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A Concept for Diagnosing and Developing Organizational Change Capabilities
A Concept for Diagnosing and Developing Organizational Change Capabilities Christina Schweiger, Barbara Kump and Lorena Hoormann
Abstract
In modern industries, organizations are facing the need to continuously change and adapt to dynamic environmental conditions. To address this change, organizations require several specific capabilities, which will be referred to as organizational change capabili- ties. As the paper will outline, organizational change capabilities are a type of dynamic capability grounded in an organization’s change logic. The model of organizational change capabilities presented in this paper distinguishes search, ref lection, seizing, plan- ning, implementation, and strategy making capabilities. Based on this model, (a) concepts for diagnosing and improving change capabili- ties, and (b) an innovative intervention design for organizational development are devel- oped, which are generic and can be tailored to the needs of a specific firm. The theoretical analysis sketched in this paper may further stimulate theory development at the interface of dynamic capabilities and dominant logic. At the same time, the innovative intervention design is expected to be of high practical value for managers and practitioners in the field of organizational development.
Key Words
Change capabilities, dynamic capabilities, organizational change logic, organizational development, organizational diagnosis
Introduction
Due to increasing turbulence in the markets and intense competition, organizations need to continuously change and adapt to their envi- ronments to survive. Dynamically changing operating environments require a proactive approach, where change occurs in a strategic way in anticipation of prospective alterations (Judge & Douglas, 2009; Worley & Lawler, 2006). Proactive organizational change requires the identification and development of strategic options and the implementation of the planned strategic changes. To achieve these changes, organizations need certain capabilities, which have been referred to as organizational change capabilities (Soparnot, 2011).
A lack of change capabilities may lead to struc- tural inertia; that is, the inability to address
Christina Schweiger is Senior Researcher and Lecturer in the Entrepreneurship Competence Team at Vienna University of Applied Sciences of WKW (Austria). She has worked in international applied R&D projects for many years. Currently she works as a team leader in research and consultant projects in the field of the development of small and medium sized enterprises, strategic management, organizational develop- ment and change management. She holds a doctoral degree in Business Management and Business Education from the Uni- versity of Graz. E-mail:
Barbara Kump is Endowed Professor of Organizational Development and Organizational Learning at the department of Human Resources and Organization at Vienna University of Applied Sciences of WKW (Austria). She holds both a diploma (MA) and a doctoral degree in cognitive psychology from the University of Graz. She has worked as a team leader in vari-
ous international and interdisciplinary R&D and consulting projects in the field of change, organizational learning and knowledge management. She has co-authored more than 30 peer reviewed scientific articles. Her current research inter- ests include organizational knowledge creation, leadership and organizational development.
Lorena Hoormann is Research Associate and Lecturer in the Entrepreneurship Competence Team at Vienna University of Applied Sciences of WKW (Austria). During her studies she worked in different projects in Germany, Spain, Chile and Aus- tria. She has been working for more than four years as a Junior Consultant at the Viennese Institute for Systemic Organiza- tional research (I.S.O.). Her current research interests include organizational development, applied research in evaluation and participation as well as systemic organizational research and interventions.
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changing conditions. Negative development paths and corporate crises are possible conse- quences (Hannan & Freeman, 1984; Trispas & Gavetti, 2000; Vergne & Durand, 2011). Organizational change capabilities can inter- cept structural inertia and path dependencies, thereby sustaining competitive advantage over time, and increase the likelihood of long-term survival. Change capabilities may thus safe- guard organizations from being “stuck in the middle” – from being without targeted strate- gic positioning in relevant markets (Borch & Madsen, 2007). The aim of this article is to introduce concepts and methods that support the improvement of organizational change capabilities. More concretely, the developed methods will enable (a) organizational diagno- sis and (b) the initiation of capability develop- ment.
The concept of organizational change capa- bilities, which will be outlined in this paper, builds on the dynamic capabilities framework (Eisenhardt & Martin, 2000; Helfat, 1997; Teece, Pisano, & Shuen, 1997), but has a stron- ger focus on the implementation of strategic change. Moreover, it integrates the concept of organizational change capabilities with that of organizational dominant logic (Bettis & Pra- halad, 1995; Prahalad & Bettis, 1986) by intro- ducing the concept of organizational change logic. As an initial theoretical contribution, a model of change capabilities will be developed. The model builds on the concept of dynamic capabilities but takes into account the actual implementation of strategic changes. More- over, the link between organizational change capabilities and an organization’s change logic will be elaborated. As a second contribution, implications and requirements for diagnos- ing change capabilities and the organization’s change logic will be derived, and an interven- tion design for developing change capabilities will be developed. The design is standardized but can still be adapted to the demands of a specific firm.
This paper is organized as follows. First, the theoretical concept of change capabilities
will be outlined by extending the concept of dynamic capabilities and linking this with the concept of organizational dominant logic. Then, a multi-method approach to diagnosing change capabilities and organizational change logic and an intervention design for develop- ing change capabilities within organizations will be described. Finally, implications for future research and practice will be discussed.
Change Capabilities and Change Logic
This section provides the theoretical rationale for developing and diagnosing organizational change capabilities. Because change capabili- ties can be seen as specific types of dynamic capabilities (Eisenhardt & Martin, 2000; Helfat, 1997; Teece et al., 1997), the section starts with a brief review of dynamic capabil- ity research, before the concepts of organiza- tional change capabilities and organizational change logic are introduced.
