CHANGE MANAGEMENT

CHAPTER LEARNING OUTCOMES

AFTER READING THIS CHAPTER, YOU SHOULD BE ABLE TO:
• Un derstand the importan ce of organizational change.
• Discuss the role of change as part of organizational planning.
• Discuss the steps of a generic change project.
• Define and discuss the process of planned change.
• Un derstand how emergent change occurs.
• Un derstand the principles of a learning organization.
• Discuss how the principles of a learning organization are important to both
planned and emergent change.

NEL

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 Change often affects the entire organization, and almost • Strategic positioner--to be able to identify the
always extends beyond the HR function. Because it affects activities, outcomes, and human capital neces-
so many jobs and functions within the firm, it must include sary for a business to succeed in its market.
participation from all employees who are influenced by • Credible activist-to be a trustworthy partner
the change process. This means that change must be to the business in helping to understand how
embedded deeply within the organization; if it is left to to solve business challenges.
a single department or individual to ensure that change
• Paradox navigator-to be able to understand
occurs, it is bound to fail. This raises a question around
and work from different points of view, and
the role of HR and HR professionals in being agents of
different mental models. For example, to be
change. Both the Human Resources ProfessionalsAssocia-
able to bring together a top-down view of
tion (HRPA) in Canada and the Society for Human Resource
competencies with a bottom-up view of KSAOs
Management (SHRM) in the United States identify change
from job analysis.
management as a requisite competency for the practice of
HR, but what does HR do to initiate and perpetuate change? • Communicator-to be able to create an envi-
Understanding the role of the HR function or the ronment in which employees feel that they
HR professional in bringing about change can be dif- can speak up about what is working and what
ficu lt. As we will see throughout this chapter, successful needs to be improved, and believe that they
change requires an organizational culture that is open to can have an impact on the organization.
constant learning, empowering employees to question • Systems thinker-- to be able to understand
processes, and to experiment with new ways of thinking all aspects of the business, including what
about how things get done. Some researchers suspect customers value about the fi rm's products
that because the HR function is often viewed as a gate- or services. This will enable the HR func-
keeping function and a bureaucracy, it is infrequently tion to understand the interactions between
a leader in promoting change. Another impediment to all aspects of the fi rm so that as one aspect
acting as an agent for change is the fact that the HR changes, it is possible to envision how it will
function often plays a supporting role in the organiza- affect the system as a whole.
tion. HR advises the business line, but rarely leads it.
This makes it difficu lt for the HR function to guide the Adapted from: Power, B. (November 16, 2011). "Why Doesn't HR
organization through change. Lead Change?" Harvard Business Review Digital Article; Ulrich, D., M.
Kryscynski, and M. Ulrich. (2017). "Competencies for HR Professionals
In order to lead change, researchers suggest that HR Who Deliver Outcomes," Employment Relations Today, 44(2), 37-44;
professionals should possess a specific set of competen- Anderson, C. (April 2, 2015). "There's a Good Reason Why HR Should
cies, including the following: Lead Change Initiatives." Talent Management and HR, tint.com

11 WHY IS ORGANIZATIONAL CHANGE IMPORTANT?

Organizational change lies at the heart of the planning process. Organizations are
dynamic entities, constantly growing or contracting, and responding to internal and
external changes, some of which are within the control of the firm and others beyond
its control. The planning process anticipates organizational resource requirements in
response to organizational change using a variety of methods to forecast demand and

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 supply, and by connecting resource requirem ents with strategic and operating impera-
tives. In order to effectively plan for and anticipate resource requirements, organ iza-
tional planners must have a strong understanding of organizational change. Chapter 1
introduced the roots of organizational planning and change in firm strategy. In that
chapter we learn ed that strategy is a plan for establishing and maintaining a competitive
advantage in the market, and that th e firm's strategy provides the ideological context
within which organizational change takes place. Later chapters cover specific change ini-
tiatives such as downsizing and restructuring, outsourcing, and mergers and acquisitions.
In this chapter we span the gap between change at th e level of conceptualizing strategy
and change at the level of sp ecific initiatives by examining the change process itself.

THE INCREA-SING PACE OF CHANGE

Innovations like the World Wide Web connect people and ideas across the boundaries
of time and space to enable change in ways th at we are only beginning to grasp. Crowd-
funding, open-source software development, collaborative knowledge repositories such as
wikis and shared folders, mass customization, the shared economy, and other communi-
cation-enabled advancements are changing the way businesses operate, an d now connect
innovators with each other, their competitors, and customers to bring about dramatically
faster product developm ents. These changes are occurring amid unprecedented levels of
economic, political, and environmental uncertainty. In response to these levels of change
and uncertainty, organizations are moving toward systems that enable faster response
and adaptation to change. Flatter organizational structures, more fluid job roles, greater
employee autonomy, an d team-based learning and decision m aking are all efforts that
can facilitate organizational knowledge acquisition an d action based on that learning.
Given the quickening pace of change an d higher levels of un certainty in today's
business environment, firm s that are able to manage ch ange effectively are in a posi-
tion to outperform their slower, less change-capable competitors. The ability to manage
change is such an important organizational competen cy th at some scholars believe that
it is the only form of sustainable competitive advantage. 1 Where other forms of competi-
tive advantage are susceptible to erosion through imitation, competition, or changing
con sum er needs, firms th at are able to adapt to th eir environment faster maintain the
ability to stay ahead of their competition . Accordingly, the most important aspects of the
job of a gen eral manager include creating and directing strategy, and managing change. 2

11 SOCIETAL, INDUSTRIAL, AND ORGANIZATIONAL

LEVELS OF CHANGE
Organizational change occurs in response to societal, industrial, and firm-level develop-
ments. At the societal level, economic and environmental issues can be strong drivers of
change. For example, after the 2008 recession, big-box stores such as Best Buy, Walmart,
Target, and Home Depot found that revenues were dropping in their large-format stores.
Several of the big-box stores have even begun to close their large stores, while others have
found that the big-box form at is either restricting growth by not allowing the format to
serve smaller communities, or that the number of useful locations for these large shopping
outlets is becoming saturated. Furthermore, as people turn increasingly to online shop-
ping, the big-box format is becoming less relevant to shoppers. Big-box retailers are now
developing smaller versions of their stores in an attempt to adapt to these societal changes.

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 At the industrial level, change typically follows an S-curve pattern in which sales
of a new product or service begin slowly as demand builds, followed by rapid growth
as the market for the product or service becomes mature, which leads to a tapering
as consumer demands develop and change. The market for tablet computing devices
showed a slow start as the computer industry struggled to put together all th e attributes
of size, weight, ergonomics, and technological capabilities that make a successful tablet
device. Apple found a winning design in iPad, and the market took off, leading to suc-
cessful designs from competitors as well. As sales of the original iPad began to peak and
competition increased from other firms and devices such as smartphones with larger
screens, Apple brought out a smaller version at a different price point and with slightly
different features, and also began actively pursuing new markets for the tablet through
partnerships like its alliance with IBM to bring iPad to the corporate market.
Firm-level developments occur largely as a result of demands from stakeh olders.
Shareholders, a particularly powerful group of stakeholders, might demand higher return
on equity, new leadership might prefer a different strategic direction, or internal resource
constraints might lead to strategic change. Large firms like GE, with multiple business
units in different industries, might develop interesting opportunities in multiple indus-
tries, but resource constraints such as managerial capabilities or financial resources might
lead to difficult decisions resulting in changes to th e decisions around the projects that
are approved and th e projects that are downsized or shelved. Thus, decision making
based on internal, firm-level choices can be a strong source of organizational ch ange.
Given the multiple levels from which the need for organizational change can arrive,
it is no surprise that firms experience an ongoing state of change. However, organizations
do not always change when they should, and even when they do ch ange, they often
experience failure. Research suggests that up to 70 percent of organizational change
efforts fail. 3 We will examine several models of organizational ch ange that attempt to
model, understand, and mitigate these reasons for failure.

11 MODELS OF ORGANIZATIONAL CHANGE

There are many models of organizational change. In this section we will examine the
view of organizations as open systems, and how this view impacts our understanding of
organizational change through three basic models that form the basis of most models of
change. The first is a generic model of change th at demonstrates the attributes th at are
common to the many models of organizational change. The other two models include
a model of planned change, followed by a model of emergent change.

ORGANIZATIONS AS OPEN SYSTEMS

The term system refers to a set or arrangement of interrelated parts that interact to form
a whole. 4 Organizations are systems that comprise multiple subsystems. A corporate
functional group, such as the marketing department or the HR department, can be
considered a subsystem within the organization, as can the retail division of th e firm.
Open systems
These subsystems interact in complex ways. An open-system perspective views the A system that receives
organization not from the point of view of an individual subsystem or even groups of inputs from its external
subsystems, but from the perspective of the organization as a whole, and its interaction environment
with its environment. Organizations are open systems because they interact with their

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 external environment, and because the internal subsystems interact with one another. 5
Organizations impact and are impacted by their external environment and by the other
subsystems working within them. The unpredictable and interconnected nature of these
open system dependencies are primary reasons that organizational change can be so
difficult, and so prone to failure.

