CHAPTER FOUR

TYPES OF CHANGE

Old is easy, new is hard

(David B. Peterson & Mary Dee Hicks)
1. Planned Vs Unplanned Change
2. Revolutionary Vs Evolutionary Change
• BPR
– BPR process
– BPR techniques and tools
– Implementation of BPR
• BSC
3. Other Kinds of Change
I. Developmental Change
II. Transitional Change
III.Transformational Change
Organizational Change
– Planned or unplanned transformations in an
organization’s structure, technology, and/or people.
– First-Order Change:
• Change that is continuous (incremental and slow) 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.
– can take many forms.
• It may involve a change in a company’s
– structure, strategy, policies, procedures, technology, or culture.
Planned and Unplanned Change
• Change can be planned or unplanned.
Unplanned Change
– is reactive Change
– just happens in the natural course of events or imposed on an
organization by external forces.
– Organizations and individuals then react to these unplanned
changes to minimize disruption or to maintain or improve their
situation.
• Forces behind unplanned change:
– Shifting employee demographics
– Government regulation
– Global competition
– Changing economic conditions
– Advances in technology
Planned Change
– is Proactive Change
– is the process of preparing and taking actions to
move from one condition to a more desired one.
– is the result of consciously preparing for and taking
actions to reach a desired goal or organizational state.
– involves proactively making things different rather
than reacting to changes imposed from outside the
organization
– 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 Unplanned change

