Organizations should match their strategy to environmental or organizational opportunities and threats to obtain or maintain competitive advantage, which is appointed as strategic fit by Zajac, Kraatz & Bresser (2002, p. 429). To acquire this strategic fit, strategic and organizational change is often required. Van de Ven & Poole (1995, p. 512) define organizational change as follows: “an empirical observation of difference in form, quality, or state over time in an organizational entity. The entity may be an individual's job, a work group, an organizational strategy, a program, a product, or the overall organization.”
Although change is required and sometimes even recognized, organizations often cope with problems to adapt to change effectively. This paper discusses the process of organizational changes and will elaborate on every step to gain a holistic understanding of organizational change. At first, the causes for the emergence of organizational change will be discussed. Hereafter, four ideal processes of change will be explained. These four ideal processes of change rarely occur in actual situations due to the complexity of organizations and their environment, which will be extensively explained. Consequently, the issues and problems related to effective organizational change will be discussed. Subsequently, some solutions to overcome issues and problems in order to effectively change will be provided. The entire process will be clarified with the development of a theoretical model which is focussed on the development of effective organizational change.
Emergence of organizational change
Plowman, Baker, Beck, Kulkarni, Solansky & Travis (2007, p. 519) describe the emergence of change by using the complexity theory, which comprises of people or groups who are adapting to feedback about the behaviour of others and act in parallel without explicit coordination or central communication. Plowman et al. (2007) argue that an unintended small change becomes radical by the destabilization of conditions and the amplified actions to promote small changes. These ongoing modifications in organizations eventually lead to continuous radical change.
Tsoukas & Chia (2002) also argue that organizational change emerges without necessarily an intended action. They draw upon the human individuals that have an important role in organizational change, while they are continuously developing. And because organizations consist of continuously changing human actions, organizational change should not be seen as an expectation or occasional event, but as a continuous phenomenon according to Tsoukas & Chia (2002, p. 577).
Another cause for the emergence of economic and cultural change is the creation of new markets according to Weber, Heinze & DeSoucey (2008, p. 529). However, new markets do not emerge naturally but are influenced by collective projects that mobilize the necessary economic, cultural, and socio-political resources. Weber et al. (2008, p. 529) emphasize on the central role social movements have that foster these projects. Social movements can provide solutions to three challenges in creating new marketing segments: entrepreneurial production, the creation of collective producer identities and the establishments of regular exchange between producers and consumers (Weber et al., 2008, p. 538) Summarizing, social movements can effect change through market creation, which can evolve in economic and cultural change.
Buchanan & Dawson (2007, p. 681) have a more narrative approach about the process of organizational change. In their perspective, organizational change is viewed as a multi-story process where the narratives influence target audiences that become active co-creators of meaning.
Ideal processes of change in organizations
Van de Ven & Poole (1995, p. 513) provide an explanation of the process of organizational change with the use of four types of change process theories in their pure ideal forms: life cycle theory, teleology theory, dialectic theory and evolution theory. According to the life cycle theory, issues are developed in linear and sequential steps, which ensure that a change can be expected (Van de Ven & Poole, p. 515). Although structure is very important in this process, another organization structure will be stimulated because every organization arrives in another phase over time, which consequently drives change. The teleology theory emphasizes on functionalism, while it argues that changes are caused by the purposes and goals of an organization (Van de Ven & Poole, p. 516). Change will be accepted when the desires and needs of people within an organization are included. The dialectical theory is based on the assumption that organizations exist in a pluralistic world of contradictory events, forces or values (Van de Ven & Poole, p. 517). Change occurs when opposing values, forces or events gain sufficient power to confront and engage the status quo. A synthesis will be created after opposing conflicts, which will eventually result in a new synthesis. At last, the evolution theory, where the statistical accumulation of changes in structural forms ensure a continuous cycle of variation, selection and retention (Van de Ven & Poole, p. 518)
Although these ideal types have their own internal logic, these pure forms rarely occur in actual situations caused by the complexity of organizations and their environments which will be explained in the following paragraph.