THE IMPORTANCE OF FEEDBACK

Open systems are input-throughput-output systems in that they take or receive inputs
from their environment, transform or convert those inputs, and then output the finished
products or services back to the environment. The factor that defines the structure of
an open system is its purpose; goals are used as indicators of whether the system is
functioning according to its purpose. The objective of an open system approach in
organizations is to structure and coordinate all the subsystems in a manner that ensures
that the firm is collectively pursuing its overall purpose. 6 Therefore, organizations must
use feedback to determine whether or not they are achieving their goals, and ultimately
their strategic purpose. Two basic forms of feedback are positive and negative feedback.
Negative feedback is the kind of information that tells whether the system is achieving its
goal. For example, the thermometer in your room operates through negative feedback;
the set temperature is its goal, and it will operate the heater until the room temperature
rises to the set temperature before shutting off. If an organization determines that it
needs to produce 1,000 pairs of shoes every month, it will use negative feedback to
determine if its daily production is on track.
Positive feedback, on the other hand, is the kind of information that a system uses
to determine if its purpose is suited for its environment. Positive feedback helps the
organization to determine if it should be producing 1,000 pairs of shoes a month, or
what styles of shoe it should be producing. Organizational change implementations
must take into account the potential effect of changes on other subsystems and on the
environment, and all models of organizational change incorporate methods for utilizing
negative and positive feedback into the design and decision-making processes around
change. However, benefitting from feedback implies learning. Organizations must also
have systems in place for learning in order to use feedback, and different methods of
learning are required to access negative and positive feedback. Chris Argyris, a thought
leader and noted researcher in the area of organizational behaviour referred to these
methods of learning as single-loop and double-loop learning. 7

SINGLE-LOOP LEARNING
This type of learning is more related to problem solving in the form of identifying and
Single-loop learning correcting errors. Single-loop learning is the type of learning around negative feedback,
The attempt to solve a and essentially seeks to learn how to achieve a set goal within the current set of governing
problem using a single variables. Single-loop learning permits the organization or the individual to proceed
strategy, without exam-
ining the validity of the according to the status quo, and can impede change implementations, especially when
problem itself the change requires new and different goals. HR Planning Notebook 9.1 discusses strate-
gies for overcoming the tendencies to reinforce single-loop learning.

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 Single-loop learning can prevent the learner from devel- 2. Afocus on maximizing winning and minimizing losing.
oping an understanding of underlying or root issues. It is Success is important, and failure is difficult to accept.
typified by the following values: Organizations can increase their learning abilities by
1. The desire to remain in unilateral control. encouraging experimentation, and allowing members to
make mistakes. Individuals and groups can move beyond
Predetermined goals and existing methods of achieving defensive routines when they accept their mistakes, and
those goals provide a sense of control. It is generally learn from mistakes from a more objective frame of mind.
easier to change the things that fall within our direct
control than to change things that are not. For example, 3. Leaving potentially threatening or embarrassing facts
when asked to find ways to increase profits, managers out of the decision-making process.
often seek to cut costs, which are known and within the This tendency relates strongly to the previous point about
control of managers, than to increase revenues, which the importance of encouraging experimentation. When
are less certain. One way to reduce the tendency to want errors can be career limiting or when they can negatively
to remain in unilateral control includes allowing more impact performance appraisals, it is only rational to want
democratic and inclusive methods of decision making by to ignore them. However, by accepting errors or misfires as
pushing decision making to groups or giving individuals part of the risk-taking process of creativity and innovation,
greater autonomy in decision making. learning can be enhanced.

Sources: C. Argyris, "Teaching Smart People How to Learn," Harvard Business Review, 3 (1991): 99-109; and C. Argyris, R. Putnam, and D.M. Smith,
Action Science, San Francisco: Jossey-Bass, 1985.

DOUBLE-LOOP LEARNING
Double-loop learning involves questioning the tacit assumptions an d attributions that
people have around their decision making. In organizational settings, this involves
questioning the extent to which the strategy itself, and the systems and structures that
implement th e strategy, support th e underlying purpose of the organization. When
managers and employees examine the assumptions they have used to arrive at a point of
view, they are using double-loop learning that enables them to bypass the assumptions
that may be locking them into a particular frame of mind, and preventing them from
viewing the problem from a different perspective. Double-loop learning is typified by Double-loop learning
en couraging participation in decision making and open expression of conflicting views, A method of learning
that involves ques-
using valid information, and widespread and open testing of evaluations. tioning current
The success of organization al change is therefore depen dent on the m ethods of assumptions, exam-
feedback that organizations use, the validity of information that is gathered and shared, ining a problem from
the alignment of goals to the organization's purpose and to the change implementation, different perspectives,
and the extent to which double-loop learning is fostered. Models of change must allow and questioning the
valid ity of the problem
for these factors to be considered, and differences between models of change often come
down to issues relating to the scale of the change or method in which these variables
are taken into account.

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 11 THE GENERIC MODEL OF CHANGE
Many models recognize that the process comprises several critical periods of change
as shown in Figure 9 .1. 8 This figure represents an overview of th e change process, and
incorporates the need for con stant review of the change process as well as the need to
mon itor and adapt to the internal and external changes that may be affecting or caused
by the change process.

RECOGNIZING THE NEED FOR CHANGE AND STARTING THE PROCESS

This is on e of the most difficult stages in the change process. Change requires not only
that a need to change is identified, but that the n eed is broadly felt among all participants
involved in the change process. Without full buy-in from all stakeholders, change efforts
are likely to fail. Once the need for change has been identified, the m otivation for that
change must be spread throughout the firm. This motivation can come in the form of
incentives tied to organizational goals that are aligned to the desired outcomes of the
change, or in the form of a high-involvement/high-commitment strategy that aligns
employee values with organizational values. 9 Successful change initiatives tend to involve
management and employees in the process of discovering the problems and developing
the solutions, as this inclusive style tends to promote a shared understanding of the issues.

DIAGNOSING WHAT NEEDS TO BE CHANGED

Organizational change is complex, involving multiple stakeholders, unpredictable out-
com es, and unexpected consequences. Models of organizational change tend to deal
with the diagnosis of what needs to change by examining the leadership of the change
process, the overall purpose of the change, an d th e degree of planning involved in th e
change process. Will leadership be a top-down style in which management determ ines
what n eeds to change and comm unicates goals down through the organization, or a
bottom-up approach in which all levels of employees share in determ ining what needs
to change an d teams are charged with developing plans of action? Is the purpose of
the change to maxim ize the economic value of the firm by focusing on shareholder

FIGURE 9.1
ADAPTATION OF HAYES' GENERIC MODEL OF CHANGE

Source: Adapted from J . Hayes, The Theory and Practice of Change Management (3rd ed.), (New York: Palgrave Mac-
Millan, 2010).

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 value-in which case a top-down approach may be utilized-or is the purpose to develop
the human capability to implement the firm's strategy, where a bottom-up approach
may be a better choice? Is the level of planning detailed, with firm goals and a timeline
outlined from the beginning, or is the planning loose, with a general direction and
plenty of room for experimentation? All these manifestations of change planning can
be successful, but they must be implemented in suitable situations. Change models
help the strategic planner to understand how to use these methods.

PLANNING AND PREPARING FOR CHANGE

The type of change intervention that will be most successful will depend on the orga-
nization culture, leadership, timeline available for the change to be implemented, and
the purpose of the change. Organizations commonly take implementation approaches
that vary in the degree to which organizational members are involved in the change,
and the scope of the implementation, ranging from change based on the identifica-
tion of a specific problem to change based on changing the entire system, as shown
in Figure 9.2. For example, changes based on a specific identified problem such as the
adoption of a new HR information systems (HRIS) technology platform might have
the potential to affect a broad population within the organization; however, this type
of change initiative might be addressed using a top-down managerial approach. Senior
managers within HR might request an RFP from several prominent HRIS providers,
make a decision using feedback from business unit-level HR managers, and roll out
training along with the new system to the broader organization upon implementa-
tion. This example of a narrow level of involvement for a broad implementation can
be contrasted against change implementations that seek to involve a much broader
group of stakeholders. The proliferation of high-involvement (often referred to as
high-performance) work practices in recent years suggests that firms are moving more

FIGURE 9.2
COMMON CHANGE IMPLEMENTATION STYLES

LEVEL OF INVOLVEMENT

CONSULTANTS OR TOP-DOWN ALL EMPLOYEES

MANAGEMENT TEAMS
System-wide change Tight structure. Top-down, planned Loosest structure.
z change initiative. Emergent change,
-~
0 or combination of
emergent and planned
.....
z
w approach.
~
w
.....
c.. Change to solve a Tightest structure. The Tight or loose
-
~
LL
0
specific problem problem, proposed solution,
and implementation plan come
structure, depending
on organization culture
w from management. Incremental and management
c..
0 change intended to bring localized approach to the
(.)

