Managing Change in Organizations

1 Managing Changein OrganizationsColin Carnallfifth editionManaging Changein OrganizationsColin Carnallfifth editionManaging Change in OrganizationsCarnallfifth editionColin Carnall is Associate Dean, Executive Programmes and Professor of Strategic Management at Warwick Business School, where he teaches and researches strategic Change , organization design and management development. Managing Change in Organizations provides a practical and thorough overview of how effective Change can be achieved in Organizations . The text is ideal for advanced undergraduates, MBA and postgraduate students on courses in Managing Change and organizational Carnall takes a strategic approach, outlining guidance and techniques for planning and implementing, evaluating and learningfrom major organizational Change .

2 Reviewing traditional and more recent critical theories, he presents models and frameworks for Change that are apt for the complex and fast-moving challenges of contemporary particular this fifth edition provides:l a clear five-part structure which covers the theories and themes, techniques and models of Change managementl a focus on both traditional models and critical perspectives of changel a new model of Strategic Convergence to address the complexity of concurrent Change initiativesl short case studies, questions and exercises to enable readers to test and apply their knowledge, skills and 119/3/07 12:43:34 Managing Change in 3/30/07 4:42 PM Page i We work with leading authors to develop the strongesteducational materials in Change Management, bringing cutting-edge thinking and best learning practice to a global a range of well-known imprints, including Financial Times Prentice Hall, we craft high quality print and electronic publications which help readers to understand and apply their content, whether studying or at find out more about the complete range of our publishing, please visit us on the World Wide Web at: 3/30/07 4:42 PM Page ii Managing Change inOrganizationsColin A.

3 CarnallWarwick Business SchoolThe University of 3/30/07 4:42 PM Page iii Pearson Education LimitedEdinburgh GateHarlowEssex CM20 2 JEEnglandand Associated Companies throughout the worldVisit us on the World Wide Web published 1990 Second edition published 1995 Third edition published 1999 Fourth edition published 2003 Fifth edition published 2007 Prentice-Hall International, UK, Limited 1990, 1995, 1999 Pearson Education Limited 2003, 2007 The right of Colin A. Carnall to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without either the prior written permission of the publisher or a licence permitting restricted copying in the United Kingdom issued by the Copyright Licensing Agency Ltd, Saffron House, 6 10 Kirby Street, London EC1N trademarks used herein are the property of their respective owners.

4 The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such : 978-0-273-70414-0 British Library Cataloguing-in-Publication DataA catalogue record for this book is available from the British Library10 9 8 7 6 5 4 3 2 110 09 08 07 Typeset in Stone Serif by 71 Printed and bound by Ashford Colour Press., GosportThe publisher s policy is to use paper manufactured from sustainable 3/30/07 4:42 PM Page iv vBrief contentsPreface xvAcknowledgements xviiPart I The challenge of organization Change 11 The challenge of Change 32 Organization structures: choice and leadership 123 The transformation perspective 37 Part II Theories of organization Change 614 Theories of Change : traditional models 635 Theories of Change : critical perspectives 786 Theories of Change : strategic management models 93 Part III Themes and issues in organization Change 1057 Organizations in the twenty-first century.

5 The value-added organization 1078 Sustaining organizational effectiveness 1209 Leadership in practice 14810 The learning organization 16011 Strategies for Change 172 Part IV Change management techniques 18712 Diagnosing Change 18913 Managing major changes 22414 Change architecture 25415 A strategy for organizational effectiveness 280 Part V Strategic Change 29316 Learning from Change 29517 Culture models and organization Change 30718 Strategic convergence: a new model for organizational Change 32619 Strategies for corporate transformation 340 References 345 Index 3/30/07 4:42 PM Page v 3/30/07 4:42 PM Page vi viiContentsPreface xvAcknowledgements xvii1 The challenge of change3 Introduction3 The profile of ambition5 Implementation7 Change architecture8 Conclusion11 Exercises112 Organization structures.

