Leadership and Change Management Chapter 4

Chapter 4
Types of organizational change

There are two basic forms of change in organizations.

Planned change is change resulting from a deliberate decision to alter the
organization. Companies that wish to move from a traditional hierarchical
structure to one that facilitates self-managed teams must use a proactive,
carefully orchestrated approach. Not all change is planned, however.
Unplanned change is imposed on the organization and is often unforeseen.
Changes in government regulations and changes in the economy, for example,
are often unplanned. Responsiveness to unplanned change requires tremendous
flexibility and adaptability on the part of the organizations. Managers must be
prepared to handle both planned and unplanned forms of change in
organizations.
Forces for Change
Forces for change can come from many sources. Some of these are external,
arising from outside the company, whereas others are internal, arising from
sources within the organization.
External Forces
The four major external forces for change are
Globalization,
Workforce diversity,
Technological change, and
Managing ethical behavior are challenges that precipitate change in
organizations.
Internal Forces
Pressures for change that originate inside the organization are generally
recognizable in the form of signals indicating that something needs to be
altered.

First-Order Change: Change that is continuous in nature and involves no

major shifts in the way an organization operates.
Second-Order Change: Radical change; major shifts involving many
different levels of the organization and many different aspects of business.
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Targets: What is changed?

Organizational structure
Technology
People
Forces behind Unplanned Change:
Shifting employee demographics
Performance gaps
Government regulation
Global competition
Changing economic conditions
Advances in technology

The planned approach to change is long established and held to be highly

effective, it has come under increasing criticism since the early 1980s.
1. It is suggested that the approach’s emphasis is on small-scale and
incremental change, and it is, therefore, not applicable to situations that
require rapid and transformational change.
2. The planned approach is based on the assumptions that organizations
operate under constant conditions, and that they can move in a pre-planned
manner from one stable state to another. These assumptions are, however,
questioned by several authors who argue that the current fast-changing
environment increasingly weakens this theory. Moreover, it is suggested that
organizational change is more an open-ended and continuous process than a
set of pre-identified set of discrete and self contained events. By attempting
to lay down timetables, objectives and methods in advance it is suggested
that the process of change becomes too dependent on senior managers, who
in many instances do not have a full understanding of the consequences of
their actions.
3. The approach of planned change ignores situations where more directive
approaches are required. This can be a situation of crisis, which requires
major and rapid change, and does not allow scope for widespread
consultation or involvement.
4. The critics argue that the planned approach to change presumes that all
stakeholders in a change project are willing and interested in implementing
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it, and that a common agreement can be reached. This presumption clearly
ignores organizational politics and conflict, and assumes these can be easily
identified and resolved

Planned vs. Unplanned Change

 Change can be planned or unplanned.
 Unplanned (reactive) Change just happens in the natural course of
events or imposed on un organization by external forces. Organizations
and individuals then react to these unplanned changes to minimize
disruption or to maintain or improve their situation.

 Planned(Proactive)Change)
 Planned change is the process of preparing and taking actions to move
from one condition to a more desired one.
 Planned change is the result of consciously preparing for and taking
actions to reach a desired goal or organizational state.
 The systematic attempt to redesign an organization in a way that will help
it adapt to changes in the external environment in a timely fashion or in an
orderly manner
 Planned change involves proactively making things different rather than
reacting to changes imposed from outside the organization.

Revolutionary Vs Evolutionary Change

Evolutionary (incremental) Change
 Taking small steps towards the changes.
 Small improvements are made in the existing work process.
 Incremental change (10%)
 It is less threatening and less stressful
 In evolutionary change, a leader still orchestrates the change.
However, the leader tends to empower people all through the organization to
take on the change
 The leader provides the resources, training and authority for people to
engage in the change and become leaders of the change in their own right

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Revolutionary (Quantum) Change

“Political power grows out of the barrel of a gun. In business, the political
power wielded in change is manifested most clearly in revolutionary change”.
Mao Tse-tung
 The organization breaks out its existing ways and moves towards a totally
different systems and structure.
 Dramatic change(10x)
 It is costly getting employees to learn completely different roles.
 In revolutionary change, one person orchestrates change, from the top.
 Revolutionary change tends to continue to be driven by one individual
surrounded by a small group
 The change process itself becomes reliant on the individual.