It has positive connotation It carries negative connotation

It has got sense of gain It has sense of loss

It is anticipated It happens suddenly

The people are well protected The people are vulnerable

Evolutionary and Revolutionary Change
• Evolutionary Change
– is incremental Change
– is gradual, incremental, and narrowly focused; not
drastic or sudden.
– involves a constant attempt to improve, adapt, and
adjust strategy and structure incrementally to step by
step to respond to changes in the environment.
– e.g. total quality management (TQM) or kaizen, are
two methods used to pursue evolutionary change.
– Such improvements might involve using technology
to reorganize task or job relationships.
• 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/
coordinates 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
Revolutionary Change
• is quantum change
• is rapid, dramatic, and broadly focused, and it involves
a bold attempt to find new ways to increase
effectiveness.
• is likely to result in a radical shift in the way an
organization manages its activities, sets new goals, and
creates a new structure for the organization.
• has repercussions/ effects at all levels in the
organization corporate, divisional, functional, group,
and individual.
• Reengineering, restructuring, and innovation are
three important methods used to implement
revolutionary change.
• 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
– “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
Business Process Reengineering (BPR)
– The concept of Business Process Reengineering (BPR)
was successfully popularized by Michael Hammer and
James 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%)
• 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.
• The intent of process reengineering is to make
organizations significantly more flexible,
responsive, efficient, and effective for their
customers, employees and other stakeholders.
• 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
– 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)
• For process reengineering to work, a business 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 team - to
contribute positively to make the organizational
vision a reality.
• Reasons for Process Reengineering
– to re-invent the way they do work to satisfy their
customers;
– to be competitive;
– to cure systemic process and behavioral problems;
– to enhance the capability to expand to other
industries;
– to accommodate an era of change;
– to satisfy the customers, employees, and other
stakeholders who want them to be dramatically
different and/or to produce different results
– to survive and be successful in the long term; and
– to invent the “rules of the game.”
• Whatever the reason for reengineering, managers
should ask themselves
– What do our customers and other stakeholders
want/require?
– How must we change the processes to meet customer
and other stakeholder requirements and be more
efficient and effective?
– Once streamlined, should the processes be computerized
(i.e., how can information technology be used to
improve quality, cycle time, and other critical baselines)?
• Processes must be streamlined (i.e., re-invented)
before they are computerized. Otherwise, the
processes may produce results faster, but those
results may not be the ones need or needed.
Requirements for Successful Process Reengineering
• Essential elements of process reengineering
– 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).
Why Process Reengineering Fails?
– 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 (educe) on reengineering resources.
– Dissipating (scatter, wasting) 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).
• 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.
Balanced Scorecard (BSC)
What is the balanced Scorecard (BSC)?
• An improved strategic planning process for
focusing on the most important things,
• A change initiative for visualizing and
communicating an organization’s long term
strategic intent to all employees,
• A framework for breaking strategy into actionable
strategic objectives,
• An effective strategic management system for
aligning day to day work to an organization’s
vision and strategy using strategic performance
measures and strategic initiatives,
• An integrated framework for informing strategic
budgeting, and allowing the organization to learn
what works and to become more strategy
focused,
• In other words, BSC is an integrated strategic
planning and management system, not just a
measurement system!
• An effective strategic management system for
aligning day to day work to an organization’s
vision and strategy using strategic performance
measures and strategic initiatives,
• An integrated framework for informing strategic
budgeting, and allowing the organization to learn
what works and to become more strategy
focused,
• In other words, BSC is an integrated strategic
planning and management system, not just a
measurement system!
• An effective strategic management system for
aligning day to day work to an organization’s
vision and strategy using strategic performance
measures and strategic initiatives,
• An integrated framework for informing strategic
budgeting, and allowing the organization to learn
what works and to become more strategy
focused,
• In other words, BSC is an integrated strategic
planning and management system, not just a
measurement system!
Other kinds/ types of Organization Change
– Before the 1980s, the term “change” described
as everything that needed to be different in
organizations.
– Linda Ackerman Anderson (1986), defined the
three most prevalent types of change
occurring in organizations as:
• developmental change,
• transitional change, and
• transformational change.
• Developmental Change
– is the simplest of the three types of change.
– represents the improvement of the existing skill,
method, performance standard, or condition that for
some reason does not measure up to current or future
needs.
– Metaphorically, developmental changes are
improvements “within the box” of what is already
known or practiced.
• Such improvements are often logical adjustments to current
operations.
• They are motivated by the goal to do “better than” or do
“more of” what is currently done.
– The key focus is to strengthen or correct what already
exists in the organization, thus ensuring improved
• Developmental change
– The process of development keeps people vibrant,
growing, and stretching through the challenge of
attaining new performance levels.
– In it, the new state is a prescribed enhancement of the
old state, rather than a radical or experimental
solution requiring profound change.
– is usually a response to relatively small shifts in the
environment or marketplace requirements for success
—or simply the result of a continuous need to improve
current operations (process improvement).
• The degree of pain triggering developmental change is
usually low, at least in comparison to the other types of
change.
– This does not mean that developmental change is not important
or challenging; it is, however, the risks associated with
developmental change, and the number of unpredictable and
volatile variables tied to it, are considerably fewer than with the
other two types of change.
• In developmental change, the gap between what the
environment and marketplace calls for and what currently
exists is comparatively low.
• Consequently, the threat to the survival of the
organization is also low.
• This makes creating and communicating a clear case for
developmental change a far simpler matter than with the
other two types of change.
• There are two primary assumptions in
developmental change.
– First, people are capable of improving, and
– second, they will improve if provided the appropriate
reasons, resources, motivation, and training.
• The most commonly used developmental change
strategy is training
– a new skills, better communication, or new techniques
or processes for accomplishing the higher goals.
• Leaders can best initiate developmental change
through sharing information about why the
performance bar has to be raised and by setting
stretch goals.
• When leaders challenge people to excel and provide
them the resources and support to do so, this
usually produces the necessary motivation for
successful developmental change.
• Leaders can use an assessment and problem-solving
approach to identify, remove, or resolve what has
blocked better performance.
• They can also use the existing goal-setting and
reward systems to improve motivation and behavior.
• Developmental change
– applies to individuals, groups, or the whole organization.
– is the primary type of change inherent in all of the following
improvement processes:
• Training (both technical and personal), such as communications,
interpersonal relations, and supervisory skills;
• Some applications of process improvement or quality;
• Some interventions for increasing cycle time;
• Team building;
• Problem solving;
• Improving communication;
• Conflict resolution;
• Increasing sales or production;
• Meeting management;
• Role negotiation;
• Survey feedback efforts;
• Job enrichment; and
• Expanding existing market outreach.
Transitional Change
– is more complex.
– It is the required response to more significant shifts in
environmental forces or marketplace requirements for success.
– Rather than simply improve what is, transitional change