"' improvement. problem.

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 toward greater levels of employee involvement in organizational decision making and
change implementation . An example of a high-involvement work practice is a gain-
sharing compensation plan, where employees are rewarded for reducing production
costs and increasing organizational efficiencies. Such a plan motivates employees to
think creatively about developing and implementing new ways to be more efficient.
More tightly structured and larger-scale changes will require many changes to orga-
nizational systems and processes, while loosely structured changes will require deep
organizational learning around the firm's vision and values. As organizations seek to
involve more constituents in the process of developing and implementing change, the
structures that guide the change process, including goals, levels of autonomy in decision
making, and feedback systems tend to be broader and more loosely controlled. According
to John Kotter, good leaders tend to focus on setting direction rather than plan; align
people to a common purpose rather than organize them; and motivate people to move
in a particular direction rather than problem solve around the systems and processes
used to push people in a particular direction. 10 This view of leadership suggests that
any change process should begin with the establishment of a clear understanding of the
firm's overall vision and direction. When anchored around a common understanding
of the firm's vision, highly structured change implementations can be constructed such
that all the goals, processes, and practices that are intended to move the organization
in the direction of the change are internally aligned. A common understanding of the
firm's vision is even more important to loosely structured change initiatives, where
leadership tends to express very loose goals around which organizational processes
and practices emerge. For example, Bob Galvin, CEO of Motorola, in 1983 helped to
transform the company by challenging his executives to "renew the organization." 11
Such a challenge would lack impact or even meaning without a strong understanding
of the firm's broader purpose.

~
-(_)
0
( /)

@ , __ _ _ _ _ _ _ _ _ _ _ _____.. _ _____..

Employees often have very good ideas about how to improve processes.

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 IMPLEMENTING THE CHANGE
Implementing change demands particular skills from both the change leaders and those
involved in the change. Successful change leaders rely on their ability to make use of the
complex social networks that connect people within organizations, and their political
skills, which can be defined as the ability to persuade, manipulate, and negotiate to
achieve a particular outcome. 12 Social networks in organizations are rarely reflected Social networks
by the formal reporting structures. These networks are instead based on the extent to The networks of ties
which people routinely communicate with one another and whom people turn to for that an individual has
with other individuals
information relating to getting their work done. Social networks in organizations can be
complex and very difficult to observe, and employees who become influential members
of a social network are often those with high levels of firm-specific human capital in
that they are instrumental to getting work done or helping others to get work done
better or faster. An influential role in a social network can therefore be a very important
tool in helping to achieve buy-in from others around the importance of the change
initiative and in bringing about shared mental models of the firm's vision and purpose.
Political skills are also important in achieving widespread buy-in for a change ini-
tiative. Persuading others is rarely done using a single, convincing argument. Rather,
persuasion is a process that involves listening to others, learning about the positions and
perspectives of others, and incorporating those views into an argument (see HR Planning
Notebook 9.2 for tips on how to increase persuasiveness). Persuasive skills are quite similar
to the dimensions of political skills, which include social astuteness, interpersonal influ-
ence, networking ability, and apparent sincerity. 13 Leaders involved in a change process
must to be able to exercise political and persuasive skills, and to draw from social networks
in order to ensure the success of the change implementation.

The ability to persuade others is an important skill not This is done in politics, of course, where politi-
only for managing change but also as a general leadership cians choose words carefully to elicit an emotional
skill. A good argument requires support and understanding response that frames an issue in a preferred manner.
from others, and those who are better able to supplement For example, referring to the US Patient Protection
a strong argument with persuasive skills are more likely to and Affordable Care Act (otherwise known as Obam-
find that support. One model of persuasion suggests that acare) as socialized medicine or as health insurance
there are four steps to persuading others: reform frames the act in very different ways that
1. Establishing credibility with the audience by demon- produce potentially different responses. Strong persua-
strating expertise and gaining trust. People are less likely sive skills involve framing an argument in a manner
to follow those whom they do not trust. An important first that the audience will be able to relate to and find
step is to help others to see how your position is informed appealing.
through expertise, and that you are a trustworthy source. 3. Providing evidence through the use of supporting data
2. Framing your position in a way that will appeal to the and appealing stories, metaphors, or analogies to help
audience by emphasizing the advantages. The way the audience visualize your position. Metaphor is an
in which people respond to ideas is partly dependent excellent tool for communicating something new or
on the way the information is presented, or framed. different by relating it to something with which people
(continued)

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 are already familiar. For example, children who are not 4. Connecting emotionally by matching the emotional
equipped with language to describe sensations like a state of the audience. To do this, good persuaders
foot falling asleep will communicate the odd feeling require emotional intelligence. Emotional intelligence
using a metaphor such as "a hundred bees are buzzing involves an ability to be aware of and capitalize on
on my foot." People skilled in persuasion help others one's own emotions and the emotions of others.
to understand their position by creating shared mental Effective persuasion requires an emotional appeal in
models to describe unique, novel, or abstract ideas. addition to a rational argument.

Source: J.A. Conger, "The Necessary Art of Persuasion," Harvard Business Review, 76 (1998): 84-95.

SUSTAINING THE CHANGE

Implementing organizational change also requires a firm-wide approach to enable the
change process, regardless of its scope. Change initiatives that are of a narrow, more
focused approach may make use of a new business process, with a commensurate level
of training around the new process, whereas large-scale change initiatives may involve
many unknowns that cannot be completely anticipated. Such changes require organi-
zational learning and experimentation in order to plot a successful change path. We
will cover two prototypical models of organizational change in the next section that
address how organizational change can be implemented.
Once change has been implemented, steps must be taken to ensure that the organiza-
tion does not slip back into its pre-change mode. While new methods or processes can be
put into place, these methods will likely not endure if they do not fit with the firm's culture,
or if they are not incorporated into existing mental models of how things work within the
organization. For example, despite the potential benefits of merging to both Daimler and
Chrysler in terms of expected market development and resource sharing, and despite all the
systems put in place to merge these two firms, the inattention to integrating the cultures
of these two very different firms ultimately led to one of the most notable merger failures
in the auto industry. 14 Sustaining change usually involves a set of measures to provide
feedback to the organization that indicate when goals that relate to successful change are
being met, and systems that can lead to the development of adaptations when those goals
are not being met. HR Planning Today 9 .1 provides an example of how an organization
uses mental models and its ability to adapt to navigate through a rapidly changing market.

You.i is a young Canadian high-technology firm based in Flick, co-founder and Chief Executive at You.i, explains that
Ottawa, Ontario. Change in the high-technology industry is the vision behind the firm is "to bring the best user experi-
constant and fast paced, especially in small firms that are ence to all screens." This vision is focused on the video
in the process of developing a market niche (i.e., a portion market space, and is further enlivened by the guiding prin-
of the market that contributes value to the consumer, and ciples of having well-designed workflow, cross-platform
is not currently being served, or is underserved). Jason capability (i.e., it works on all hardware platforms including
(continued)

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 smartphones, tablets, and computers of all major brands), leading to a rethinking of You.i's rendering engine, and a
and high performance (such as quick video rendering, subsequent breakthrough in the speed of its video ren-
fast loading and response, etc.). You.i seeks to keep its dering software. The speed of You.i's rendering software
vision at the forefront of employees' minds by making the is a critical aspect of one of the guiding principles, and
vision a focal point during product meetings. You.i con- is a strong differentiating feature of You.i's product in the
ducts several employee retreats every year in which all marketplace. In this change incident, You.i quickly realized
employees are brought together to discuss and have input that the mental models it was using around how to imple-
on what the vision means at You.i and how it impacts their ment its vision of bringing "the best user experience to all
work. Flick further explains that the company's vision is screens" were no longer relevant due to changing environ-
communicated to both employees and customers through mental conditions, and adapted new mental models around
the creation of prototype software. The software is only how to deliver its vision. When organizations are focused
for demonstration purposes, and shows how You.i envi- on a clear understanding of a future vision, and carry the
sions the future blending of art and science in the world ability to adapt and learn, environmental changes can bring
of video streaming. Its purpose is to not only give potential opportunities where other firms may see a dead-end.
customers an idea of what You.i can do, but also help to
affirm the aspirations of the employees at You.i, and give
them the opportunity to bring You.i's current vision to life,
to give it substance.
In a recent example of change, You.i was working on
a video streaming solution that was intended to extract
the highest video performance from smart devices that
did not have a built-in graphics chip. However, rapid
E
advancements in the hardware configurations of smart 0
(_)
(/)

3:
devices led the team at You.i to realize that the market Q)
:z
~
was moving toward a widespread use of graphics chips LL
'
(.)
in these devices. You.i had to make a major change in its :z
(/)
:z
organizational activities. Management decided to abandon 0
!::(
some of their high-priority projects relating to maximizing (.)
:z
::>
:a:
video performance without using the graphics chip; but :a:
0
(.)

this shift in focus remained true to the overall vision and (/)
a:
UJ

the guiding principles of You.i. As a result, much of the <.!}

0
a:
@
learning that went into the abandoned projects served as
a springboard to guide the resulting projects, ultimately Vision and the use of mental models helped make You.i a success.