Complex organizations and their environments
The importance of organizational change is highlighted by the strategic fit examined by Zajac et al. (2002). There is a strategic fit when the strategy of an organization is in line with the environmental or organizational opportunities and threats the company is facing. In order ti obtain or maintain such a strategic fit, organizational change is often required. Organizations continuously face different environmental and organizational contingencies and the strategic fit therefore has a multivariate and dynamic character (Zajac et al., 2002, p. 437).
Continuing on this strategic fit, D'Aunno, Succi & Alexander (2000) argue that organizational change is more likely desired when there is a lack of strategic fit or a strategic fit is hard to maintain. According to D'Aunno et al. (2000, p. 698), market factors seem to affect divergent change in two ways. At first, divergent change is more likely when an organization is facing strong forces from the local market caused by the possession of similar products and services and organizations are limited by the geographically close-by resource-availability. Secondly, organizations are forced to move away from the status quo to new templates by strong heterogeneous institutional forces.
Zajac et al. (2000) and D'Aunno et al. (2000) show the importance of organizational change when facing environmental or organizational contingencies. However, these changes often fail because of multiple reasons. D'Aunno et al. (2000, p. 683) especially blames the anti-competitive regulation and legislation that provide resources to support current organizational templates that will inhibit divergent organization change. Despite the good intentions of an organization, a strategic misfit and a performance disadvantage will be generated (D'Aunno et al., 2000; Zajac et al., 2000). According to D'Aunno et al. (2000, p. 682), companies that change their institutionalized templates drastically are more likely to generate a competitive advantage.
Tripsas & Gavetti (2000) continue on the failure of changes by arguing the incapability of organizations to adapt to change. According to Tripsas & Gavetti (2000, p. 1157), this incapability is influenced by managerial cognition such as beliefs, knowledge and reasoning on how to compete successfully. Consequently, this influence of managerial cognition can evolve in organizational inertia where search and development efforts are restricted and directed (Tripsas & Gavetti, 2000, p. 1158). Consequently, organizations face difficulty keeping track on new developments.
Concluding, organizations and their environment are complex, which makes the strategic fit organizationally unique. In order to stay fit as an organization, they should constantly adjust and eventually incorporate drastic changes to obtain or maintain a competitive advantage. Despite this knowledge, organizations often fail to change effectively due to multiple reasons. Possible problems emerging in the change process will be elaborated in the following paragraph.
Barriers for strategic and organizational change
Burgelman (2002, p. 327) also emphasizes on organizational inertia but in his opinion it is caused by the unintended sequence of coevolutionary lock-in. Coevolutionary lock-in is explained as a positive feedback process that ties the previous success of an organization's strategy to that of its existing product-market environment (Burgelman, 2002, p. 327). As a result, it is more difficult to change strategic direction because this narrow business strategy reduces the capability of organizations to explore, renew and adapt to its environment by ignoring the possibility for other directions. Furthermore, Burgelman (2002, p. 351) emphasizes on the role of top-management in organizational decision-making processes by stressing the power they hold to influence organizational change in a particular direction.
Where Burgelman (2002) is mainly focussed on the top management, Howard-Grenville (2007) argues that individuals outside of top-management also participate in the construction of meaning within organizations. The actions of these individuals can shape the strategic actions of an organization by directing the attention of others to particular issues (Howard-Grenville, 2007, p. 560). Besides the construction of meaning, these issue sellers also influence others' interpretations of issues in order to gain competence.
Dutton & Ashford (1993) also focus on the importance of issue selling but emphasize on the crucial communication of issues from the middle-management to top-management. According to Dutton & Ashford (1993, p. 404), the middle-management has a mediating role between lower and top-layers and should therefore take incremental influence, claiming and impression-management into consideration to effectively sell an issue.