replaces what is with something entirely different.
– begins when leaders recognize that a problem exists or that an
opportunity is not being pursued—and that something in the
existing operation needs to change or be created to better serve
current and/or future demands.
– Once executives, change leaders, or employee teams have
assessed the needs and opportunities at hand, they design a
more desirable future state to satisfy their distinct
requirements.
– To achieve this new state, the organization must dismantle and
emotionally let go of the old way of operating and move
through a transition while the new state is being put into place.
• Examples of Transitional Change
– Reorganizations;
– Simple mergers or consolidations;
– Divestitures;
– Installation and integration of computers or new
technology that do not require major changes in
mindset or behavior; and
– Creation of new products, services, systems,
processes, policies, or procedures that replace old
ones.
• Richard Beckhard and Rubin Harris (1987)
– first named and defined transitional change in their Three
States of Change model, which differentiated “old state,”
“new state,” and “transition state.”
– They articulated that transitional change requires the
dismantling of the old state and the creation of a clearly
designed new state, usually achieved over a set period of
time, called the transition state.
– This state is unique and distinct from how the old state used
to function or how the new state will function once in place.
– They were the first to suggest that changes of this nature
could and needed to be managed.
– These two pioneers in the field of change management
provided some critical strategies that continue to be useful
today for transitional change
• Leaders typically perceive transitional changes as projects
that can be managed against a budget and timeline, and
rightfully so.
• Transitional changes usually have a specific start date and
end date, as well as a known concrete outcome designed
according to a set of preconceived design requirements.
• Traditional approaches to project management are
usually quite effective for overseeing transitional change,
especially when the people impacted by the change are
fully aware of what is going on and are committed to
making it happen.
• Project management approaches work best when there
are few people issues because significant human
variables usually make a project “unmanageable.”
• The degree of focus required for the human and cultural
components is a key differentiator between transitional and
transformational change.
• In transformational change, human and cultural issues are
key drivers; in transitional change, they are often present,
but are not dominant.
– For instance, in technology installations that are transitional in
nature, such as simple software upgrades, the only behavioral
change required is learning the new system. The new technology
does not change people’s roles, responsibilities, or decision-
making authority. It merely improves how they do their current
jobs.
– In technology changes that are transformational, such as in
significant information technology installations, the new
technology requires people’s behavior, jobs, and perspectives on
their lives or work to change, making the human impact and the
change strategy required to deal with it much more complex.
• In transitional change, the requirements for deep
personal change are low and quite predictable, making
the human dynamics more “manageable” than in
transformational change.
• Building a transitional change strategy and well-planned
change process assists with the human requirement.
• If leaders experience difficult human and cultural impacts
in transitional change, it is usually the result of one of
the following human dynamics:
– People possessing inadequate skills for functioning in the new
state;
– People being “left in the dark” and feeling uncertain about
what is coming next;
– People’s lack of understanding of the case for change or the
benefits of the new state;
– People’s reluctance to stop doing what they have
always done in the past;
– Homeostasis or inertia—people’s natural resistance
to learning new skills or behaviors;
– People’s emotional pain or grief at the loss of the
past;
– Poor planning and implementation of the change,
which creates confusion and resentment;
– Unclear expectations about what will be required to
succeed in the new state;
– Fear about not being successful or capable in the new
state; and/or
– Inadequate support to succeed in the new state.
Transformational Change
• is the least understood and most complex type of
change facing organizations today.
• transformation is the radical shift from one state of being
to another, so that it requires a significant shift of culture,
behavior, and mindset to implement successfully and
sustain over time.
• transformation demands a shift in human awareness that
completely alters the way the organization and its people
see the world, their customers, their work, and
themselves.
• In addition, the new state that results from the
transformation, from a content perspective, is largely
uncertain at the beginning of the change process and
emerges as a product of the change effort itself.
• Therefore, the transformation litmus test is found
in these two basic questions:
1. Does your organization need to begin its change
process before its destination is fully known and
defined?
2. Is the scope of this change so significant that it
requires the organization’s culture and people’s
behavior and mindsets to shift fundamentally in order
to implement the changes successfully and succeed in
the new state?
• If the answer is “yes” to either of these questions,
then you are likely undergoing transformation.
• If the answer is “yes” to both, then you are
definitely facing transformational change.
• Organization change stems from changes in the
environment or marketplace, coupled with the
organization’s inability to perform adequately using its
existing strategy, organizational design, culture, behavior,
and mindset.
• The pain of the mismatch between the organization
(including its human capability) and the needs of its
environment creates a wakeup call for the organization.
• Ultimately, if the leaders of the organization do not hear
or heed the wakeup call, and the organization does not
change to meet the new demands, the organization will
struggle.
• To thrive, the leaders must hear the wakeup call,
understand its implications, and initiate a transformation
process that attends to all the drivers of change.
Summary
• The three different types of change operating in organizations
requires different change strategies.
• Developmental and transitional changes are the most familiar
and are easier to lead.
• Developmental change is the improvement of something that
currently exists, while transitional change is the replacement
of what is with something entirely new, yet clearly known.
• Both developmental and transitional change possesses
common characteristics:
– Their outcomes can be quantified and known in advance of
implementation;
– significant culture, behavior, or mindset change is not required; and
– The change process, its resource requirements, and the timetable,
for the most part, can be managed.
• In developmental change, simply improving
current operations is adequate.
• In transitional change, replacing current
operations with new, clearly defined practices
suffices.
• But in transformational change, the
environmental and marketplace changes are so
significant that a profound breakthrough in
people’s worldview is required to even discover
the new state with which they must replace
current operations.
• transformation, requires a completely different
set of change leadership skills.
• Transformation is the newest and most complex type of
organization change, possessing very different dynamics:
– The future state cannot be completely known in advance;
– significant transformations of the organization’s culture and
of people’s behavior and mindsets are required; and
– The change process itself cannot be tightly managed or
controlled because the future is unknown and the human
dynamics are too unpredictable.
• Transformation requires
– leaders to expand their worldview and increase their
awareness and skill to include all the drivers of change, both
external and internal.
– a different mindset and style; demands that both leaders and
employees undergo personal change as part of the
organization’s transformation.
• In developmental and transitional change,
– leaders can manage the change process with some
appearance/ semblance of order and control.
– They know where they are going and they can plan
with greater certainty how to get there.
• In transformation,
– the change process has a life of its own and, at best,
leaders can influence and facilitate it.
– If they attempt to control it, they will stifle creativity
and progress.
– The “order” of the future state emerges out of the
“chaos” of the transformational effort itself.
– Transformation, in fact, is the emergence of a new
order out of existing chaos.
• Chaos, as used here,
– refers to the increasingly unstable dynamics of the
organization as its current form disintegrates and is no
longer as functional as it once was.
– The resulting new state is the product of both this
chaos and the process that ensues to create a better
future