A social unit of people that is structured and managed to meet a need or to pursue collective goals. All organizations have a management structure that determines relationships between the different activities and the members, and subdivides and assigns roles, responsibilities, and authority to carry out different tasks. Organizations are open systems--they affect and are affected by their environment.
Transformation: In an organizational context, a process of profound and radical change that orients an organization in a new direction and takes it to an entirely different level of effectiveness. Unlike 'turnaround' (which implies incremental progress on the same plane) transformation implies a basic change of character and little or no resemblance with the past configuration or structure.
As business students, it is not difficult for us now, to understand what Organization Transformation (OT) stands for.
"Organization Transformation (OT) can be defined as drastic, abrupt change to total structures, managerial processes and corporate cultures. It requires a redesign of everything in the organisation, including the norms and the cultures, the very soul of organization. Nothing is sacred, and there are few, if any, guidelines. Organizational Transformation is more revolution than evolution. Since transformations aim at organization's survival in a competitive environment, the changes may or may not subscribe to the values of organization development and, in many instances, are not accomplished by participation processes. Organization Transformation includes changes as takeovers, mergers and plant closures, which often involve large scale downsizing, employee layoffs, and massive restructuring."
Thereby, we see that Organization Transformation is one of the many Organizational Development interventions aimed at strategic change focussed on developmental and directive change processes.
There are a few key concepts to understanding the organizational change process.
Change is situational: the new site, the new boss, the new team roles, the new policy, and the new structure, the new system. Change tends to be structural in approach.
Transition is the psychological process people go through to come to terms with the new situation. Transition involves the cultural elements of an organization.
Transformation is the process of managing change and guiding transitions to attain the desired outcomes of the organizational change process.
Approach to Change
Evidences support that Organizational Transformation is more Directive than Participative. It is usually initiated by the top management and coerced by the use of power. The senior management takes the call on when and how the transformation is to be brought about. It is considered as the better approach than being participative or collaborative so that the organization can immediately be restored to equilibrium in the ever dynamic environment. Moreover, to save on time and to be more authoritative, externally recruited executives are more likely to initiate the change.
Strategies of Change
There are several approaches to change of which Incremental Approach refers to long term planned change relying more on participative and collaborative exercises whereas the Transformation Approach refers to immediate and drastic change through directive methods.
The four process change strategies identified by Dunphy and Stace are based on the 3 core dimension of time frame of change, level of support of the organisational culture and the degree of continuity with the environment. They are listed as below:
Participative evolution: This incremental strategy is a collaborative one used when organisation anticipates change and makes minor adjustments to make the organization environment fit. Here time is available and the strategy is supported by the key interest groups.
Charismatic Change: It is a transformation strategy to bring about radical change in a short duration with support from organisation's culture.
Forced Evolution: It focuses on bringing long term change with minor adjustments but without organisation's support.
Dictatorial Transformation: It is used in times of crisis when authoritative direction is the only option for restructuring the entire organisation in a short span of time which is in the interest of the organisation's culture and vision.
The key point here is that the OD agent must select the strategy based on a strategic analysis if the situation rather than selecting based on personal bias. Effective transformation requires careful understanding of the people involved, their needs, and what it will take to get them to participate in the change process.
Three major themes emerge during the Transformational process:
1. An organization must awaken to a new reality and must disengage from the past, recognizing that the old way of doing things is no longer acceptable.
2. The organization then needs to create and embrace a new vision for the future, uniting behind the steps necessary to achieve that vision.
3. Finally, everyone must commit to the new attitudes, practices and policies in order for them to take hold and become the new organization and culture.
There are three basic participants in any change process:
1. Change strategists- The change strategists lay the foundation for change and craft the vision.
2. Change implementers- The change implementers develop and enact the steps necessary to enact the vision; they manage the coordination among the parts and the relationships among people that give the organization its internal shape and culture
3. Change recipients- The change recipients adopt or fail to adopt the change plan. Their response and reaction to the change can fundamentally reshape that change
Resistance to change: Resistance to change is not inevitable. Employees or change recipients' openness or receptiveness to change can determine whether or not it will be a success or failure. They react better when involved in the process. They are often overlooked in the process and transition never occurs. Transition is the process of getting the recipients to adopt and adapt to the change implemented within the organization. They can accept the change, assume a neutral position relative to the change or resist the planned change. By addressing their concerns during the planning and implementation of any organizational change, the change recipients can be positively affected and will be more likely to adopt the new change.