Business Process Reengineering

 The concept of Business Process Reengineering (BPR) was successfully
popularized by two consultants: Hammer and Champy(1993) and Daven
Port(1993)
 It is a revolutionary kind of change
 Challenging the status quo, “starting over”, and fresh start.
 It does not mean trying to repair or improve the existing system so that
they work better.
 Dramatic change, not incremental change(10x, not 10%)
 Reengineering is defined as the fundamental rethinking and radical
redesign of business process to achieve dramatic improvement in critical,
contemporary measures of performance, such as cost, quality, service, and
speed.( Hammer,1993)
 The definition contains four key words: Fundamental, radical, dramatic,
and process.
Fundamental,
 It ignores what is and concentrates on what should be.
 It starts with no assumption and given.
 It first determine what a company must do, then “how” issue comes later

Radical
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 Radical redesign means getting to the root of things.

 Not improving the existing system to make better.
 Not superficial change, or modification
 Throwing away the old, reinventing completely new ways of doing work.
Dramatic
 Reengineering is not about making marginal or incremental
improvement , but about achieving quantum leaps in performance.
 Not 10% but 10x dramatic improvement in quality, speed, and service
level.
Process
 It is only business process the object of reengineering.
 It is the process, not the organization, or parts of it( E.g. department) to be
redesigned in reengineering.
 Reengineering is not restructuring or downsizing(reengineering reduce
costs not people)

BUSINESS PROCESS REENGINEERING

Process reengineering is redesigning or reinventing how we perform our daily
work, and it is a concept that is applicable to all industries regardless of size,
type, and location.
While selected elements of process reengineering are well documented in the
late 1800s and early 1900s, process reengineering as a body of knowledge or as
an improvement initiative, takes the best of the historical management and
improvement principles and combines them with more recent philosophies and
principles, which make all people in an organization function as process owners
and reinvent processes. It is this combination of the old and the new as well as
the emphasis on dramatic, rapid reinvention that makes process reengineering
an exciting concept. The differences between continuous process improvement
and process reengineering are outlined in Figure 1.
The first question in process reengineering is: “Why are we doing this at all?”
Answering this question is the beginning of the immediate, dramatic change
and the application of supporting technical and behavioral concepts and tools
that are necessary to implement process reengineering. To accomplish this,
organizations must foster an environment that encourages quantum leaps in

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improvement by throwing out existing systems and processes and inventing

new ones.
The intent of process reengineering is to make organizations significantly more
flexible, responsive, efficient, and effective for their customers, employees and
other stakeholders. According to field experts Michael Hammer and James
Champy, process reengineering requires the “fundamental rethinking and
radical redesign of business processes to achieve dramatic improvements in
critical, contemporary measures of performance, such as cost, quality, service,
and speed.” If process reengineering is to work, a business’s priorities must
change in the following ways:
 from boss to customer focus;
 from controlled workers to empowered, involved process owners and
decision makers;
 from activity-based work to a results orientation;
 from scorekeeping to leading and teaching so that people measure their
own results;
 from functional (vertical) to process (horizontal or cross functional)
orientation;
 from serial to concurrent operations;
 from complex to simple, streamlined processes;
 from empire building and guarding the status quo to inventing new
systems and processes and looking toward the future (i.e., from the
caretaker mentality to visionary leadership).
As organizational priorities change, the culture will change as well. As people
understand the vision for a better culture with better capabilities and results,
they will be able-individually and as members of teams-to contribute positively
to make the organizational vision a reality.