Besides the top-management and the middle-management, the operational management is as important in the perspective of Floyd & Lane (2000, p. 171), because the strategic role conflict can limit strategic renewal. Disagreements in the perceptions between all management levels regarding the need for change creates strategic role conflicts. This strategic role conflict is inevitable and will always be present.
Huy, Corley & Kraatz (2014) also examine the important role played by middle-managers. According to Huy et al. (2014), middle-managers judge the legitimacy of their top managers as change agents. When problems with high uncertainty arise, resistance of the recipients will increase because of the decreasing legitimacy and negative emotional reactions (Huy et al., 2014, p. 1653). Consequently, negative change outcomes will follow by this increased resistance towards change.
Canato, Ravasi & Philips (2013, p. 1725) investigate the resistance regarding coerced implementation of a new practice when there is a low degree of fit between the practice and an organization's culture. According to Canato et al. (2013), coerced implementation of a new practice exposes members to new values and encourage reconsideration of existing cultural beliefs and practices. Processes of sensemaking should solve the tension between coercion and resistance.
As a conclusion, incapability, organizational intertia, co-evolutionary lock-in, coerced implementation, resistance, strategic role conflicts are all causes for organizations to fail in adapting to organizational change effectively. However, possibilities exist to surmount these barriers and these will be elaborated in the next paragraph.
Overcome barriers in order to change effectively
At first, in order to change effectively, organizations should be capable of exploring, renewing and adapting to its environment according to Burgelman (2002). Therefore, it is important to find a balance between induced and autonomous strategies to focus on change within and outside the organization. In addition, companies that change their institutionalized templates drastically are more likely to generate a competitive advantage D'Aunno et al., 2000, p. 682)
Canato et al. (2013) already mentioned the importance of sensemaking in order to understand and manage change. According to Kaplan (2008, p. 730), actors are able to get a better understanding of change with the use of cognitive frames, which enables them to recognize and interpret the changes. Kaplan (2008, p. 731) also claims that communication can be especially helpful in uncertain situations whereas actors can benefit from discourse and frames to make sense.
Another barrier to overcome is the resistance towards change that result from an uncertain situation, where the legitimacy of top managers is judged (Huy et al. 2014). In order to overcome this barrier, Monin, Noorderhaven, Yaara & Kroon (2013, p. 256) argue that change recipients accept the planned change more likely when there is a sense of justice. The integration of change is a process of sensemaking in which norms of justice are crucial regarding the development of integration of these changes. When sense is given and made to justice, it will lead to the confirmation of norms of justice.
Besides the fact that communication can be helpful in uncertain situations, Mantere & Vaara (2008, p. 342) focus on the importance of communication by arguing that a non-participatory approach to strategy can lead to poorly developed strategies, dissatisfaction and consequent difficulties in implementation. Mantere & Vaara (2008) distinguished three strategy discourses in order to promote participation: self-actualization, dialogization and concretization.
Evidently, communication among all the management levels is necessary. However, Floyd & Lane (2000) argue about the inevitable strategic role conflicts that exist in and between every level of managers and create a barrier for organizational change. These strategic role conflicts can be minimized by controlling the external factors to improve effectiveness of the strategic renewals according to Floyd & Lane (2000, p. 154).
Organizational inertia is according to Tripsas & Gavetti (2000) and Burgelman (2000) another barrier for organizational change. In order to overcome this barrier, Vuori & Huy (2015) claim that an open communication-climate is helpful. As Dutton & Ashford (1993) already emphasize on the important role of the mediating middle-managers, an open communication-climate can help the middle-managers or other organizations groups to express their feelings and concerns towards strategic plans of top-management (Vuori & Huy, 2015, p. 42). Without the existence of an open communication-climate, the shared emotions and behaviour of one organizational group can negatively influence behaviour and communication processes of other groups which eventually leads to temporal myopia, which indicate a short-term orientation (Vuori & Huy, 2015, p. 40).
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