Key Elements in the Organization Transformation Process:
Vision: A clear and compelling vision is a key ingredient for successful transformation. Developing a vision requires defining a "perfect world" and clear principles to guide the transformation effort. It should constitute a shared image for a desired future state - not a strategic plan, but the inspiration that will motivate people to create such a plan and willingly make the special effort to achieve it.
Leadership: Transformation efforts require exceptional leadership abilities. Leaders must have both the capability to formulate a compelling vision and the skills to organize and manage the change processes. These skills may reside in more than one person. In addition to developing and communicating the vision, the leadership's responsibilities involve developing a coherent transformation plan, maintaining a focus on key transformation goals, and managing external changes to complement internal ones.
Alignment: A system's structures and processes must be aligned with the idealized vision in order for relevant persons, organizations, and systems to participate in the transformation process. Discouraged and disempowered employees never make enterprises winners in a globalizing economic environment. But with the right structure, training, systems, and supervisors to build on a well-communicated vision, increasing numbers of firms are finding that they can tap an enormous source of power to improve organisational processes.
Characteristics of Transformational Change
Change is triggered by environmental and internal disruption.
Transformational change occurs in response to atleast 3 kinds of disruptions:-
Change is systemic and revolutionary.
Transformational change involves reshaping the organization's culture and design element.
These changes can be characterized as systemic and revolutionary cause nature of the organization is altered fundamentally.
3. Change demands a new organizing paradigm.
Organizations undertaking transformational change are, by definition, involved in 2nd-order or gamma types of change.
Gamma change involves discontinuous shifts in mental or organizational frameworks.
4. Change is driven by senior executives and line management.
They are responsible for the strategic direction and operation of the organization and actively lead the transformation.
The critical role of executives' leadership in transformational change is clearly emerging.
There are 3 key roles of executive leadership of such change:-
5. Continuous learning and change.
Transformational change requires considerable innovation and learning.
Organizational members must learn how to enact the new behaviors required to implement new strategy direction.
Why Plan For Organizational Transformation?
For many if not all enterprises, moving to a total quality management approach requires a fundamental change in how the organization is managed. This is akin to what has been labelled as a paradigm shift. A paradigm is a set of rules and regulations (written or unwritten) that does two things:
1. It establishes or defines boundaries; and
2. It tells you how to behave inside the boundaries in order to be successful.
What this means is that a paradigm shift is a shift to a new game, a new playing field. The concepts, tools, and methods of total quality management are a new set of running rules for an organization which must cause it to re-think all of its policies, practices, procedures, and strategies.
Organizational Transformation includes 3 basic types of intervention.
Organization culture
Self designing
Organization Learning and Knowledge
Culture Change
Culture change is the most common form of organization transformation. The number of culture change interventions has grown accordingly.
Org. culture is also the focus of growing research and protecting the implied rights.
Steps in Organizational Culture Change
There are three major steps involved in changing an organization's culture.
Before an organization can change its culture, it must first understand the current
culture, or the way things are now.
Once the current organizational cultureis understood, the organization must then decide where it wants to go, define its strategic direction, and decide what the organizational culture should look like to support success. What vision does the organization have for its future and how must the culture change to support the accomplishment of that vision.
Finally, the individuals in the organization must decide to change their behaviour to create the desired organizational culture. This is the hardest step in culture change.
Self-Designing organizations
A growing number of researchers and practitioners have called for self-designing organizations that have built-in capacity to transform themselves to achieve high performance in today's competitive and changing environment.
Demand of transformational change
There are 5 requirements for organizational transformation:-
Systematic change
Dynamic and iterative
Organizational learning
Multiple stakeholders
Multiple level of the organization
Application Stages
Organization learning and knowledge management
The 3rd organizational transformation intervention is aimed at helping organizations develop and use knowledge to change and improve themselves continually.