REASONS FOR PROCESS REENGINEERING

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There are several reasons for organizations to reengineer their business

processes:
(1) to re-invent the way they do work to satisfy their customers;
(2) to be competitive;
(3) to cure systemic process and behavioral problems;
(4) to enhance their capability to expand to other industries;
(5) to accommodate an era of change;
(6) to satisfy their customers, employees, and other stakeholders who want
them to be dramatically different and/or to produce different results
(7) to survive and be successful in the long term; and
(8) to invent the “rules of the game.”
REQUIREMENTS FOR SUCCESSFUL PROCESS REENGINEERING
Many experts indicate that there are essential elements of process
reengineering, including:
• Initiation from the top by someone with a vision for the whole process
and relentless deployment of the vision throughout the organization.
• Leadership that drives rapid, dramatic process redesign.
• A new value system which includes a greater emphasis on satisfying
customers and other stakeholders.
• A fundamental re-thinking of the way people perform their daily work,
with an emphasis on improving results (quality, cycle time, cost, and
other baselines).
• An emphasis on the use of cross-functional work teams which may result
in structural redesign as well as process redesign.
• Enhanced information dissemination (including computerization after
process redesign) in order to enable process owners to make better
decisions.
• Training and involvement of individuals and teams as process owners
who have the knowledge and power to re-invent their processes.
• A focus on total redesign of processes with non-voluntary involvement of
all internal constituents (management and non-management employees).
• Rewards based on results; and a disciplined approach.
WHY PROCESS REENGINEERING FAILS?
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Those same experts state there are many reasons that process reengineering
fails, including:
• Not focusing on critical processes first.
• Trying to gradually “fix” a process instead of dramatically re-inventing it.
• Making process reengineering the priority and ignoring everything else
(e.g., strategy development and deployment, re-structuring based on new
strategies, etc.).
• Neglecting values and culture needed to support process reengineering
and allowing existing culture, attitudes, and behavior to hinder
reengineering efforts (e.g., short-term thinking, bias against conflict and
consensus decision making, etc.).
• “Settling” for small successes instead of requiring dramatic results.
• Stopping the process reengineering effort too early before results can be
achieved.
• Placing prior constraints on the definition of the problem and the scope
for the reengineering effort.
• Trying to implement reengineering from the bottom up instead of top
down.
• Assigning someone who doesn’t understand reengineering to lead the
effort.
• Skimping on reengineering resources.
• Dissipating energy across too many reengineering projects at once.
• Attempting to reengineer when the CEO is near retirement.
• Failing to distinguish reengineering from, or align it with, other
improvement initiatives (e.g., quality improvement, strategic alignment,
right-sizing, customer-supplier partnerships, innovation, empowerment,
etc.)
• Concentrating primarily on design and neglecting implementation.
• Pulling back when people resist making reengineering changes (not
understanding that resistance to change is normal).

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Strategic approaches that are process-focused and that are extensions of process
reengineering:
• Intensification-improving/re-inventing processes to better serve
customers.
• Extension-using strong processes to enter new markets.
• Augmentation-expanding processes to provide additional services to
existing customers.
• Conversion-using a process that you perform well and performing that
process as a service for other companies.
• Innovation-applying processes that you perform well to create and deliver
different goods and services.
• Diversification-creating new processes to deliver new goods or services.
Process reengineering is a valuable concept for organizations that are willing to
undergo dramatic change and radical process redesign. It can co-exist with
ongoing gradual process improvement efforts because not all processes can be
radically redesigned at once.
In process reengineering, as in all improvement initiatives, assessments should
be made in terms of cost/benefit analysis, and risk analysis. However, even the
assessments should be done with a sense of urgency since process
reengineering requires speed as well as radical redesign. Documentation of
results will serve as the baseline for future improvements.
The various improvement methodologies (i.e., continuous improvement and
process reengineering) should not be used as separate efforts but rather as two
approaches within a single improvement initiative. In fact, a single flowchart
can be used to make choices regarding both continuous process improvement
and process reengineering. Both gradual continuous improvement and process
reengineering should be an integral part of process management.

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