Cracking the Code of Change by Michael Beer - Case Study Example

Managing change xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Name xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Course xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Lecturer xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx Date Article critique: Cracking the code of change This article authored by Michael Beer and Nitin Nohrin is basically a preparatory tool for executives across organizations within all sectors of the economy anticipating any form of change within their respective organizations. By presenting the article in the Harvard Business Review, the authors target audiences are managers and business people who are bound to experience change in their day to day running of business. At the beginning of the article the authors contend that change within organizations is inevitable with the current outburst of technological knowhow, industrial revolution and globalization. Even though most companies have concurred with this argument, one issue is still pertinent; managing the process of change is difficult. Low rates of success have been reported in the attempt to implement certain initiatives such as change of corporate culture, restructuring, downsizing and introduction of new technology. With enough experience in the field, the authors conclusively state that the reason why change is hard to implement is due lack of proper preparation for the change. Failure of adequate information regarding basic as well as complex requirements for the change is the leading cause of failure of implementation. In order to achieve the goals of change, executives need to have wide knowledge and understanding of issues underlying the change process; in other words, crack the code of change. This article clearly relates to other articles that tackle on issues of change management. Apparently, all these articles have based their argument the on unconscious assumptions made by managers concerning change which are basically founded on the questions of why and how the change should be made. Beer and Nohria have analytically evaluated the use of Theory O and E of change management. Although many companies prefer to use the E change strategies, majority of others have been torn in between the choices of theory E and O since even E change strategies have their own share of shortcoming. As such, they have resorted to using a mix of both notwithstanding the tension that develops due to simultaneous applications of both strategies. The purpose of this article is to advice change managers on ways to resolve the tension between E and O strategies. It makes reference to a particular company that successfully implemented both strategies. The authors of the article are explicit about their position regarding the issues underlying the use of E and O theories. The article is not biased but rather gives factual arguments. For instance it states that theory E change strategies make headlines which inherently shows the authors have explored a wide range of literature in order to come to this conclusion. By providing specific examples such as the one on General Dynamics indicates that the arguments brought out in the article are not mere assumptions but instead evidence-based. The research conducted by Beer and Nohria revealed that a vast majority of companies prefer to use a mix of the E and O theories even with the inherent tension that is created. Even so, Beer and Nohria are positive that companies can successfully implement both theories based on their research findings. The major assumption derived from this argument is that there are significant differences between the two theories; which is the reason for development of tension during simultaneous application of both. Theory E strategies are more common than O strategies. It is regarded as the hard approach to change and stakeholder value is the ultimate measure of the success of any given change (Kritsonis 2005). According Pryor et al (2008), to the fundamental concept behind the theory is that stakeholders are the most valuable assets in an organization and thus any strategy or change process should seek to increase their returns. The article gives the example of Dunlap, the CEO of Scott Paper’s in 1994 who directed totally restructured the company in order to increase shareholders returns. This ultimately increased the company’s profits to about $9 billion in 1995. Leaders who subscribe to the E theory employ the top-down type of decision making (Jick 2003). In many cases, they make decisions pertaining to change independent from other members of the managerial team, junior employees or unions. Additionally, these leaders focus on changing the hardware of the organization, that is, the systems and structures from top going down thus rapidly yielding tremendous financial results (Graaff & Kolmos 2007). In terms of process, theory E proposes that no strategy can be achieved without a well planned and clear plan of action that incorporates the contribution and inspirations of stakeholders such as investors, customers, employees and suppliers (Manto et al 2002). The plan acts a driving force towards attainment of goals of the specific initiative. Rewards systems in E theory are basically financial oriented. For instance, by increasing employee incentives, the company is bound to increasing productivity based on increased employee motivations and performance. The O theory differs from the E theory in a number of ways. Unlike the E theory whose goal is to enhance the overall happiness for stakeholders, O theory maintains that creation of economic value is the central aspect in any form of change. This is best achieved by changing