6 Choice and leadership12 Introduction12 Management structures and management in action13 The entrepreneurial structure13 The functional structure14 The product structure14 The divisional structure14 The matrix structure15 The federal structure16 Management in action16 The dilemmas of organization18 Centralization versus decentralization18 For centralization19 For decentralization19 Global versus local21 Efficiency versus effectiveness21 Professionals versus line management22 From control to commitment24 Change versus stability27 Leadership and excellence 27 Strategy and structure29 Managerial performance34 Conclusion35 Exercises36 Part I The challenge of organization 3/30/07 4:42 PM Page vii Contentsviii3 The transformation perspective37 Introduction37 New rules for the organizational game 38 Changing organizations41 Transforming the organization46 The value-added organization49 The network organization58 Conclusion60 Exercises604 Theories of Change : traditional models63 Introduction63 The clinical approach67 Linear approaches68 Systems theory72 Emergent approaches to change73 Conclusion77 Exercises775 Theories of Change .

7 Critical perspectives78 Introduction78 Emerging thinking about organizational change81 Critical theory81 Postmodernism83 Complexity theory84 Experience-based design89 Social movements and large-scale change89 The evolution of theory about organization change91 Conclusion92 Exercises926 Theories of Change : strategic management models93 Introduction93 Strategic management: the resource-based view93 The level of ambition 95 Radical or transformational Change 97 Conclusion103 Exercises104 Part II Theories of organization 3/30/07 4:42 PM Page viii ixContents7 Organizations in the twenty-first century: the value-added organization107 Introduction107 Changing the rules of the game108 Techniques for a value-added organization109 Stage A1: Business capability profile110 Stage A2: Value-added metric112 Stage B: Process design mapping the value flow1141 Value-added design1142 Estimate value-added problems of command and control mode1143 Value-added clusters1144 Value-added contributions114 Stage C.

8 The balanced scorecard 116 The workshop activity 118 Selecting the measures 118 Creating an implementation plan 118 Conclusion118 Exercises1198 Sustaining organizational effectiveness120 Introduction120 Blocks to problem solving and change120 Perceptual blocks121 Emotional blocks121 Cultural blocks122 Environmental blocks123 Cognitive blocks123 Working through the blocks123 Limits to problem solving124 Organizations and rationality126An example: organization and counter-rational behaviour129 Contingency, choice and organizational environments136 Organization design, resources and complexity138 Criticisms of the contingency approach140 The innovative organization144 Conclusion146 Exercises147 Part III Themes and issues in organization 3/30/07 4:42 PM Page ix Contentsx9 Leadership in practice148 Introduction148 All things to all men!

9 149 Leadership, vision and strategy150 Leaders and situations151 The context of leadership154 Managers and leadership156 Leadership and human scale 158 Conclusion159 Exercises15910 The learning organization160 Introduction160 Changing perceptions of organization161 Disciplines for the learning organization164 Convergence and the learning organization167 Competence development in handling change169 Conclusion170 Exercises17111 Strategies for change172 Introduction172 Management performance and learning182 Effective team work182 Effective organizational structures and systems182 Organizational change183 Learning from changing183 Conclusion184

10 Exercises18512 Diagnosing change189 Introduction189 Monitoring performance, measuring effectiveness190 Efficiency and effectiveness191 Techniques for assessment194 Assessing organizational effectiveness: exercise194 Part 1: Functional analysis195 Part 2: Organizational diagnosis201 Understanding the human dimension of change206 Rational economic man 207 Social man 208 Part IV Change management 3/30/07 4:42 PM Page x xiContents Self-actualizing man 208 Complex man 209 The Change equation210 Authenticity in diagnosis221 Insightful organizational diagnosis222 Effective Change architecture223 Adaptive culture223 Conclusion223 Exercises22313 Managing major changes224 Introduction224 Managerial skills for effective organizational change225 Managing transitions225 Dealing with organizational culture: a major financial institution229 The organizational culture: a major financial institution230 Managing in different cultures231 I