Dynamic Capabilities
The concept of dynamic capabilities emerged from contributions by Teece et al. (1997), Helfat (1997), and Eisenhardt and Martin (2000). It is grounded in the resource-based view of the firm, which assumes that competi- tive advantage is generated by a firm’s indi- vidual combination of internal resources such as knowledge, rules, routines and capabilities and by its capability to reconfigure existing resources into specific resource configura- tions (e.g. Barney, 1991; Grant, 1991; Nelson & Winter, 1982). These resource configurations enable firms to generate new valuable market strategies and innovations that are difficult to copy. Dynamic capabilities are usually defined as those capabilities that enable an organi- zation to recognize the need for changes, to understand the likely consequences of the change, and to reconfigure its firm-specific resource base to match the requirements of changing environments.
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Since its introduction, the dynamic capabili- ties framework has been the subject of numer- ous theoretical debates (for overviews see, e.g. Ambrosini, Bowman, & Collier, 2009; Bar- reto, 2010; Di Stefano, Peteraf, & Verona, 2014; Vogel & Güttel, 2013). Dynamic capabilities are deemed responsible for seizing the oppor- tunities that a dynamic operating environment opens up and for presenting the innovations required to continuously maintain competitive advantage. Such capabilities include the bal- ance of the present and future activities of the firm; for example, the management of the cre- ation of product and process innovations, the operational management of the present busi- ness, and the improvement and advancement of present routines and competencies (Borch & Madsen, 2007; Wang & Ahmed, 2007; Winter, 2003; Zahra, Sapienza, & Davidsson 2006). Thereby, dynamic capabilities prepare the firm for prospective challenges.
Teece (2007, see also Teece, 2014) presents a model of dynamic capabilities that dis- tinguishes sensing, seizing, and transform- ing capabilities. Sensing refers to various activities related to identifying new business opportunities, or innovations (e.g. searching, scanning). Seizing includes designing vari- ous new business opportunities and selecting among various strategies and business models, and it is closely related to investment decisions that primarily take place under uncertainty (e.g. changing markets). Transforming refers to conducting activities that aim to recombine and to reconfigure assets within an organiza- tion such that path dependencies and inertia are avoided (Vergne & Durand, 2011). Teece (2014) highlights the importance of strategic decision-making with regard to sustainable change. In line with previous approaches (e.g. Eisenhardt & Sull, 2001; Mintzberg, 1994), Teece emphasizes that strategy should build the basis for investment decisions and should be aligned with changing environmental con- ditions.
Research into dynamic capabilities provides insights into how firms can strive to gain or
to sustain a competitive advantage by strate- gically altering their resource base. However, this stream of research is largely disconnected from the question of how well firms can actu- ally implement strategic change (Soparnot, 2011). Therefore, the concept of change capa- bilities has been introduced.
Change Capabilities
Soparnot (2011: 642) defines a firm’s change capability as
‘the ability of the company to produce match- ing outcomes (content) for environmental (external context) and/or organizational (inter- nal context) evolution, either by reacting to the changes (adaptation) or by instituting them (pro-action) and implementing the transition brought about by these changes (process) in the heart of the company’.
This definition, however, remains vague with regard to the concrete capabilities firms need for successful strategic change. To actually diagnose and improve change capabilities, the concept must be further refined.
Teece’s (2007, 2014) distinction of dynamic capabilities into sensing, seizing, and trans- forming provides a useful starting point for further refining the concept of change capa- bilities, and Teece’s components can partly be transferred to change capabilities: First, orga- nizations need to sense ideas for change, from both outside and within the firm. Teece’s cat- egory of sensing is primarily oriented towards the organization’s environment, for exam- ple, towards identifying changing customer needs or new competitors. However, ideas for changes may also arise from within the orga- nization, for example, because the current pro- cesses do not lead to the expected outcomes. Second, ideas for change both from outside and within the organization must be seized, that is, formed into concrete opportunities for change that fit the firm’s strengths and weak- nesses and are in line with the firm’s strategy.
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As described above, Teece (2014) highlights that dynamic capabilities can unfold their full potential only in conjunction with a strong organizational strategy. This also holds true for organizational change, which should take place in a strategic, planned manner. There- fore, decisions for implementing a change opportunity should be in line with an organi- zation’s strategy. Third, transformation must occur in the sense that the decided changes must be implemented. This aspect of imple- mentation goes beyond Teece’s concept of transformation: As Soparnot (2011: 645) puts it, even if the concept of dynamic capability ‘identifies the routines at the origin of the stra- tegic and organizational reconfigurations, it does not explain how these renewals may be carried out; this is what the change capacity is trying to identify’.
By combining Soparnot’s (2011) concept with Teece’s (2007, 2014) components, the defini- tion of change capabilities can be refined by regarding them as
those capabilities that enable an organization to recognize the need for change, both from inside the organization and its environment, develop and seize ideas for change opportuni- ties which fit the firm’s strengths and weak- nesses, make decisions for change, taking into account the firm’s strategy, and successfully plan and implement changes.
From this definition, the following change capabilities can be derived: search, ref lection, seizing, planning, implementation and strat- egy making (see Figure 1; a similar model is presented by Güttel, 2006, in the context of strategic entrepreneurship).