Source: Based on interview with Jason Flick, President and CEO, You.i, and Deborah Naczynski, Head of Education and Outreach, You.i.

11 THE PLANNED MODEL OF CHANGE

It has been argued that Kurt Lewin's three-step model of planned organization change
is the model around which most subsequent change models were conceived. 15 Kurt
Lewin (1890- 1947) was a behavioural psychologist who focused much of his work on
situational and group influences on individual behaviour. Lewin developed the three-
step model in the early 1940s as part of the Planned Approach to change that comprises
four elem ents in total: field theory, group dynamics, action research, and the three-step
model. Together these four elements form an interrelated approach to understanding
and developing solutions to change problems. We will briefly touch upon each of these
elements while fo cusing more on the three-step model.

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 FIELD THEORY
Lewin developed field theory as an approach to understanding and changing individual
or group perceptions and behaviours by seeking to understand the interdependent
forces that act on individuals or groups and that motivate them toward certain courses
of action and restrain them from others. According to Lewin, the totality of all the psy-
chological forces (i.e., their needs, goals, and intentions) that maintain an individual's
or group's set of behaviours in a given situation such as home life or work life can be
described in what Lewin called a life-space. The forces acting on a particular life-space
are always in flux, always changing, but they form a state of quasi-equilibrium, which is
referred to as the status quo. The status quo can be changed by altering the forces that
make up the life-space. Behavioural change is therefore a matter of understanding the
forces that act on an individual's or group's life-space, and reinforcing those forces that
act to move the individual or group toward the desired behaviour, and reducing the
strength of the forces that act to prevent the individual or group from moving toward
the desired behaviour. The analysis of these forces acting on individuals or groups is
also called force-field analysis.

FORCE-FIELD ANALYSIS
Force-field analysis The purpose of force-field analysis is to analyze a condition and to plan corrective actions.
A framework for ana- As Figure 9.3 shows, the analysis begins therefore with a statement of the current state
lyzing a problem that
or condition, and a statement of the desired future state or condition. The analysis then
seeks to identify all the
relevant factors and attempts to plot the forces that are supporting or driving toward the future state as well
stakeholders that are as the forces that are restraining the future state from being put into action. A force-field
acting to either sustain analysis is an important first step in a change plan (see HR Planning Notebook 9.3 for
the current state or to the steps in conducting a force-field analysis). It helps organizations to identify issues
move away from the by requiring change planners to first identify a future desired state rather than to focus
current state
solely on existing problems. It also helps planners to identify suitable courses of action
to initiate a change implementation.

Current condition: Desired cond ition: increase team

team coherence is effectiveness and communication
at an all-time low within 1 year

Driving Forces Restraining Forces

Highly ski lled, motivated emp loyees No measures of team effectiveness
Strong organizational culture of pride in good work No measures of team coherence
Managers are highly respected by subord inates Team purpose is not always clearly stated
Employees respect one another with in functional No formal structure for manag ing teams
departments Individuals not given adequate time to devote to team
Functional departments have frequent and responsibilities
productive meetings Some functional departments feel like they are more important
Organ ization has a clear vision than others
Organizational cu lture supports friend ly competition
between employees
Technology does not support interdepartmental
col laboration

Source: Based on W.L. French and C.H. Bell, Organizational Development: Behavioral Science and Interventions for
Organizational Improvement (6th ed.) (Upper Saddle River: Prentice-Hall, 1999).

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 Force-field analysis can be used as a problem-solving tool 4. Examine the valence of each of these forces. Which
as well as a change management tool. Some of the benefits forces are the strongest and which are the weakest?
of a force-field analysis include the development of a strong Which of these forces can be controlled or are sus-
understanding of the current situation, and a clarification ceptible to behavioural intervention?
around how it differs from an ideal future state or situa- 5. Develop strategies to reduce the strength of the
tion. Force-field analysis can be used to decide whether a restraining forces and strategies to amplify the driving
change is appropriate and, if so, what actions should be forces.
taken to move toward the new direction. French and Bell
6. Implement the strategies developed in step 5. As
break the force-field analysis down to the following steps:
restraining forces are reduced in strength and number
1. Describe the current state (i.e., the status quo), and and driving forces are amplified and increased in
why it must be changed. Ultimately this will lead to number, behaviours should begin to shift toward the
a statement of the current condition such as "team desired state.
coherence is at an all-time low." 7. Develop strategies to stabilize the driving and
2. Describe the desired future state. The future condition restraining forces into a new state of quasi-equilib-
should ultimately be described in a sentence or a few rium. How do we make this the new status quo?
sentences, such as "increase team effectiveness and After using a force-field analysis, organizational
communication within one year." planners can begin the process of moving toward the
3. Identify the forces that are supporting or driving future state through a series of trial-and-error attempts
toward increasing team coherence as well as the to implement the strategies developed in step 5 to reduce
forces that are restraining or preventing increased restraining forces and amplify the driving forces. After
team coherence. Techniques that access a wide moving to the new state, planners must develop strate-
variety of stakeholder viewpoints such as surveys, gies to stabilize the driving and restraining forces into a
brainstorming sessions, and nominal group technique new state of quasi-equilibrium; to turn the change into
might be useful to perform this step. the new status quo.

Source: W.L. French, and C.H. Bell. Organizational Development: Behavioral Science and Interventions for Organizational Improvement (6th ed.)
(Upper Saddle River: Prentice-Hall, 1999).

GROUP DYNAMICS
A group can be any aggregation of two or more people. Groups can be assembled
for a specific purpose or task, or groups can form spontaneously as a result of people
assembling around a common cause (e.g., an audience at a concert, or a social network
at work, or witnesses at the scene of a car accident). While not all groups have formal
rules or codes of conduct, they develop norms over time that govern or constrain the
behaviours of the individuals who comprise the group. Thus, a group is more than
merely the sum of the individuals within it; a group establishes normative behaviours
that alter the actions of group members.
Lewin believed that organizational change could be achieved only by changing
behaviours at the group level. Accordingly, efforts focused on changing individual
behaviours alone would be insufficient to bring about effective and sustainable change.

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 In oth er words, individual behaviour in organizational settings is to some extent a func-
tion of the group setting. Change implementations must be viewed from th e perspective
of the group, which involves focusing on the values, norms, and roles within th e group.

ACTION RESEARCH
While an important stage in the change process is understanding that the status quo is
not sustainable, the decisions around what needs to change are filled with uncertainty
and risk. Lewin believed that change is most likely to succeed when stakeholders are
involved in both making and implementing decisions. This implies a level of interac-
tion between research and practice whereby the practitioners are also the researchers.
Action research Action research is th eory based but, rather than seeking findings that are universal or
An iterative trial- generalizable across all situations, it is embedded in the specific context of the practi-
and-error process of tioners, and is intended to help identify and solve practical problems in a methodical,
discovery that involves
diagnosing a problem, evidence-based manner. Figure 9.4 shows the five stages of the cyclical process of action
planning a solution, research. As practitioners move from diagnosis to planning, taking action, evaluating
acting on the solution, the outcomes of those actions, learning based on the outcomes, and back to diagnosing,
evaluating the results this cyclical process is intended to spiral deeper toward greater insight into the problem
of the actions, learning and its ultimate set of solutions as new learning occurs through each cycle. 16 Action
from the outcomes, and
asking new questions research is used in many fields including management, education, sociology, psychology,
anthropology, and politics, to name a few. 17
One of the main benefits of action research is that each of the successive steps
taken to implement change is based on input from stakeholders and uses information
from prior steps. 18 When each step of an implementation informs the following steps
using action research, it is possible to understand how a change implementation can be
methodical, but allow for improvisation and unpredictability in the process. The end
result of such a process of inquiry may be quite different from the original problem
definition, as insights from each cycle of action research have the potential to lead to
previously unanticipated courses of action.

Source: Adapted from G.I. Susman, Action Research: A Sociotechnical Systems Perspective, ed. , G. Morgan, pp. 35-113
(London: Sage, 1983).