It includes 2 interrelated change processes:-
Organization learning is Organization-wide continuous process that enhances its collective ability to accept, make sense of, and respond to internal and external change. Organizational learning and is more than the sum of the information held by employees. It requires systematic integration and collective interpretation of new knowledge that leads to collective action and involves risk taking as experimentation.
Knowledge Management- Strategies and processes designed identify, capture, structure, value, leverage, and share an organization's intellectual assets to enhance its performance and competitiveness. It is based on two critical activities: (1) capture and documentation of individual explicit and tacit knowledge, and (2) its dissemination within the organization.
Seven Strategies for Organizational Transformation
1. "Shape a context of values, ethics and integrity.
A context of values, ethics, and integrity that is explicit, shared, and embodied in real behaviours that reverberate throughout the organization.
2. Form living, evolving webs of association.
Self-managing organizations are flexible and renewable. They constantly shift and evolve into shapes and structures that are highly responsive to environmental conditions.
3. Develop ubiquitous, linking leadership.
The ability of leaders to link individuals, teams, and webs of association, stimulate energy and commitment, solve problems, build supportive alliances, and learn from experience.
Build innovative self-managing teams.
Teams are responsible for defining and achieving goals, solving problems, and seizing opportunities.
5. Implement streamlined, open collaborative processes.
Communications, meetings, negotiations, and decision-making are redesigned to encourage diversity, collaboration, self-management, and democracy.
6. Create complex, self-correcting systems.
Systems for self-correction and self-improvement encourage employees and organizations to learn and continue increasing their capacities.
7. Integrate strategically, and change the way we change.
Changing the way we change means turning every employee into a self-conscious change agent, an organizational revolutionary.
Process of Organizational Transformation
Setting the Stage for Planning
This includes an examination of their own behaviours relative to the proposed transformation. In addition, leadership must have a clear vision of the desired end state, provide the strategic direction for the change, empower those who are stakeholders in the change, develop a plan which integrates needed changes with other aspects of organizational functioning, and value both learning (i.e., planning) and doing at the same time. Any change requires a systems thinking perspective. The organization will need to pay attention to the totality of the environment within which it operates and the influence of the parts of the organization in relationship to the whole. Also important here are issues of leverage and the ability of the organization to successfully resolve conflict at all levels. Whether an organization just embarking on a total quality journey or is re-thinking its quality effort, it needs to conduct an assessment of itself and provide training and education on total quality management to senior management and others who will participate in the planning sessions.
Conducting the Planning Sessions
There are several logistical issues surrounding the planning sessions. These issues include who needs to attend, who will lead the effort, who will facilitate the effort, and where these sessions will occur. Ideally the entire senior management team participates in planning sessions. If the team is large in number (i.e., greater than 12 members) the team will want to form a subgroup to attend to the planning effort. In any case, the most senior person is responsible for leading this activity and as such, communicating the purpose and the agenda for the planning sessions in advance. If the organization has a director/coordinator for its quality effort, this individual will also need to be involved in these planning sessions. However, the sessions will need to be facilitated by someone who has knowledge and experience in total quality management, large scale organizational change, and small group facilitation. For most organizations this will require an outside expert. The planning sessions must be held on-site to model for the workforce that quality is not "add-on" or "special" work and that even for senior executives it is an integral part of how they spend their time.
Ongoing Management of the Plan
Senior management is ultimately responsible and accountable for the implementation of the output of the planning sessions. This output is often in the form of a short document (less than 25 pages) that outlines the results of each of the planning topics based on the consensus of the senior management team using employee input and feedback. During these orientation sessions, it needs to be communicated that the document may change over time based on the Plan-Do-Check-Act Cycle and where employees are to provide ongoing feedback and input to this process. Once a month senior management will want to review the tree diagram(s), integrated flowchart(s), and Gantt chart(s) to note progress, concerns, issues, and changes to the implementation steps based on data and new knowledge. In order to demonstrate commitment to involvement, those who are intimately involved with the implementation of these plans need to be actively involved in this review process. Senior management also has to insure that progress and changes to implementation steps are communicated in a timely fashion to all employees. Over time this review, as mentioned before, will need to be integrated with the ongoing review of the organization's long and short term strategic planning efforts. Planning for organizational transformation is critical to integrating quality into daily work and an organization's short and long term strategies. It forces senior management to step back and assess where the organization is today and where it needs to be in the future relative to the use of quality concepts, tools, and methods. It insures commonality in thinking and approach by providing a framework which outlines the boundaries of acceptable behaviours and practices. And over time it causes the organization to re-examine all of its policies, procedures, systems, and strategies in light of its approach to total quality management thus reinforcing time and time again what is important to the organization's future success.