Search refers to a firm’s ability to effectively recognize, sense and explore the external envi- ronment for prospective innovative products, services and processes (e.g. Danneels, 2008). That is, they are all routines that support orga- nizations in observing their environment to find new relevant external information about, for example, the market, customer needs,
competition and new technologies. Reflection focuses on processes and developments within the organization. It constitutes the firm’s abil- ity to continuously challenge internal organi- zational routines, behaviour and the general “status quo” (strategy, goals, vision, etc.; e.g. West, 2000). Ref lection is related to the ques- tions of what is working well within the orga- nization, what is not working and what has to be changed.
Seizing, in the sense of Teece (2007, 2014), refers to all organizational processes that enable organizations to assimilate relevant information and to transform it into suitable change opportunities. With regard to orga- nizational change, this means that ideas for change, which the organization has devel- oped based on (external) search and (internal) ref lection processes, are adapted to a firm’s current characteristics.
Concerning the implementation of the change, planning and implementation can be distin- guished. Planning becomes visible in the abil- ity to bring change visions “down to earth” by operationalizing strategic change goals (e.g. Kapsali, 2011; McElroy, 1996; Noble, 1999). This includes the planning of change and innovation projects and the identification of existing resources, potentials and barriers. Implementation refers to the firm’s ability to bring intended change activities into action and to transform change ideas consistently into new products, structures and systems (e.g. Davis, Kee, & Newcomer, 2010; Meyer & Stensaker, 2006; Vacar, 2013). Only through consequential action can change take place.
Finally, the capability of strategy making is required for successful strategic change, which is closely related to all other capabili- ties. Strategy making is seen as the firm’s abil- ity to define long-term change goals, to take into account the existing means and resources, and to orient entrepreneurial decisions towards these goals. Strategy making includes pro- cesses for defining the vision, mission, value
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statements and strategies for competition (e.g. Ackermann & Eden, 2011).
Organizational Change Logic
An organization’s change capabilities do not operate in a vacuum; they are deeply embed- ded in the organization’s basic assumptions, beliefs and emergent decision rules regarding change and learning. One framework, which elaborates on the emergence and effects of organizational beliefs and rules within orga- nizations, is the concept of a dominant logic introduced by Prahalad and Bettis (1986) (see also Bettis & Prahalad, 1995). The dominant logic constitutes the firm’s collective mind set or “view of the world”, which configures and arranges the business model, the management, and the firm’s structure to make decisions, to allocate resources, and to realize goals (Bettis & Wong, 2003; Drazin, Glynn, & Kazanjian, 2004; Eggers & Kaplan, 2013; Kor & Mesko, 2013).
Expressed as the firm’s typical learning and problem solving behaviour, the dominant logic is “an emergent property of organizations as complex adaptive systems” (Bettis & Pra- halad, 1995: 10) and part of the organization’s deep structure or subconscious (Bettis & Pra- halad, 1995; Bettis & Wong, 2003; Gersick, 1991; Tushman & Romanelli, 1985), which underlies a firm’s visible strategy, structure and systems (Drazin et al., 2004; Eggers & Kaplan, 2013; Kor & Mesko, 2013; von Krogh & Roos, 1996). The organization’s dominant logic comprises, among others, values (e.g. trust, reliability), beliefs (e.g. “leaders must be strong”), mental models (e.g. what does “conf lict” mean) or norms (e.g. dress code, addressing extra hours).
An organization’s dominant logic affects all aspects of organizing, including how the organization addresses change. This facet of the dominant logic, which addresses orga- nizational change, is defined here as organi- zational change logic. More specifically, an
Figure 1: Organizational Change Capabilities (search, reflection, seizing, planning, implementation, strategy
making) that Operate on the Organizational Change Logic
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organization’s change logic is seen as that part of the dominant logic that conceptualizes its change and learning processes through basic assumptions, beliefs and emergent decision rules, structures and systems. Therefore, the organizational change logic is the organiza- tion’s collective mind set, which shapes and steers all types of change and learning pro- cesses within an organization. Because each organization has its unique dominant logic, it also has a specific way of addressing change; that is, a particular, idiosyncratic, organiza- tional change logic.
In more practical terms, the organizational change logic is the organization’s typical way of addressing change (e.g. avoiding risk, involv- ing many people in decisions). The organiza- tion’s change logic may affect questions such as “How important is change in general for the organization?”, “Who usually makes sugges- tions for change?”, “Who decides whether an idea is actually being implemented?”, or “To what extent are changes being planned?”
As a set of invisible, cognitive rules, assump- tions and beliefs, the organizational (change) logic is responsible for prospective changes and for maintaining present routines and behaviour (Bartunek & Moch, 1994). The organizational change logic therefore can be seen as the framework on which change capa- bilities may bring out the intended change and innovations. Although it was not in the focus of their work, Kor and Mesko (2013) described a similar link between dynamic capabilities and the organizational logic. In line with these considerations, the presented model suggests that the development of change capabilities is shaped by the firm’s change logic, and in turn, the development of change capabilities may shape the organizational change logic (Bettis & Wong, 2003; Kor & Mesko, 2013).
Diagnosing Change Capabilities and Change Logic
The aim underlying this article was to develop concepts for organizations to improve their change capabilities, taking into account their change logic. Therefore, concepts were developed for diagnosing both change capa- bilities and the change logic. Due to the dif- ferent nature of the two, different methods are needed to diagnose them, which will be out- lined in the following.