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 THREE-STEP MODEL
This model is the main component of the Planned Model of C hange, and is the primary
change framework for this chapter. The three steps of unfreezing, moving, and refreezing
have become the foundation of many subsequent models of organizational change.
Lewin's choice of wording has led to criticisms of this model, as some have argued that
the static notions of unfreezing and refreezing do not adequately address the need for
models of change to incorporate the constant ebb and flow of change within organiza-
tions. 19 However, when the th ree-step model is embedded in the four interconnected
elements of the planned model of change, it becomes clear that the model is far from
static in its consideration of organizational change. To better understand this, we will
examine the three steps of unfreezing, moving, and refreezing in closer detail.

STEP 1: UNFREEZING
As was discussed in the section on field theory and the force-field analysis, Lewin proposed
that organizational conditions exist in a state of quasi-equilibrium that is loosely maintained
by opposing forces acting to drive and restrain conditions. Because individual behaviours
are partly dependent on group forces such as norms, values, and roles, the equilibrium
brought about by the various forces and by the norms, values, and roles within the group
must be destabilized so that new learning, new norms, and new conditions can take root.
A great deal of research has been done on the tendency to resist change, and the
unfreezing stage represents the part of a change process where resistance to change is
broken down. Th e open-system view of organizations presupposes that organizations,
like organisms, tend toward homeostasis in that they try to maintain their equilibrium
in changing environments, and are naturally "change resistors."20 In addition to systemic
sources of resistance to change, individuals may resist change actively by finding fault
in or ridiculing the change plan, or passively by verbally agreeing to a course of action
but failing to actually act, by refusing to share information, or by not following through
with plans. 21 Destabilizing the status quo requires that resistance to change is overcome.
HR Planning Today 9.2 shows how IBM avoided imminent bankruptcy by unfreezing
and changing its long-standing culture and organizational activities. Edgar Schein is a
social psychologist who expanded on Lewin's three-step model by suggesting that the
process of unfreezing requires three conditions to unfreeze current behaviours: 22 Unfreezing
As the initial stage of
1. Disconfirmation ofthe validity ofthe status quo: Essentially, this means that stake- organizational change,
holders must be convinced that the current modes of behaviour and way of unfreezing involves
doing things are no longer successful paths to achieving goals. This is done by the development of a
shared understanding
2. Inducing survival anxiety: Individuals and groups must develop a sense of among stakeholders
survival anxiety, or pressure to change, in order to overcome resistance and that a particular
to move away from current behaviours and toward new learning and new change is necessary
behaviours. However, new learning and new behaviours carry with them
learning anxiety, or the fear of failure. In the context of a force-field analysis,
survival anxiety can be considered a driving force, and learning anxiety a
restraining force. Therefore, moving away from the status quo would require
both increasing the driving force and reducing the restraining force (learning
anxiety). Schein suggests that decreasing learning anxiety can be facilitated by
3. Creatingpsychological safety: Psychological safety is the belief that an individual
can take certain risks and openly discuss workplace issues without fear of reprisal
or threat to mental well-being. Schein recommends that psychological safety can
be increased through interventions such as providing a strong organizational

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 vision, consistent systems and structures, training, role models, and support
groups, as well as by involving the learner. Thus, unfreezing requires that stake-
holders develop the understanding that the current way of doing things is no
longer acceptable, that continuing along the current path will lead to mean-
ingful negative consequences, and that taking a risk on a new path or expressing
new ways of doing things will not be judged negatively. Without satisfying these
three conditions, change efforts are likely to be hampered by resistance.

For decades IBM was considered a model corporate enter- 50 percent over the course of a couple of years, and the
prise. IBM hired the smartest employees and gave them an media coverage of IBM's woes had helped push several
excellent working environment and job security; customers banks to reconsider their lending situation with IBM. The
knew that they could trust IBM's information technology and company that had a reputation for "no layoffs" had seen the
management solutions. It was a safe bet to buy IBM prod- departure of roughly 120,000 employees in just three years.
ucts and services. But by the mid-1990s, IBM was quickly To instill psychological safety, Mr. Gerstner called upon
running out of cash, and heading toward disaster. In the IBM's original strategy of offering customers a complete,
mid-1970s, IBM focused its resources on large mainframe unified solution, but using different activities. He confronted
computing, when the market was headed to miniaturized, the criticism of many media outlets that IBM had become
stand-alone workstations. As the market for mainframe too big to change this late in the game by suggesting that
computers quickly dwindled through the 1980s and early IBM eliminate its bureaucratic ways, and he dealt with
1990s, IBM did not have the resources to develop a com- the employees honestly by admitting that the days of no
petitive advantage in the personal computing market. As layoffs at IBM were gone; IBM would have to change its
well, the corporate culture at IBM that had been developing size and its core activities. After laying out the overall
since the early 1960s was very strong: IBM was focused on customer strategy and focus, Gerstner left much of the
developing and implementing integrated, large-scale solu- implementation to managers' understanding of what the
tions, whereas the information technology market had been market needed. Rather than extensive planning, he wanted
cut into segments, where smaller, faster innovators were quick action, even if it led to occasional mistakes. Finally,
capturing market share. Having been accustomed to market Gerstner pointed out that while he was looking for small
domination and success, the culture at IBM was highly resis- wins in the short term, this effort was going to take years.
tant to change, even in the face of broad media criticism. IBM sold its last computer in 2005. Today it is the
Senior management at IBM looked outside the firm largest consulting organization in the world that connects
for the first time in its history to hire a new CEO. They hardware, software, and decision making to provide data
were looking for a change agent who could transform the analysis and information-based solutions to its customers.
company. IBM had become frozen in its current condition Many factors came together to bring about the unfreezing
after years of market dominance; as its market began to of IBM's culture and strategy back in the early 1990s;
disappear, the company lacked the ability to "unfreeze" to the board of directors, employees, and U.S. media and
the point of its near demise. When Louis Gerstner took over society helped unseat the status quo, while Louis Gerstner
as CEO in 1993, he set about unfreezing this behemoth of did much to bring about a sense of psychological safety
a company. By that time, employees had a strong sense that allowed the fi rm to progress into the moving stage of
that the status quo was no longer viable. Revenues from change. Without these factors coming together, IBM would
the mainframe computer market had fallen by more than not be the successful firm that it is today.

Sources: L.V. Gerstner, Jr., Who Says Elephants Can't Dance? Harper Collins e-books; "Chronological History of IBM," 2009, www-03.ibm.com/ibm/
history/history/decade_1990.html; IBM corporate website www-03.ibm.com/employment/news/200908_volume3art2_realibm.html; and Business
Week Magazine www.businessweek.com/chapter/mills.htm.

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 STEP 2: MOVING
The unfreezing and moving stages of the three-step model parallel the action planning
process. The unfreezing stage involves identifying the problems and action planning around
methods of enhancing the driving forces and reducing the restraining forces that have been
identified in a force-field analysis, and the moving stage of the three-step model focuses on
taking action and evaluating the outcomes of those actions. Lewin mentions that the com-
plexity of the interplay between the forces involved in change renders outcomes impossible
to predict. Thus, the moving stage is the process of trial-and-error that can cycle back and Moving
forth between unfreezing and moving as change agents monitor the strength and effects As the second stage of
of the moving process on driving and restraining forces. Successful movement requires a change process, the
moving stage involves
experimentation, where mistakes can occur. Organizations that encourage experimentation the trial-and-error pro-
must also develop a culture in which mistakes are accepted as part of the learning process. cess of taking action to
Organizational cultures that do not accept mistakes or that punish employees for mistakes move the firm through
will generally lead to defensive routines and single-loop learning.23 When double-loop the intended change
learning is employed during this step, change agents not only strive to achieve movement
in the direction of the originally proposed change, but also seek to determine whether the
original set direction or outcome is still the most important or relevant goal. This iterative
process of action and research continues until a set of behaviours, values, and attitudes
that are consistent with the overall change effort are achieved.

STEP 3: R_EFREEZING
The purpose of this stage is to establish new norms and modes of behaviour that are likely
to reinforce the change that has taken place. The term refreezing may suggest that the Refreezing
organization is placed in a new form of stasis, but recall that the quasi-equilibrium that The third and final
stage of a change
Lewin refers to in the unfreezing stage refers to a balance of forces that are supported
initiative, refreezing
by a set of norms and behaviours. Unless there are new group norms and routines to involves putting
support individual behaviours, Lewin suggests that changes to individual behaviour will policies, practices, and
regress to their pre-changed state. In this phase, organizational structures, processes, and structures in place to
systems such as new compensation and benefits plans, revised selection criteria, training establish new norms
around the change
initiatives, job designs, or team or reporting structures are put into place to reinforce new
cultural norms. The lack of attention to refreezing may be exemplified by the nature of
popular organizational management techniques such as outsourcing or TQM, which
rapidly become management fads and then quickly lose some of their popularity as the
intended benefits fail to emerge for many firms. The implementation of these techniques
themselves may be clearly codified and followed, but the development of organizational
structures and practices to root them into the newly changed system may not be given
sufficient managerial attention to allow them to flourish within the organization.