Evaluation
Competitive realities in today's business world are forcing the need for large-scale transformations of organizations, even in successful companies. While in some cases transformation initiatives can lead to dramatic business improvements, in other cases the transformation may stall or even backfire. The board of directors can play an important role in smoothing the transformation process by understanding some of the common pitfalls an organization may encounter, and by ensuring that executive teams are adopting a focused, systematic approach to change initiatives. Directors can also play a major role in managing shareholder expectations during the transformation to give this reasoned approach a chance to take effect without damaging shareholder confidence.
Contrasting Change
Even successful companies can benefit from organizational transformation. To check the progress of transformation it is important for all companies to contrast their previous performance to the current and expected performance standards. It is during the penultimate and this stage only that the pitfalls of transformation can be identified, analysed and corrected.
Transformational Pitfalls
There are four common pitfalls that can stall or derail even the best corporate initiatives or transformations.
Pitfall 1: One-Size-Fits-All
The first is expecting staff changes to produce quick results with a "one-size-fits-all" solution. While sometimes the existing leader is no longer a match for the job, it is not always safe to assume that an individual who is a star in one organization can simply impose his or her solutions on another organization. A warning sign: If transformational progress is stalled or regresses even after new leaders are brought in, the organization may be experiencing this pitfall.
Pitfall 2: Covert Resistance
While replacing leaders of an organization will guarantee change, it may not guarantee progress, as the problems may go well beyond any one person or group. The new leader frequently faces covert resistance, the second pitfall. Many times, transformation initiatives will be mandated from the top down without the proper support or planning. The CEO and/or executives will insist on the change, and the organization will respond back with lip service agreement, but in reality, everything keeps on happening the way it did before the initiative was put into place.
Pitfall 3: Lack of Preparation
While forcing major changes creates one set of problems, premature introduction of major changes leads to the third common transformational pitfall: lack of preparation. Executives can get everyone charged up for a key initiative, and get all the employees enrolled and excited, but lo and behold, for a variety of reasons the organization isn't able to absorb the magnitude of the change, and the initiative crashes and burns-until the next major initiative is introduced. Not only does this lead to a "flavour of the month" cynicism, but the unfortunate lingering effect is reluctance in the organization to innovate and try new approaches. The truth is that the same initiative would have had a greater chance of success if it had been introduced in an incremental manner.
Pitfall 4: Incorrect Information
The last pitfall, but certainly not the least, is taking or failing to take action based on incorrect information or assumptions. In a widely publicized case, in February 1999, Sears, Roebuck and Co. paid a $60 million fine against a charge of bankruptcy fraud perpetrated by one of its subsidiaries. The problem, which went undetected by Sears' executives for over a decade, was apparently driven in large part by pressure to meet aggressive business goals imposed during a transformation effort, along with a reluctance of front-line workers and middle management to send bad news to the top. The fatal assumption made by Sears' executives was the belief that there was free-flowing communication within their organization.
Understanding Essential
Towards the end of this paper, it can be understood that understanding both formal and informal elements of the existing corporate culture is an essential element of organizational transformation. Without taking culture into account, a transformation can easily succumb to pitfalls that can cause it to fail. If the board and management understand their formal and informal business culture, their transformation initiative has a greater chance for realization. The board's involvement can help keep the process on track and give it time to succeed.
Moving from the "world of today" to the "world of tomorrow" which is built upon these concepts is no easy task. It requires evolutionary change that is thoughtfully planned, implemented, studied, and improved upon over a long period of time. Most often than not organizations like people wait for crisis to come and then they act, but with transformation they can bring about radical changes through continuously focusing on their processes and quality. When top management initiates a total quality effort it needs to be concerned about modelling behaviours that it will want employees to exemplify in the future.
