Types of Organizational Change

Organizational changes come in different shapes and sizes: mergers, acquisitions, buyouts, downsizing, restructuring, outsourcing the human resource function or computer services, departmental reorganizations, installations of new incentive systems, shutting particular manufacturing lines or opening new branches in other parts of the world, and the list goes on. All of these describe specific organizational changes. The literature on organizational change classifies such changes into two types, episodic or discontinuous change and continuous change. That is, change can be dramatic and sudden—the introduction of a new technology that makes a business obsolete or new government regulations that immediately shift the competitive landscape. Or, change can be much more gradual, such as the alteration of core competencies of an organization through training and adding key individuals.

Under dramatic or episodic change, organizations are seen as having significant inertia. Change is infrequent and discontinuous. Reengineering programs are examples of this type of change and can be viewed as planned examples of injecting significant change into an organization. On the other hand, under continuous change, organizations are seen as more emergent and self- organizing, where change is constant, evolving, and cumulative.

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Japanese automobile manufacturers have led the way in this area with kaizen programs focused on encouraging continuous change. In the technology sectors, collaborative approaches, facilitated by social networks that extend beyond corporate boundaries and even crowd sourcing, are giving rise to continuous change models for organizational adaptation, growth, and renewal.

A second dimension of change is whether it occurs in a proactive, planned, and programmatic fashion or reactively in response to external events. Programmatic or planned change occurs when managers anticipate events and shift their organizations as a result. For example, Intel, a multinational semiconductor chip maker headquartered in California, anticipates and encourages a cycle of computer chip obsolescence. As a result, the organization has been designed to handle this obsolescence. Alternately, shifts in an organization’s external world lead to a reaction on the part of the organization. For example, the emergence of low-cost airlines has led to traditional carriers employing reactive strategies, such as cutting routes, costs, and service levels in an attempt to adapt.

Nadler and Tushman combine these two dimensions in a useful model illustrating different types of change. They define four categories of change: tuning, adapting, redirecting or reorienting, and overhauling or re-creating.

Tuning is defined as small, relatively minor changes made on an ongoing basis in a deliberate attempt to improve the efficiency or effectiveness of the organization. Responsibility for acting on these sorts of changes typically rests with middle management. Most improvement change initiatives that grow out of existing quality-improvement programs would fall into this category. Adapting is viewed as relatively minor changes made in response to external stimuli—a reaction to things observed in the environment, such as competitors’ moves or customer shifts. Relatively minor changes to customer servicing caused by reports of customer dissatisfaction or defection to a competitor provide an example of this sort of change, and once again, responsibility for such changes tends to reside within the role of middle managers.

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