An Outcome-oriented Approach to Diagnosing Change Capabilities
Organizational change capabilities mani- fest themselves in practice when firms are addressing change. They are basically observ- able and measurable. They may appear in various shapes in different organizations but they have similar outcomes regardless of how these outcomes are achieved. This property of achieving similar outcomes with different means has been referred to as equifinality by Eisenhardt and Martin (2000).
To account for this property of equifinality, the extent of change capabilities may be best measured by focusing on outcomes. Therefore, a definition of outcomes was developed that may indicate a high level of the competence under consideration (e.g. “How well are you aware of what our competitors are doing?”). This output orientation allows for measuring change capabilities regardless of how they are enacted in the firm under consideration. The definition of outcomes for each of the com- ponents of change capabilities can be seen in Table 1: Firms with high search capability are aware of what happens in their environment and are able to identify ideas for change. If the reflection capability is high, firms are aware of what happens inside their organization and are able to identify ideas for change from within. Firms with high seizing capability are able to recognize ideas that bear market oppor- tunities and to derive ideas for innovation and
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change that fit the organization’s strengths and weaknesses. A firm with good planning capa- bility is able to realistically plan changes. If the implementation capability within a firm is well developed, the firm is able to allocate the required resources, to define appropriate pro- cesses and to acquire the required know-how once the change has been initiated. Organiza- tions with high capability of strategy making in the context of organizational change have long-term goals and strategies with which to achieve these goals, and they are able to align their change-related decisions with these long- term goals.
Starting from this output-oriented operation- alization, change capabilities may be diag- nosed with the help of (quantitative) surveys or semi-structured (qualitative) interviews. A quantitative survey-based diagnosis may be useful to gain an overview of different (aggre- gated) perspectives on each of these change capabilities. A survey-based quantitative operationalization may enable the collection of data in more breadth (e.g. many employees in different positions).
In addition, qualitative interviews may take place individually or in group settings, and they may focus on the question of how each of these capabilities is enacted in practice within an organization. Qualitative methods help achieve greater depth and richer pictures
of how change capabilities manifest within the organization at hand and of their strengths and weaknesses. A combination of qualitative and quantitative methods may provide an over- view of the status quo of each of the change capabilities, concerning both their extent (quantitative) and their shape (qualitative).
An Interpretative Method for Diagnosing the Organizational Change Logic
Because a firm’s logic is rooted in its “deep structures”, a firm’s members are largely unaware of it (Bettis & Wong, 2003). There- fore, the organizational change logic cannot be directly diagnosed with, for example, a survey or direct interview questions such as “How would you describe the change logic of your firm?” Instead, more indirect methods are needed with which the organizational change logic is inferred from other data (e.g. Alderfer, 1987; 2011). The method that has been devel- oped for diagnosing the organizational change logic is based on an associative-interpretative analysis (e.g. Alderfer, 2011; Dijksterhuis & Nordgren, 2006) of qualitative data from multiple sources (e.g. qualitative interviews, observations, analyses of the website).
The following basic assumptions underlie the developed method for diagnosing the change logic: (a) An organization’s change logic is
Table 1: Output-oriented Definition of Organizational Change Capabilities
Organizational
change capability Output-oriented definition
Search We are aware of what happens in our organization’s environment, and we are able to
identify ideas for change.
Reflection We are aware of what happens inside our organization, and we are able to identify ideas
for change.
Seizing We are able to recognize ideas that bear market opportunities and to derive ideas for
innovation and change.
Planning We are able to realistically plan changes within our organization.
Implementation Once we initiate a change in our organization, we are able to allocate the required
resources, to define appropriate processes, and to acquire the required know-how.
Strategy making We have long-term goals and strategies of how to achieve these goals, and we are able to
align our decisions with these long-term goals.
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idiosyncratic; that is, each organization has its unique change logic; (b) the organization’s change logic manifests in patterns that re- occur in different organizational contexts; (c) an organization’s change logic is a collective phenomenon, but each individual has his own perspective on it; (d) some aspects of the logic are directly observable, whereas others must be inferred; and (e) an organization’s change logic develops based on experiences and rein- forcement learning from the past.
From these assumptions, several methodologi- cal implications were derived: Because the change logic is assumed to manifest as an idio- syncratic pattern that re-occurs in different organizational contexts, multiple data sources should be considered for data collection. In addition to interviews, as much additional information as possible should be collected, which could potentially reveal insights into a firm’s change logic (e.g. explicated values on walls, layout of offices, salient symbols). Because it is assumed to be a collective phe- nomenon, multiple members of the organiza- tion should be asked to provide information. To identify the more observable/conscious aspects of the change logic, semi-structured interviews should be conducted. The inter-
view protocol could include questions about the firm’s foundation and past handling of change, the significance of change within the organization, the general attitude towards change, the frequency of change, how the need for change is recognized and communicated, how ideas for change are developed and by whom, who makes decisions for change, to what extent changes are planned, and what are typical obstacles with regard to change. Moreover, to better understand the firm as a whole, the interview protocol should also con- tain questions about the current market situa- tion and questions regarding the firm’s overall strategy.