11 DEVELOPMENT OF THE PLANNED CHANGE

APPROACH
Planned change has endured since Lewin's approach was introduced in the 1940s, and
has been further developed in many ways by many researchers and practitioners. One of
the more popular approaches is John Kotter's eight-step model of change. 24 You may not
be surprised to learn that this approach bears many similarities to Lewin's model, which
suggests that the overall process has endured the test of time. Kotter's eight steps, and

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 FIGURE 9.5
RELATIONSHIPS BETWEEN LEWIN'S THREE-STEP MODEL AND KOTTER'S EIGHT-STEP
MODEL OF CHANGE

Lewin's 3-step Model Kotter's 8-step Model

Unfreezing
- Disconfirm the status quo i) Estab lish a sense of urgency
- Create psychological safety ii) Form a guiding coal ition
iii) Create a vision
Moving
- Expe riment iv) Commun icate the vision
v) Empowe r others to act on the vision
vi) Create short-term wins
vi i) Conso lidate improvements and produce mo re change
Refreezing
- Re inforce new norms and behaviou rs vi ii) Institutionalize new approaches

Source: J.P. Kotter, "Leading Change: Why Transformation Efforts Fail," Harvard Business Review, 85 (2007): 96-103.

their relation to Lewin's planned approach, are shown in Figure 9.5. The first three stages
of this model, which include (1) establishing a sense ofurgency, (2)forming a guiding coalition,
and (3) creating a vision are clearly activities that mirror Lewin's unfreezing stage. The next
four stages move the change process, and even include the reiterative nature of cycling
between unfreezing and moving by (4) communicating the vision, (5) empowering others to act
on the vision, (6) planningfor and creating short-term wins, and (7) consolidating improvements
and producing more change. Finally, (8) institutionalizing new approaches clearly reflects the
refreezing process. Common to all models of planned change is the assumption that change
is a process that can be segmented into discrete and necessary steps that organizations all
pass through en route to successful change. Kotter warns that the change process usually
takes more time than managers suspect, and that skipping steps in a planned change effort
in the hope of saving time or increasing efficiency is unlikely to yield positive results. 25

11 EMERGENT CHANGE
All planned approaches to change assume that change is initiated at the top of the
organization based on identifiable and definable issues, has discrete steps, and includes
a beginning and end point. This planned, linear approach might be used in a situation
such as the implementation of a financial incentive plan that is designed to better align
employee goals with organizational goals. However, if the change plan recognizes that
change must take place, but has difficulty identifying the exact courses of action to
take, and has goals that are broadly defined-for example, a goal to "improve customer
service," the planned approach can be overly restrictive. Furthermore, as Lewin's notion
of quasi-equilibrium based on a balancing of opposing forces suggests, change is often
complex, dynamic, and unpredictable. Organizations are complex systems, and rela-
tionships in such systems tend to be nonlinear and highly interconnected, which lead
to unintended consequences. 26 These characteristics evoke a process that is much more
chaotic than the carefully controlled nature of the planned approach to change. Change
researchers have recently begun to embrace the chaotic nature of change by applying
chaos theory to models of organizational change.

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 CHAOS 1HEORY AND EMERGENT CHANGE
The development of organizational management over the past century has been focused
on establishing order from chaos through systemization and control. Chaos theory Chaos theory
recognizes that attempts to do this assume that the future can be both known and to Complex systems are
some extent, controlled. However, scientists have learned that even models that perfectly based on some form of
order but can behave
match dynamic systems cannot predict the outcome of that system at a given point in in unpredictable ways.
time. For example, you may be familiar with the children's toy that is a pendulum with The unpredictability
a magnet at the bottom of the pendulum as well as a magnet on the base of the toy of these systems
underneath the pendulum. When the pendulum is put into motion, the two magnets resu lts from the many
interact to make the pendulum move in chaotic patterns. While it is possible to predict interactions of the
system variables and
things like the average distance the pendulum will be from the base at a given moment, the consequences
or the average length of time the pendulum will remain in motion, it is impossible to of differences in the
predict the exact position of the pendulum at any given moment during its travels. The initial states of those
properties of the system interact with one another in unpredictable ways to produce variables
outcomes that simply cannot be predicted with accuracy. 27
This is the essence of chaos theory, and it flies in the face of the popular Newtonian
worldview of business as a controllable, predictable machine. We tend to think of chaos
as a complete lack of order; however, from a scientific perspective, chaos refers to a
form of disorder in which behavioural patterns emerge in unpredictable and yet similar
ways. 28 While the perfect model of a dynamic system may not be able to perfectly pre-
dict the state of that system at a given point in time, the model will produce outcomes
that are consistent with the behaviour of that system. This can be understood through
the myriad examples of the outcomes of chaos theory in our daily lives; for example,
through the way snowflakes are formed by the same process that leads to all having six
sides, and yet each is unique. 29 Chaos theory has been used in the study of business
to demonstrate how small changes in the function of supply chain models can lead
to unpredictable outcomes. 30 In short, chaotic systems produce recognizable patterns,
with unpredictable outcomes. 31
In the context of managing change, chaos theory provides a frame for understanding
how a broadly defined goal such as "to improve customer service" can provide the basis
on which successful change can be patterned. Dee Hock, former CEO of Visa, coined
the term chaordic organization (a combination of the words chaos and order) to describe
a management style whereby firms focus less on structure and control, and more on a
guiding purpose. A clearly understood and shared guiding purpose provides the order
necessary for organizations to spontaneously develop their own structure and system. 32
Tetenbaum33 points out that chaos is actually governed by underlying rules, and in
Hock's chaordic organization those rules are the firm's purpose and the principles that
guide employees toward behaviours that are harmonious with that purpose. Examples
of chaordic behaviour in nature are the tendencies for birds to flock together or fish to
swim in tightly coordinated schools. 34 Flocks of birds dart through the air with a degree
of coordination that suggests an extremely high level of communication and integration.
How is a signal to turn in a particular direction transmitted instantly through a flock of
hundreds of birds? Craig Reynolds, a software engineer developed a computer simulation
model of the flocking behaviour of birds using three simple rules: (1) separation; avoid
crowding other members of the flock, (2) alignment; steer towards the average direction
of other members of the flock, and (3) cohesion; move toward the average position of
members of the flock. These three simple rules created a model of flocking behaviour
that replicates the flocking of birds so well that it was adopted by Hollywood to create
bird and bat flocking animations in the Batman Returns movie. 35

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 Using the principles of ch aordic behaviour to manage change therefore suggests
th at emergent change is a bottom-up process in th at it originates from and is enacted by
all members at all levels of th e organization, and that it is guided by simple principles
th at are widely h eld throughout the organization. For example, Apple's success can in
part be attributed to th e fact that all th e company's products demonstrate a commit-
ment to their guiding principles of ease of use, integration of products, and innova-
tive industrial design. One can imagine that wh en developing innovations at Apple,
hardware engineers, software engineers, and designers all h ave these guiding principles
at the forefront of their thinking, which may explain why Apple's new products have
been consistently successful. For another example of how organizational values can be
used to guide organizational change, see HR Planning Today 9.3.
The idea of a chaordic organization also suggests that firms must focus on creating
systems and structures that communicate the guiding principles in a consistent and
unambiguous manner, on giving employees the skills and autonomy to be adaptive in
their environment, to leverage diversity to broaden the creative scope of the firm, to make
use of teams so that employees can interact and develop ideas, and to encourage informa-
tion sharing among employees. 36 Change in the context of a chaordic organization is an
emergent phenomenon rather than planned. Change occurs as a form of adaptation and
as a result of learning, and so the most important attributes an organization can develop
in order to promote emergent change are th ose of a learning organization. HR Planning
Today 9.4 discusses how the process of emergence is changing an entire industry.

