environmental
awareness
• Liberalization
of
attitudes
toward
GLBT
Ex:
Rise
of
the
same-­‐
sex
marriage
World
Politics
• Rising
health
care
costs
• Opening
of
markets
in
China
Ex:
NIKE
outsource
production
to
China
Stephan
Robbins,
Mary
Coulter,
Organizational
Behavior
15th
ed.

9. Planned
Change
or
Reactive
Change
• Things
just
happen
• Planned
Change
– Activities
that
are
intentional
and
goal
oriented
• Goals
of
Planned
Change
– Improving
the
ability
of
the
organization
– Changing
the
behavior
of
groups
Jeff
Bezos,
CEO
of
Amazon
Source:
Newscom.

10. Resistance
to
Change
• The
force
resists
the
change
and
maintains
the
status
quo.
• Resistance
to
change
can
be
positive
if
it
leads
to
open
discussion
and
debate.
“You've
written
a
bold
and
innovative
proposal.
Unfortunately,
it
challenges
the
status
quo
and
that
can
jeopardize
my
job.”
Source:
CartoonStock

11. SHRM
Aging
Workforce
Survey
36%
20%
19%
13%
6%
5%
2%
Beginning
to
examine
internal
policies
and
management
prac'ces
to
address
this
change
Have
examined
our
workforce
and
determined
that
no
changes
in
our
policies
and
prac'ces
are
necessary
Just
becoming
aware
of
this
poten'al
change
Not
aware
of
this
poten'al
change
Have
implemented
specific
policies
and
management
prac'ces
Have
proposed
specific
policy
and
management
prac'ce
changes
Have
agreed
on
a
plan
to
change
policies
and
management
prac'ces
Source:
SHRM
Aging
Workforce
Survey:
State
of
Older
Workers
in
U.S.
Organizations

12. Types
of
Resistance
Explicit
Implicit
Voicing
complaints,
engaging
in
job
actions
Loss
of
employee
loyalty
and
motivation,
increased
errors
or
mistakes,
increased
absenteeism
“The
Xirst
order
of
business
is
the
problem
of
absenteeism.”
“We
like
status
quo.”
Source:
CartoonStock

13. Source
of
Resistance
to
Change
• Uncertainty
– Employees
worry
about
their
ability
to
meet
new
job
demand,
think
job
is
insecure,
and
dislike
ambiguity.
• Threatened
Self-­‐Interests
– A
change
might
diminish
some
managers’
power.
• Different
Perceptions
– Employee
resist
because
they
do
not
agree
with
top
managers’
perception
of
the
situation

14. Kraft’s
Takeover
of
Cadbury
Cadbury
Kraft
Entrepreneurial
company
with
great
autonomy
given
to
managers.
Did
not
keep
the
promise
of
keeping
plants
opened.
A
formal
and
hierarchical
food
Giant.
Source:
Daily
Mail,
UK

15. Overcome
the
Resistance
Education
and
Communication
Show
those
effected
the
logic
behind
the
change
Ex:
Caterpillar
educates
the
change
very
often
Participation
Participation
in
the
decision
process
lessens
resistance
Ex:
3M
encourages
employees
to
participate
change
events
Building
Support
and
Commitment
Counseling,
therapy,
or
new-­‐skills
training
Ex:
GM
provides
relocation
and
retraining
during
plant
closing
Develop
Positive
Relationships
People
are
more
willing
to
change
if
they
trust
the
managers
Ex:
Frequent
visiting
the
subordinate
Implementing
Change
Fairly
Be
consistent
and
procedurally
fair
Ex:
Meet
the
promises
Manipulation
and
Cooptation
“Spinning”
the
message
to
gain
cooperation
Ex:
GM
convinces
Union
by
promising
employee
beneXits
Selecting
people
who
accept
change
Hire
people
who
enjoy
change
in
the
Xirst
place
Ex:
GE
replaced
12
out
of
14
top
managers
during
restructuring
Coercion
Direct
threats
and
force
Ex:
Power
of
persuasion

16. The
Process
of
Change
Source:
ServiceMaster,
Newscom.

17. Lewin’s
Three-­‐Step
Model
• Unfreezing
the
status
quo
• Changing
to
a
new
state
• Refreezing
to
make
the
change
permanent
Stephan
Robbins,
Mary
Coulter,
Organizational
Behavior
15th
ed.
Stephan
Robbins,
Mary
Coulter,
Management
9th
ed.