To extrapolate an organization’s change logic; that is, the pattern of how it usually addresses change, from the vast amount of informa- tion from multiple sources (e.g., interviews, field protocols), a group interpretation proce- dure was developed. This procedure foresees involving multiple individuals (we suggest four to six) who have varying degrees of famil- iarity with the organization under consider- ation. For the group interpretation, interview transcripts and documentation of all other data collections are needed. The procedure pro- posed for the group interpretation follows six
Table 2: Procedure of the Group Interpretation to Diagnose an Organization’s Change Logic
Step Content
Preparation Multiple researchers familiarize themselves with field data (interviews, protocols)
to ensure that all information is “available”.
Information sharing Researchers present short versions of the data to the interpretation group to
ensure that all available field information is “on the table”.
Individual associations
(intuitive)
Each individual (alone) comes up with free associations (words, images, stories,
feelings, emotions) and intuitions about the case. Time pressure is used to ensure
intuitive thinking.
Collective pattern
recognition
Associations are shared in the group, patterns and similarities among these
associations are identified, and assumptions about the change logic are developed.
Linking identified patterns
to data (systematic)
Assumptions about patterns of the change logic are validated based on the data;
assumptions that are not substantiated by the data are discarded.
Communicative validation
Assumptions about the change logic that are supported by data from interviews
and observations are presented to members of the organization for communicative
validation purposes.
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steps (see Table 2): (i) In preparation, each of the interview transcripts and other protocols is read by at least two participants (in the follow- ing referred to as owners) to reduce researcher biases. (ii) At the beginning of the session, the owners present a concise summary of each interview and protocol to all participants to make sure that all information is “in the room” at the same time. During this step, the other participants do not comment; they only ask comprehension questions. (iii) All participants (including the owners) note their mental asso- ciations regarding the organization’s logic; for example, metaphors, images, or words. (iv) These associations are presented to the others in the interpretation group, starting from the person with the least knowledge about the firm to the person with the most knowl- edge. The associations are discussed and syn- thesized, and assumptions about the firm’s change logic are derived. (v) The developed assumptions are then cross-checked with the interview data. If no evidence for a specific assumption is found in the data, that assump- tion is discarded. The group interpretation is finished once the group has developed a col- lection of assumptions concerning the firm’s organizational change logic, each of which is substantially grounded in multiple pieces of data. Eventually, (vi) the collection of assump- tions is presented to members of the firm (e.g. the management board) for them to validate.
Intervention Model: Improving Organizational Change Capabilities
Once the organization’s change capabilities and change logic have been diagnosed, inter- ventions can be conducted to trigger the devel- opment of change capabilities. As described above, every organization is assumed to have a specific change logic – to address change in its own idiosyncratic way. Because change capabilities are embedded in and shaped by the firm’s organizational change logic, change capabilities may also appear in different forms across different organizations. The method for developing change capabilities (Figure
2), which will be presented in the following, is generic and standardized but can be easily adapted to the needs of each firm.
To enable this individual adaptability, again an outcome-oriented approach was chosen. For each step in the generic design, specific out- comes were defined that should be achieved for each change capability (Table 3). How exactly one and the same intended outcome is achieved may strongly vary across firms, depending on their organizational change logic. In the following, both the overall design for capability development and specific out- comes for each change capability in each step of the design will be detailed. Possible effects of the designed interventions on the organi- zational change logic will then be brief ly dis- cussed.
A Generic Design for the Development of Organizational Change Capabilities
The standardized design that has been designed for the outcome-oriented develop- ment of change capabilities follows four basic steps: (1) Status Quo and Awareness, (2) Pre- ferred Future, (3) Resources and Barriers and (4) Routines and Specification. The interven- tion methods and focus areas within each step are easily adaptable to the organization’s indi- vidual learning needs.
Step 1. Status Quo and Awareness aims to create a common view of the status quo of the firm’s change capabilities and change logic based on organizational diagnoses. The main content of this step is the presentation and discussion of the results from the organi- zational diagnoses. Step 2. Preferred Future seeks to achieve a common view of the firm’s specific outcomes for the change capability to be developed. This includes a definition of the preferred future regarding compe- tence development and an explication of the expected benefits for the organization. Ques- tions to be addressed in this step are: What would the indicators be if this change capabil-
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ity were perfectly developed? What would be the benefits for our organization if this change capability were highly developed? Step 3. Resources and Barriers aims to identify exist- ing resources and barriers for the development of change capabilities. The main questions to be answered in this step are therefore: Which resources are critical for our preferred future? What hinders us from further developing this change capability in the intended direction? At this stage, the organization’s change logic can be considered both a resource and a constraint. Step 4. Routines and Specification targets the development of an organizational action plan for developing the respective change capa- bility. The main question to be answered is: How can we reach the intended learning out- comes and with the help of which methods, taking into consideration our existing change logic? In this phase, the focus lies on defining concrete steps for competence development, which lead to an agreed-upon “learning con- tract” for the implementation of the intended processes and routines. It is important to note
that the learning activities within the sug- gested intervention model do not end with step 4. To ensure that the organization puts the planned actions to use, further monitor- ing, ref lection and adaptation are required, as long as the development of change capabilities is still in progress. Hence, further (internal or external) process facilitation may be helpful to provide support for the organization’s devel- opmental process.