HR PLANNING TODAY 9.3

EMERGENT CHANGE THROUGH VISION AND VALUES AT KINDRED CREDIT UNION

An important element to successful emergent change When an organization is able to clarify and consistently
is a shared understanding of the simple rules that drive message its members around its central principles, and
the system. Credit unions are member-owned coopera- when members identify strongly with the purpose of the
tives in which members can draw low-interest loans organization, then member activities are likely to comple-
from pooled deposits. Kindred Credit Union centred in ment the needs of the organization. In a credit union, this
Kitchener, Ontario, is such a cooperative, where mem- means that members are less likely to abuse the credit-
bers agree to embrace a faith-based set of convictions. granting aspects of the institution, thereby lowering costs
By shari ng similar re ligious beliefs, members develop of defaults for all members. The kinds of loans that are
rich mental models of the guiding pri nciples of the granted and the types of services that are offered to mem-
Kindred Credit Union, which are integrity, compassion, bers are not determined by what competitors are offering,
and responsible stewardship. These institutional values or whether the organization can achieve economies of scale
are directly associated with personally held religious or scope through these activities, but whether the activities
values, which imbue the credit union's values with deep serve the needs of the members. When it comes to orga-
meaning and an understanding of the kinds of actions nizational change, a strongly shared understanding of the
and behaviours that reflect those values. Furthermore, central principles and purpose of the organization can lead
a main purpose of this credit union is to invest in the to thinking, actions, and innovations that are in step with
local community, and to return profits to the members. the needs of the organization. Rather than stating a specific
As such, the institution exists to serve the needs of need or even a specific goal, these institutions develop nec-
its members. essary capabilities spontaneously and as the need arises.

Source: https://www.kindredcu.com/AboutUs/

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 HR PLANNING TODAY 9.4

EMERGENCE AT THE INDUSTRY LEVEL: SPECIALTY COFFEE

Coffee is one of the most traded agricultural commodities locked into the bean. The process of delivering that bean to
in the world. It is also one of the most valuable com- the cup must preserve as much of that quality as possible.
modities exported by developing countries. As a com- Guided by this principle and these values, the
modity-based industry, the market price for coffee is set leaders in the specialty coffee industry travel to the
according to its global availability more than its quality. areas where coffee is produced throughout the world
Because of the speculation in coffee prices and the global and develop relationships with farmers who are inter-
reach of the coffee market, coffee farmers can lose money ested in adhering to these values. By doing so, the farmer
on their crops due to the fluctuations in the global price steps away from the commodity market, and develops
of coffee. In the commodity market, farmers deliver their a purchase agreement with the specialty coffee retailer
crop to a central co-op, where their crop is combined at rates well above the commodity market price. This
with those of other local farmers, and the farmer is paid begins the process of transforming not only the way the
according to the going rate for green (unroasted) coffee. coffee is farmed, but also how the coffee is processed,
These coffees are then purchased by the large coffee and how it is transported from the farm in Ethiopia or Peru
buyers such as Kraft, Proctor and Gamble, and Nestle. to the roastery in Portland or Chicago. Every farm and
The specialty coffee industry is the portion of the coffee every geographic region has its own unique qualities and
industry that is focused on the highest quality coffee. Quality problems to overcome, and so the solutions can range
in coffee is defined in terms of the transparency of the from planting more shade trees around the coffee trees
process that led to the production of the coffee, from farm to long-term projects to bring water to remote farming
and soil, to how the coffee beans are separated from the communities to facilitate the washing and processing of
coffee cherries, to transportation, roasting, and finally the the green coffees. Relationships in the specialty coffee
brewing process itself. This is an industry that is emerging industry are more intimate, where the retailer knows
from the commodity coffee industry, and it has grown from the farmer, and the farmer learns how his green coffees
1 percent of the total coffee market in the 1970s to roughly are brought to and consumed by the rest of the world.
50 percent of the market today. A few of the companies Problems are solved locally, and decision making is more
leading the evolution of the specialty coffee industry include democratic and is highly decentralized. The participants
Intelligentsia Coffee (in Chicago), Stumptown Coffee Roasters in this industry develop more of a system view of the
(in Portland, Oregon), and George Howell Coffee (in Acton, coffee value chain, and every member of that value chain,
Massachusetts). The values that guide this industry are from farmer to barista (and ultimately the consumer)
quality and transparency. These values are associated with understands the basic guiding principle and values, and
the principle that everything done to the coffee cherry once each plays a role in the transformation and development
it is plucked from the tree can degrade the quality that is of the specialty coffee industry.

Source: SCAA, "U.S. Specialty Coffee Consumption Report," www.scaa.org/?page=resources&d=statistic-and-reports, retrieved March 12, 2015.

11 ORGANIZATIONAL LEARNING
How does an organization improve its products, its services, its manufacturing process,
or its customer service? Should strategy always be developed at the top of th e organi-
zation and implemented down to the business lines? Should change? If not, how can
strategy or ch ange come from the bottom of the organization? Top-down strategies for
learning, strategy development, or change can involve focus groups, customer surveys,
six-sigma or TQM methods, or formal training, among other activities. The strategies

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 for bottom-up learning, strategy developmen t, or change are very different. Imagin e an
organization in which the employees working in the assembly plant to produce the same
product many times over develop such a high degree of competence th at they begin to
find successful shortcuts, or better ways of assembling the product; or an organization
in which th e sales staff develop a rich understanding of what the customer is looking
for in its products. Employees have direct contact with the products of their labour and
can develop a highly n uanced understanding of their jobs and consequen tly how to
improve aspects of th e organization th at are separated from senior m anagemen t often
by several layers of managemen t. Employees also have a keen understanding of how
organizational processes fit together. How many people do you kn ow who h ave at least
one story about an organizational process or practice that makes no sense or th at runs
contrary to stated organization al objectives? If the firm could h arness the knowledge
in these employees and fu rther en courage this kind of inquisitive thinking, it could tap
into a diverse and almost limitless source of innovation and improvement. Peter Senge37
discusses the concept of organizational learning in his semin al book The Fifth Discipline,
which explains the concept and benefits of organizational learning, and outlines the
necessary conditions for organizational learning.
Organizational O n e of the first aspects of organizational learning is to move away from viewing
learning the organization from th e perspective of a singular focus such as "maximizing share-
An approach to learning holder value." Such a single-minded objective ten ds to engender single-loop learning,
that applies double-loop
learning and an attempt and brings with it the difficulties of trying to predict and bring about a particular future
to understand how the state. Instead, Senge suggests that "our primary tasks in complex human system s are
entire system may be to become m ore reflective on the reasoning that guides our actions an d to gradually
affected by change. improve our theories in use." 38 This sounds very m uch like double-loop learn ing, as it
Organizational learning requires m anagers and employees to re-examine the practices, processes, and assump-
allows knowledge from
any individual in the tions that guide curren t activities.
organization to become Senge further suggests th at rather than becoming focused on specific numeric
incorporated into the goals, which have the potential to limit our natural tendency to try to make sense of
firm's cu lture and our overall environment, organizations should seek to promote the learning processes
processes that people would otherwise use to improve. 39 These natural learning processes are sup-
ported through th e principles of a learning organization . Th us, organizational learning
is on e of the most important attributes n ecessary to bring about emergen t ch ange. Th e
elem ents of organization al learning comprise (1) personal mastery, (2) mental models, (3)
building a shared vision, (4) team learning, an d (5) systems thinking.

PERSONAL MASTERY
Develop ing personal mastery is not n ecessarily about becoming very good at what
one does, although peop le who have a high level of person al mastery do become
Personal mastery very good at what they d o. Personal mastery has more to do with personal devel-
The understanding of opmen t, a comm itment to learning, and to achieving what one really wan ts, o n e's
one's purpose and the person al vision. 40 Vision fl ows from a sense of purpose. Where purpose can be
development of a per-
sonal vision thought of as a vocation, a calling, what one truly cares about in life, vision rep-
resents a picture of wh ere on e wan ts to be. Goals p rovide m easu rable markers of
success toward that vision. Th ink of what you would like to be doing p rofessionally
in five years; how does th is vision con nect with your sen se of purpose? Do you
have goals to help you to in dicate whether you are on track with you r vision? Now
imagin e that you get that job. What comes next for you ? Re-establishing a new

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 vision that is connected to your purpose is the source of energy that people with
a strong sense of personal mastery use to propel themselves through life. When
organizational change is connected to a clearly articulated organizational vision,
and that vision connects with the individual, Senge suggests that personal mastery
will lead employees to be more committed to their work, and take more initiative
at work. 41 Senge further suggests that organizations can actively promote personal
mastery in the workplace through building climates that foster the development of
personal visions, that encourage frank and open discussions about the workplace,
and that question the status quo. 42

MENTAL MODELS
These are the organized knowledge structures that individuals use to help navigate
the volume and complexity of information that we perceive from our environment.
Mental models help us to describe, ascribe cause to, and explain our surroundings. 43 Mental models
Our mental models help to shape the heuristics, the rules-of-thumb that we use to An internal representa-
simplify and increase the speed of decision making. 44 At the team level, shared mental tion of the way th ings
work. Mental models
models contribute to higher team performance. 45 We are largely unaware of the mental influence the causal
models that we employ, but they are responsible for many of the causal attributions attributions that we
that we make; for example, if we meet someone who claims to like classical music, we make
may think that person is well educated.
Because mental models are assumptions or generalizations that are ingrained within
us, they can limit our openness to learning or to understanding novel situations or
information in new ways. In organizations, institutionalized mental models can limit the
firm's ability to take advantage of opportunities, or to change, or to understand when
change is necessary. Furthermore, organizational defensive routines can insulate the firm
from examining its mental models. 46 The importance of mental models to a learning
organization is that when we become aware of the mental models that guide and limit
our actions, we can hold them up to the light, and are in a better position to evaluate the
quality and context of our decision making. When organizational groups become aware
of their mental models and open them up to critical examination, organizations can
understand when their mental models no longer serve them successfully in a changing
environment, and can adapt their mental models to the changing conditions. A plan-
ning method that organizations can use to challenge existing mental models is scenario
planning (see Chapter 5). 47 Other methods to institutionalize the questioning and testing
of mental models include practices that encourage reflective skills in employees, and a
culture that allows employees to challenge organizational thinking.