18. John
P.
Kotter:
Why
Transformation
Efforts
Fail?
Not
establishing
a
great
enough
sense
of
urgency
Too
many
managers
but
no
leaders
Needs
75%
of
the
managers
be
convinced
Not
creating
a
powerful
enough
guideline
coalition
Underestimate
the
difXiculties
Oppositions
can
gather
and
stop
the
change
Lacking
a
vision
Without
a
vision,
a
transformation
effort
can
dissolved
into
confusion
and
misdirection
Under
communicating
the
vision
The
change
startle
if
no
people
understand
Not
removing
obstacles
to
the
new
vision
Organizational
structure:
Narrowed
job
design
Individual
interest:
Compensation
or
appraisal
Not
systematically
planning
for
of
creating
short-­‐term
wins
Time
make
people
loss
momentum
to
change
Shorten
wins:
12-­‐24
months
Declaring
victory
too
soon
Declare
the
war
won
too
early
is
catastrophic
Not
anchoring
changes
into
culture
Unless
rooted,
changes
are
easily
degradable
John
P.
Kotter,
Harvard
Business
Review,
Jan.
2007

19. Declaring
Victory
Too
Soon
Source:
Troy
(Movie),
International
Movie
Database

20. Jim
Kilts
Made
Change
to
Gillette
Revise
the
appraisal
system
Setup
appraisal
system
according
to
job
description.
The
evaluation
should
be
run
quarterly
or
annually.
Flatten
the
organizational
structure
Remove
hierarchy
to
facilitate
communication.
Communication
Chairman’s
page
and
video
presentation
distributed
to
all
employees.
Participative
management
Weekly
staff
meetings
and
overseas
visiting.
Refer
to
“Gillette
Company
(B):
Leadership
for
Change”
Jim
Kilts,
Former
CEO
of
Gillette

21. • First
day:
– Operating
committee
staff
meeting
– Communicate
his
style,
philosophy,
expectations,
and
management
process
– Promising
no
lay-­‐off
but
emphasize
performance
• First
week:
– Communicate
the
Circle
of
Doom
to
rise
the
sense
of
urgency
– Start
one-­‐on-­‐one
meeting
with
managers
• First
Month:
– Deliver
video
presentation
and
chairman's
page
– Setup
short-­‐term
agenda
and
quarterly
priorities
– Change
the
organizational
structure
Refer
to
“Gillette
Company
(B):
Leadership
for
Change”

22. Kotter’s
Eight-­‐Step
Plan
Establish
a
sense
of
urgency
Identify
crisis,
potential
crisis,
or
major
opportunities
Ex:
Jim
Kilts’
“Circle
of
Doom”
Form
a
powerful
coalition
Assemble
a
team
with
enough
power
to
lead
the
change
Ex:
Set
“international
operating
ofXice”
Create
a
new
vision
Create
a
vision
and
set
strategies
for
the
vision
Ex:
Jim
Kilts’
“My
Vision
and
My
style”
Communicate
the
vision
Using
very
vehicle
possible
Ex:
Speech,
meeting,
video,
and
webpages
Empower
others
to
act
on
the
vision
by
removing
obstacles
Remove
barriers
undermine
the
changing
efforts
Ex:
Removing
layers
and
hierarchies
Plan
for,
create,
and
reward
short-­‐term
“wins”
Visible
performance
improvements
and
reward
it
Ex:
Month-­‐>Quarter
-­‐>Annual
goal
Consolidate
improvements
and
make
adjustments
Reinvigorating
the
process
with
new
goal
Reinforce
the
change
Articulate
the
connection
between
new
ways
and
success
John
P.
Kotter,
Harvard
Business
Review,
Jan.
2007;
Gillette
Compnay
(B),
Harvard
Business
School
Case

23. Action
Research
• A
change
process
• Based
on
the
systematic
collection
of
data
• Selection
of
a
change
action
based
analysis
Diagnosis
Change
agent
collect
information,
concerns,
and
needed
changes
from
members
Analysis
Make
information
into
primary
concerns,
problems,
and
possible
actions
Feedback
Share
with
employees
what
has
been
found.
Facility
employees
to
develop
action
plans
Action
Employees
and
change
agents
carry
out
actions
Evaluation
Evaluate
the
effectiveness
referring
to
the
initial
data
Stephan
Robbins,
Mary
Coulter,
Organizational
Behavior
15th
ed.