Intended Outcomes for Specific Change Capabilities
The initiation of organizational learning and development processes requires the defini- tion of clear learning goals to steer and shape these processes in the intended direction (e.g. Edmondson & Woolley, 2003; Levitt & March 1988; Schein, 1993). Therefore, the generic learning goals described in the previous sec- tion were specified for each of the change capabilities, based on the outcome-oriented
Figure 2: Design for developing change capabilities, which comprises four steps: (1) Status Quo and Aware-ness,
(2) Preferred Future, (3) Resources and Barriers and (4) Routines and Specification
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Table 3: Specification of Outcomes in Each Step of the Design for Change Capability Development
Organizational
Change
Capability
Intended
Outcomes
Status Quo and
Awareness Preferred Future
Resources and
Barriers
Routines and
Specification
Search
Continuous
knowledge and
awareness of
market trends,
customers,
competitors
Status quo of
search capability
Examples:
awareness of
new technology
trends,
competitors,
markets
Aspects to
search for
Examples:
competitors’
activities, new
technologies,
market
movements, new
market segments
What enables/
hinders the
search?
Examples:
access to
data sources,
communication
structures/
information
distribution,
interest of
employees in
topic
Concrete steps
to establish
search routines
Examples:
responsibilities
for search topics,
subscription
to magazines,
networking
events
Reflection
Continuous
reflection about
strengths,
weaknesses, and
opportunities for
improvement
Status quo
of reflection
capability
Examples:
awareness of
the firm’s core
competences,
core processes,
blind spots
Aspects to
reflect upon
Examples:
customer
satisfaction,
efficiency
of strategic
processes,
quality of
outcomes,
employee
satisfaction
What enables/
hinders
reflection?
Examples:
documentation/
data, existing
meeting formats,
(physical)
infrastructure,
time, feedback
culture, attitude
towards errors
Concrete steps
to establish
reflection
routines
Examples: jour
fixes, collection
of relevant
data as basis
for reflection,
systematized
feedback,
supervision,
customer and
employee
surveys
Seizing
Continuous
recognition of
strategic options
for change and
innovation
Status quo of
seizing capability
Examples:
product
and service
innovations in
line with existing
strategy
Aspects to ‘seize’
Examples:
new products,
new business
models, new
management
methods
What enables/
hinders seizing?
Examples:
reward structure,
clear strategy,
time for creative
processes,
culture of
innovation
Concrete steps
to establish
routines for
recognizing
and generating
options for
change and
innovation
Examples:
innovation days,
idea awards,
R&D position/
department,
cooperation with
universities
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Table 3: (continued): Specification of Outcomes in Each Step of the Design for Change Capability Development
Organizational
Change
Capability
Intended
Outcomes
Status Quo and
Awareness
Preferred
Future
Resources and
Barriers
Routines and
Specification
Planning Planned change
processes
Status quo
of planning
capability
Examples:
resources
adequately
allocated
to planned
changes, project
management
Aspects to plan
before/during
change
Examples:
responsibilities,
time, money
What enables/
hinders the
planning for
change?
Examples:
discontinuous
order situation,
planning tools/
databases,
workload
Concrete steps to
establish routines
for planning change
Examples: allocation
of responsibilities,
project
management,
controlling
Implementation
Structure and
knowledge
for enabling
consequent
and competent
implementation
of intended
change
Status quo
implementation
capability
Examples:
workforce
skilled for
change,
required
structures
Aspects to
implement
in preparation
for/during
change
Examples:
employee
competences,
consulting,
machines and
devices required
for the change
-resource
management
What enables/
hinders the
implementation
of change?
Examples:
commitment
to change,
prioritization,
ownership of
change, number
of concurrent
change projects
Concrete steps
to establish
implementation
routines
Examples: enacting
assigned roles,
rewards (at least
no disadvantages)
for change-
related activities,
training, regular
communication of
project status
Strategy Making
Clear (change-
related) vision
and coherent
strategy
regarding
change
Status quo
of strategic
handling of
change
Examples:
presence/
absence of
vision/mission,
formal strategy
including
the aspect of
change, clear
decision criteria
Aspects
regarding
change to take
into account
in vision and
strategy
Examples:
decision for
innovation
areas, customer
types, role of
innovation,
growth/no
growth
What enables/
hinders strategy
development
regarding
change?
Examples:
managerial
style, ownership
structures, legal
regulations,
organizational
flexibility (e.g.
production
vs. service
business)
Concrete steps to
establish routines
for strategic
development
Examples: definition
of decision criteria,
regular SWOT
analyses, regular
strategy meetings,
vision work
definitions introduced above in Table 1. For example, search was defined as a firm’s abil- ity to effectively recognize, sense, and explore the external environment for prospective innovative products, services, and processes. Strong search capabilities are indicated by the defined outcomes (e.g. continuous knowledge and awareness of the market, trends, custom- ers and competitors).