the organizational culture which essentially refers to change of behavior of management, workers, unions and other members of the organization. The O theory recommends participation of all members of the organization through dialogue in order to ensure success of the change process (Lawler III et al 2001). Even junior employees have a stake in selecting the kind of change that is most appropriate to the organization. Rather than enhancing structures and processes, O strategies are focused on changing the “software” of the organization; attitude of employee, behavior and culture. The O theory is opposed to programmatic and planned actions but instead believes that change is emergent and evolutionary. The compensation systems under O style are not financial based but emphasizes on a gain sharing plan which the outcomes of the change are disbursed into a community of purpose (Hoff & Stiglitz 1999). These propositions clearly justify Beer and Nohria argument that the E theory and O theory are two extremes that would be totally difficult to manage simultaneously. However, they are still convinced that the two systems can work in conjunction and in fact they this would produce the best change outcomes. Of importance is to know how to meld the two theories as failure to do so might lead to detrimental effects. To avoid such instances Beer and Nohria suggest that companies would rather stick with one of the options; either pure E or pure O. According to Beer and Nohria the most obvious way of merging the theories is through sequencing. This means implementing one after the other. irrespective of the sequence followed the major challenge is that sequencing takes considerably long time to implement and would actually require two CEO with contrasting view of change management. In that case, E and O theories can only co exists when wisdom, skill and great will are integrated (Amagoh 2008). One of the approaches that have proved successful is explicitly confronting the tension between O and E strategies. This basically means sidelining strategies in both theories such as having objectives of the company as to secure the stakeholder value and to maintain its economic value (Cao & McHugh 2005). Another way of merging the theories is to set direction from the top and engage people below. By stating this, Beer and Nohria imply that management should act independently in formulation of strategies and goals concerning the organization but them should adequately involve junior employees in gathering ideas on how to implement the changes successfully and regularly consult about the progress of the change. The article also suggests that companies should focus on both hard and soft sides of the organization. For instance, having two CEO, with completely different personality, is an easy way of implementing E and O strategies simultaneously. The final step that Beer and Nohria propose is to plan for spontaneity. According to their findings, top-driven culture change programs, total quality programs and training programs have insignificant effect on the successful implementation of the theories. What has helped many companies to achieve this goal is experimentation and evolution. ASDA, for instance, set up an experimentation store to examine the applicability of the specific strategies. The authors of the article have adequately justified their propositions. Use of practical examples has particularly added strength as the reader is able to relate the ideas with real life. The article has also been published in relatively simple English that can be read and comprehended by a wide range of readers. Nevertheless, the article lacks theoretical backing, that is, the authors have not referred to the opinions of others which would have given the article a more scientific outlook. Research work and statement from journal article, book, periodicals and magazines are good reinforcements to key arguments and ideas. In conclusion, I am impressed by the authors’ authoritative stand throughout the article; they have remained unopposed about the fact that E and O theories can be implemented simultaneously. In my opinion, the article is sufficient enough to be used by the target audience who are essentially executives as well as scholars and researchers interested in field of managing change. Reference Beer, M, and Nohri, N 2000, Breaking the code of change, Boston: Harvard Business School Press. Amagoh, F. (2008). Perspectives on organizationsl change: systems and complexity theories . The innovation journal: The public sector innovation journal, 13(3) . Cao, G., & McHugh, M. (2005). A systemic view of chnage management and its conceptula underpinnings . Systemic pactice and action research, 18(5) , 475-490. Graaff, E., & Kolmos, A. (2007). Management of change: Implementation of problem-based and project-based learning in engineering . Rotterdam : Sense publishers. Hoff, K., & Stiglitz, J. (1999). Modern Economic theory and development. World Bank. Jick, T. (2003). Managing change: Cases and concepts. New York: Irwin Publishing. Kritsonis, A. (2005). Comparison of change theories . International journal of scholarly academic intellectual diversity, 8(1) . Lawler III, E., Mohrman, S., & Benson, G. (2001). Prganizing for high performnace. employee involvement, TQM, Reegineering and knowledge management in the futuer 1000: The CEO Report. San Francisco : Jossey- Bass publishers. manto, A., Jones, R., & Dirndorfer, W. (2002). A chnage management process: Grounded in both theory and practice. GJournal of change management, 3(1) , 45-59. Pryor, M., Taneja, S., Humphreys, J., & Singleton, L. (2008). Challenges facing chnage managemnt theories and research. Delhi Business review, 9(1) . Read More