24. Organizational
Development
• Techniques
and
programs
to
change
interpersonal
work
relationships
• A
planned
to
increase
organization’s
effectiveness
and
health
OD
Concerns
Values
Respect
for
people
Individuals
are
respected
and
treat
with
dignity
Trust
and
support
Need
a
trusting,
authentic,
open,
and
supportive
climate
Power
equalization
Eliminate
hierarchies
and
control
Confrontation
Problems
should
be
openly
confronted
Participation
To
make
people
commit
to
change
Stephan
Robbins,
Mary
Coulter,
Organizational
Behavior
15th
ed.

25. Organizational
Development
Techniques
Sensitivity
Training
Members
discuss
themselves
and
their
interactive
processes
in
a
free
and
open
environment,
facilitated
by
a
behavioral
scientist.
Ex:
Benedictine
University’s
OD
team
help
Abbott
realign
culture
with
mission
and
value
Survey
Feedback
Identifying
discrepancies
among
member
perceptions
via
surveys
Ex:
KJ
Associate
help
a
school
identify
issues
in
education
Process
Consultation
(PC)
Process
consultants
observe
group
member's
interaction
and
provide
suggestions
Ex:
Avid
Work
help
client
accelerate
product
development
cycle
Team
Building
Using
high-­‐interaction
group
activities
to
increase
trust
and
openness
among
members
Ex:
Partnering
Resources
help
to
facilitate
executive
team
develop
new
approaches
Intergroup
Development
Increase
cross-­‐function
or
cross-­‐group
interaction
and
understanding
Ex:
Communication
between
IT
and
other
departments
Appreciative
Inquiry
(AI)
Emphasis
group’s
success,
via
discovery,
dreaming,
design,
and
destiny
Ex:
WorldsView
used
AI
to
create
shared
value
Organization
Development
Network
<http://www.odnetwork.org>

26. Change
and
Innovation
Source:
Evan
Williams
(leO),
founder
of
TwiSer,
New
York
Time.

27. DeXinition
of
Innovation
• A
new
idea
applied
to
initiating
or
improving
a
product,
process,
or
service
Invention
Innovation
The
introduction
of
new
product,
process,
or
service
Improves
or
makes
a
signiXicant
contribution
to
an
existing
product,
process
or
service
Ex:
Introduction
of
electrostatic
cloth
Ex:
P&G
used
electrostatic
cloth
to
make
Swiffer
mop
Source:
P&G

28. Stimulate
Innovation
• Structural
variables
– Organic
structures
– Long-­‐tenured
management
– Slack
resources
– Internal
communication
• Experimental
Culture
• Training
and
Development
Idea
Champions
Individuals
who
take
an
innovation
and
actively
promote
the
idea

29. Jack
Welch
Made
GE
a
Learning
Organization
Bureaucracy
and
Centralized
Self-­‐learning
and
Innovative
Leadership
Strong
commitment
and
team-­‐leading
capability
Followership
Achievement
driven
and
Agree
to
the
standards
Human
Resource
Systems
Strong
recruitments,
supportive
training
sessions,
effective
appraisal
system
Source:
GE:
Two
Decades
Transformation,
Harvard
Business
School
Case
Jack
Welch,
Former
CEO
of
GE

30. To
Build
a
Learning
Organization
Establish
a
Strategy
Make
explicit
its
commitment
to
change
Ex:
Hands-­‐on
appraisals
and
continuously
releasing
initiatives
Redesign
the
Organization’s
Structure
Flatten
the
structure
and
use
cross-­‐functional
systems
Ex:
Eliminating
layers
and
use
workshop
for
cross-­‐functional
coordination
Reshape
the
Organization’s
culture
Supportive
Taking
risks
and
admitting
failure
Unlock
the
real
openness
Ex:
Training
sessions,
reemphasize
the
openness,
and
frequently
aligning
people
with
the
learning
culture
Source:
Based
on
P.
M.
Senge,
The
Fifth
Discipline
(New
York:
Doubleday,
1990).

31. Starbucks:
Return
to
Its
Roots

32. Starbucks
Facing
Fast
Extension
During
2006
• Starbucks
went
from
just
11
stores
in
1987
to
2,600
in
the
year
2000
• Howard
Schultz:
“An
aura.
A
spirit
was
missing.
The
stores
were
lacking
a
certain
soul.”
“Take
the
culture
back.”
• Afterward:
Sales
declined
and
bout
100
store
openings
being
canceled
and
hundreds
more
stores
being
closed.
• A
bold
move:
All
7,000
Starbucks
stores
were
closed
for
a
single
afternoon
as
part
of
a
training
effort
of
135,000
baristas.
Howard
Schultz,
chairman
and
CEO
of
Starbucks

33. Thank
You
for
Listening!