On the basis of these overall learning goals for each change capability, sub-goals for each of the steps in the generic process (Figure 2) were specified. These sub-goals guide the develop- ment of the change capability under consid- eration. Table 3 details the learning goals for each of the change capabilities in each step in the generic design. How these learning goals can be utilized in the process of capability
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development is described using the search capability as an example: The aim of step 1, Status Quo and Awareness, is to achieve a common awareness of the firm’s current status quo in regard to its search capability. Differ- ent indicators exist for the extent of a firm’s search capability, such as the firm’s awareness of new technology trends, competitors and markets. Step 2, Preferred Future, focuses on the desired aspects the firm should be aware of in the future. Competitors’ activities, new technologies, market movements and new market segments are examples of prospective aspects worth seeking. Step 3, Resources and Barriers, aims to answer the question of what may enable and hinder the firm with regard to search activities in the aspects worked out in step 2. Examples for such resources and barri- ers are access to data sources, communication structures and the degree of employee interest in the topic under consideration. Step 4, Rou- tines and Specification, aims to define con- crete steps for establishing search routines, such as determining clear responsibilities for the defined search topics, subscribing to rel- evant magazines, or participating regularly in networking events.
This goal-oriented specification of process steps takes into account the fact that the mani- festation of each of the change capabilities may differ across organizations. The methods for the development of change capabilities in each of the process steps can be chosen f lexibly, as long as they lead to the outcomes specified in Table 3. That way, the generic intervention model can be adapted to each of the change capabilities while still being sensitive to the needs of a specific firm.
Effects on the Organizational Change Logic
In this methodology, direct interventions primarily target change capabilities, particu- larly by making use of collective learning processes, for example, through group ref lec- tion and discussions (e.g. Isaacs, 1993; Zollo
& Winter, 2002). However, as graphically insinuated in Figure 2, in addition to capabil- ity development, each design step may affect the organizational change logic because it may mean challenging basic assumptions, making decisions unconsciously, or learning rules.
In addition to these rather indirect interven- tions, alterations in the organizational change logic may be triggered by more direct meth- ods (Corley & Gioia, 2003; Schein, 1993; Zollo & Winter, 2002), such as the explication of mental models (e.g. “What do we mean by ‘change’?”, “What does ‘success’ mean for us?”) or the questioning of basic assumptions (e.g. “change must take place fast”, “change is dangerous”), and beliefs (e.g. “never change a winning team”, “change must start from the top”). As a next step, these mental models, assumptions and beliefs may be analysed with regard to effects on the organization’s handling of change. To maintain sustainable change at the level of the organizational change logic, regular supervision of the top management may also be a highly effective method (e.g. Swart & Harcup, 2012).
Discussion and Conclusion
The paper presents an extended conceptual- ization of a firm’s strategic change capabili- ties, and makes two theoretical advancements. First, previous research on capabilities related to change have almost entirely been identified and discussed in terms of dynamic capabili- ties, which focus on the identification of stra- tegic options and the transformation of the resource base. The model of change capabili- ties introduced in this paper follows Sopar- not’s (2011) suggestion to extend the dynamic capabilities perspective by highlighting the actual implementation of the planned changes, and considers perspectives of strategic change, the generation of change ideas and innova- tions, and their actual implementation within the organization in accordance with corporate strategy and strategic goals.
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The second theoretical advancement presented in this paper is the integration of the theory on capabilities for strategic change with the con- cept of the organization’s dominant logic – it is suggested that the development of specific capacities and processes for the realization of change and innovation (organizational change capabilities) is embedded in this set of invis- ible rules and assumptions (organizational change logic), which steer organizational development processes and need to be con- sidered for capability development. The two aspects are assumed to mutually inf luence each other – the development of change capa- bilities is supposed to be shaped by the firm’s change logic, and in turn, the development of change capabilities may shape the organi- zational change logic. The idea that change capabilities are shaped by the organization’s change logic has important implications for the practical development of change capabili- ties. Since it is assumed that every organiza- tion addresses change in its own specific way, enforcing effective interventions to develop change capabilities systematically requires taking into account an organization’s change logic. This perspective contradicts the preva- lent practice within business schools and man- agement courses, which often propagate “one best way” of searching the business environ- ment, or planning change initiatives.
Building on the theoretical concept of change capabilities that are embedded in a change logic, a generic, outcome-oriented approach for diagnosing and developing the change capabilities was suggested. This outcome- oriented approach aims to assess the extent of change capabilities by focusing on their desired outcomes, thereby taking into account the idea of equifinality (i.e. achieving one and the same outcome with different means). Instead of suggesting a specific tool, the paper describes considerations for the design and operationalization of quantitative and qualita- tive diagnostic methods. Future work may be dedicated to developing standardized quanti- tative measures for diagnosing the extent of change capabilities within an organization or
to developing standardized interview guide- lines for analysing how change capabilities are enacted.
Another innovative contribution of the pres- ent article is the design of a theory-based, associative-interpretative group analysis tech- nique for diagnosing an organization’s change logic, which cannot be diagnosed directly (e.g. by asking explicit questions such as “What is your change logic like?”). Because this more qualitative branch of research into organiza- tional (change) logics is still in its infancy, no standard tools exist for assessing it. Future work should be dedicated to further refining the methodology and testing its diagnostic strengths and weaknesses. Moreover, the eco- logic validity and practical usefulness of the methodology should be explored by practitio- ners such as change agents in their practical work.
The paper also contributes to current orga- nization development practice by presenting an output-oriented intervention design for the improvement of an organization’s change capabilities. The output-oriented approach enables the adaptation of concrete interven- tions for both the organization’s idiosyncratic change logic and the firm-specific learn- ing needs and circumstances. The interven- tion model can be seen as a standardized and outcome-oriented learning framework that encourages the development of organizational change capabilities for pro-active strategically relevant organizational change.