SHARED VISION
Senge defines shared vision as " ... the answer to the question 'What do we want to
create ?'" 48 A shared vision helps to connect people to a greater purpose, which facilitates
organizational identification, and accepting the organization's goals as one's own goals. 49
Great leaders tend to encourage a shared vision by creating pictures of the future that
are embedded in important social values. 50 When Steve Jobs shared his vision for NeXT
in the mid-1980s, a computer company that built computers intended for higher educa-
tion and business markets, 51 his vision was to "revolutionize the educational system of a

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 nation." 52 People want to do work that matters, and when an organization can galvanize
employees around a shared vision that reflects an important social purpose, it connects
the individual with the other employees and with the organization in a deep and mean-
ingful way. 53 In terms of organizational learning, a shared vision is the bonding element
that brings together and focuses the efforts of employees to pursue personal mastery
in ways that are relevant to the goals of the firm, and helps employees to understand
current shared organizational mental models and develop new shared mental models. 54

TEAM LEARNING
Have you ever been part of a group that made you feel as though you were performing
at a higher level than you could have ever achieved on your own? We exp erience team
learning when working with a particularly good team at work, in a successful group
project at school, or with a sports team or a group of musicians. When experiencing
Team learning team learning, our individual ideas and efforts are combin ed with the team's and ampli-
The interaction of indi- fied by others within the team to arrive at som ething we could not have achieved on
vidual ideas and efforts our own. The most important element of team learning is open dialogue, where team
toward a team objective
that results in outcomes members feel free to discuss and share ideas openly and without fear of embarrassment
that exceed the capa- or reproach. Dialogue is important because it is what enables people to see beyond
bilities of any individual their own p erspective and to better understand the boundaries of their own mental
on the team models. When we include the views of others into our own thinking, we are broad-
ening our understanding and incorporating systems thinking in our decision processes.

SYSTEMS THl-NKING
A great deal of organizational thinking tends to be linear in nature: we look at systems
Systems thinking in terms of input-to-output, and we analyze decisions in terms of cost-benefit. Systems
Systems th inking views thinking is a way to examine problems by looking at them in the context of the system
change issues within in which they occur, rather than as isolated issues. Diagrams of systems using systems
the framework of the
entire organization. This thinking tend to be circular or iterative, where one part of the system influences or is
view helps to under- influenced by another part of the system. For example, a systems diagram of pouring
stand the underlying your morning cup of coffee may look like the diagram in Figure 9.6. The desired amount
causes of problems and
the potential outcomes
of change initiatives
FIGURE 9.6
SYSTEMS THINKING MODEL OF POURING COFFEE INTO A CUP

Des ired amount

of coffee -- _ Coffee
-level in cup
Angle of
pour

Rate of
coffee level
. . .
rising 1n cup

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 of coffee in your cup influen ces the angle at which you hold the coffee carafe, which
affects the rate at which your cup fills with coffee, which in turn influen ces the coffee
level in your cup. This process continues until th e cup is filled to the desired level.
Such a feedback loop shows all the participating structures in the system and leads to a
deep understan ding of the roles of each of the structures in the system . Using systems
thinking, beh aviour is influenced by organizational structures such as the norms, the
man agement practices, an d the human capital and social capital within the firm. 55
Viewing organizations from a systems thinking persp ective leads away from viewing
actions or behaviours as the sources of problems and looks to th e role of structures in
influen cing problems. Systems thinking provides a method to understan d the forces
th at must be influenced in order for change to take place.
Senge suggests that the five disciplines are interdepen dent, that each requires the
others in order for a learning organization to be realized. 56 For example, vision in the
absen ce of systems thinking cannot lead to a rich understanding of how the vision can
be implemen ted successfully. Without vision, personal mastery is n ot possible, since
individuals cannot achieve the necessary creative tension with out understanding wh ere
on e needs to be (i.e., vision) in relation to where one currently stands.
Overall, th e five disciplines of a learning organization are vitally important to
en abling emergent change. One principle of emergen t change is that the order that
governs chaos arrives through simple rules th at are widely understood. In the context
of a learning organization , these simple rules can be represented by the organization's
shared vision. Shared mental models and a shared vision en sure that the organizational
stru ctures an d processes that emerge through chaordic change are in line with organi-
zational n eeds and environmental constraints or opportunities. Learning organization s
p ermit change as a bottom-up process as well as a top-down process by essentially put-
ting everyon e "on the same page" and then allowing them to fill in the lin es together.
As lin e-level employees learn new methods to improve products or new ways to satisfy
customers, learning organizations build the structures to permit that learning to move
up through the organization, where th ose new methods become incorporated into the
organization 's practices and get im plem ented back down throughout th e firm. Using
organization al learning, firms remain in a constant state of change, or adaptation, by
taking in new learning, wherever it is experienced within the firm, and diffusing through
th e entire organ ization . In this way, emergent change occurs spontaneously and as
needed, rather th an as a planned reaction to an event.

11 STRATEGIC HR AND CHANGE

At this point it is clear that organizational change is a dynamic and unpredictable process.
Whether change is approached from a planned perspective, an emergent perspective,
or a combination of perspectives, several elements that are com mon to all models of
change also overlap with the HR function , which provides guidance aroun d the aspects
ofHRM that are critical to any successful change initiative. The HR function contributes
to organ ization al change by supporting the change process itself (i.e., by helping the
organization to move through each stage of change), an d also by managing the content of
the HR function to supp ort ch ange. 57 In other words, the content of the HR function
includes the recruitment, selection, performance man agement, an d planning activities
that must be done to supp ort the change process. When HRM is involved in the change
process, and develops content to support that process, it is at its most proactive in terms
of change readiness. When the HR function is not involved in developing th e change

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 process, the content of the HR function to support change becomes reactive, thereby
diminishing the HR function's ability to support change.
Change efforts should be guided by a set of established values, and all change
involves new learning. 58 These two aspects are critical to change efforts and are foun-
dational to the HR function. Therefore, the two areas of HRM that are involved in
strategic change include the following:
1. Clarifying and communicating the values that are central to the organiza-
tion and the need for the change. When TD Bank acquired Canada Trust
Financial Services in 2000, the main messages that were made clear were
that customers would immediately experience better service through longer
banking hours and more access to automated banking machines, and that
the new organization would do as much as possible to minimize the nega-
tive consequences to employees as a result of the acquisition. 59 It is inter-
esting to see that both these values flow from TD Canada Trust's central
value proposition that "banking can be this comfortable." Part of HR's role
at TDCT during this time included developing planning initiatives to mini-
mize the number of layoffs that are inevitable with an acquisition. Because
TDCT is a large company, these plans incorporated the redeployment of
employees from areas of the firm that now contained redundancies to areas
that were growing, by limiting new hires to allow for attrition to reduce a
surplus of human capital, and providing severance policies that exceeded
industry standards as well as outplacement training and services. An impor-
tant aspect of communicating a set of organizational values is making cer-
tain that no HR practices are inconsistent with the message that is being
communicated.
The HR function plays a very important role in ensuring that the need
for change is understood throughout the firm. Consistent with Lewin's
three-step model of change, senior management must communicate the
need to change the status quo, and HR plays a role in demonstrating how
the new state and the process for moving to that state is consistent with
the firm's values. This helps to bring about employee buy-in to the change
. . . .
1n1t1at1ve.
2. The other area of HRM that is critical to implementing strategic change
is training, education, and organizational learning. The HR function is
responsible for developing each of the dimensions of organizational learning
discussed earlier in this chapter. To the extent that HR fosters the five
dimensions of organizational learning, it builds a culture of learning within
the organization. This enhances any training that occurs within the firm,
and it encourage employees to take a learning approach to daily tasks. The
HR function must also thoroughly understand the new activities that are
required to get the firm to the new state and to refreeze the new state. Based
on these strategic activities, HR can determine the KSAOs and competencies
required to perform these activities and institute training, redeployment, and
hiring where appropriate. Organizational change requires a great deal of new
learning, and when HR anticipates the learning needs, and has a culture in
place that facilitates learning, organizational change has a better chance of
success.

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