In conclusion, the paper makes several theo- retical and practical contributions to the ques- tion of how organizations can improve their capabilities for strategic change and innova- tion and how they can be supported during this improvement process. One possible avenue for future research could be investigating the effect of the presented intervention model and methods on the development of strategic change capabilities, particularly on the basis of longitudinal case studies. Another sugges- tion for future work would be enriching the
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theoretical basis of the change capabilities concept and its relationship with the organiza- tional change logic with more theoretical and empirical findings, to further strengthen the theoretical foundation of this novel approach. In particular, future work could look in more depth at the effect of the organizational (change) logic on organizational change and learning processes.
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John Kotter’s Eight Step Change Model
John Kotter (1996), a Harvard Business School Professor and a renowned change expert, in his book “Leading Change”, introduced an 8 Step Model of Change which he developed on the basis of research of 100 organizations which were going through a process of change. The 8 steps in the process of change include: creating a sense of urgency, forming powerful guiding coalitions, developing a vision and a strategy, communicating the vision, removing obstacles and empowering employees for action, creating short-term wins, consolidating gains and strengthening change by anchoring change in the culture. Kotter’s 8 step model can be explained with the help of the illustration given below:
(Source: Adapted from Kotter 1996)
1. Creating an Urgency: This can be done in the following ways: Identifying and highlighting the potential threats and the repercussions which might crop up in
the future. Examining the opportunities which can be tapped through effective interventions. Initiate honest dialogues and discussions to make people think over the prevalent issues and give
convincing reasons to them. Request the involvement and support of the industry people, key stakeholders and customers on
the issue of change. 2. Forming Powerful Guiding Coalitions
This can be achieved in the following ways: Identifying the effective change leaders in your organizations and also the key stakeholders,
requesting their involvement and commitment towards the entire process. Form a powerful change coalition who would be working as a team. Identify the weak areas in the coalition teams and ensure that the team involves many influential
people from various cross functional departments and working in different levels in the company.
3. Developing a Vision and a Strategy This can be achieved by: Determining the core values, defining the ultimate vision and the strategies for realizing a change in
an organization. Ensure that the change leaders can describe the vision effectively and in a manner that people can
easily understand and follow.
4. Communicating the Vision Communicate the change in the vision very often powerfully and convincingly. Connect the vision
with all the crucial aspects like performance reviews, training, etc. Handle the concerns and issues of people honestly and with involvement.
5. Removing Obstacles Ensure that the organizational processes and structure are in place and aligned with the overall
organizational vision. Continuously check for barriers or people who are resisting change. Implement proactive actions
to remove the obstacles involved in the process of change. Reward people for endorsing change and supporting in the process.
6. Creating Short-Term Wins By creating short term wins early in the change process, you can give a feel of victory in the early
stages of change. Create many short term targets instead of one long-term goal, which are achievable and less
expensive and have lesser possibilities of failure. Reward the contributions of people who are involved in meeting the targets.
7. Consolidating Gains Achieve continuous improvement by analysing the success stories individually and improving from
those individual experiences. 8. Anchoring Change in the Corporate Culture
Discuss the successful stories related to change initiatives on every given opportunity. Ensure that the change becomes an integral part in your organizational culture and is visible in
every organizational aspect. Ensure that the support of the existing company leaders as well as the new leaders continue to
extend their support towards the change.
Advantages of Kotter’s Model
It is an easy step by step model which provides a clear description and guidance on the entire process of change and is relatively easy for being implemented.
Emphasis is on the involvement and acceptability of the employees for the success in the overall process. Major emphasis is on preparing and building acceptability for change instead of the actual change
process.
Retrieved from: https://www.managementstudyguide.com/kotters-8-step-model-of-change.htm on
5/30/2018
Discussion 2: Developing a Change Plan – Forming a Guiding Coalition
As a sense of urgency for change is developed within an organization, there needs to be a structure in place to manage the change. In the Kotter model, this need is filled by the establishment of a change management team composed of a variety of individuals with different competencies and roles. The composition of the key players in the change process is important, and while those with solid management skills may be needed, leadership skills are vital. These key players must align together in a coalition based on trust and common goals. A successful coalition is not necessarily composed of top management, but a blend of people within an organization—a selection based on position, skills, integrity, and leadership qualities that will garner the necessary commitment of the entire organization. Key players in the change process can exist at all levels of an organization.
To prepare for this Discussion:
· Review this week’s Learning Resources, especially:
1. Step 1: Establishing a sense of urgency – see attachment
2. Step 2: Creating a guiding coalition – see attachment
3. Leading change management Retrieved from: 10 principles of leading change management (strategy-business.com)
Post a cohesive response based on your analysis of the Learning Resources and your professional experience. Be sure to discuss the following:
· If you were tasked with establishing a network for change, which types of individuals within your organization would you select? Why?
· Do these individuals represent all areas in your organization that would be affected by the change?
· As the change project evolves, it will be necessary to include key individuals from every level of the organization that is affected. Explain how you have included these managers and leaders in your guiding coalition.
· What challenges might a manager or leader face when enlisting individuals from diverse areas within the organization?
· What could be the consequences of not identifying key individuals or of not including individuals that represent all areas of the organization? What additional work would that then create in managing change?
· 3 – 4 paragraphs
· No plagiarism
· APA citing

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