Organizational Frame Bending: Principles for …

1 Academy ol MMingement EXECUT)Vt, 1989, Vol. III. No. J, pp. 194-2O4 Organizational Frame Bending: Principles for managing ReorientationDavid A. NadierDelta Consulting Group, New YorkMichael L TushmanGraduate School of Business, Golumbia UniversityOne of the hallmarks of American business in the pastdecade has been the attempts by large organizationsto manage large-scale planned change. In some cases AT&T, Chrysler, and Apple, for example the efforts havebeen dramatic and have captured public attention. Othercases, such as Corning Glass, Xerox, Citicorp, and GTE, havereceived less attention, but the changes have been no concept of planned Organizational change is notnew; but this most recent generation of changes is some-what different from what has gone before. First, they typi-cally are initiated by the leaders of organizations rather thanconsultants or human resource specialists (although theyhave played significant roles in some cases).

2 Second, they areclosely linked to strategic business issues, not just questionsof Organizational process or style. Third, most of the changescan be traced direaly to external factors, such as new sourcesof competition, new technology, deregulation or legal initia-tives, maturation of product sets, changes in ownership, orshifts in fundamental market struaure. Fourth,these changesaffect the entire organization (whether it be a corporation ora business unit) rather than individual SBUs (strategic busi-ness units) or departments. Fifth, they are profound for theorganization and its members because they usually influ-ence Organizational values regarding employees, customers,competition, or products. As a result of the past decade'schanges, there are now more large visible examples thanever before of successful planned Organizational work has brought us into contact with a numberof examples of these changes.

3 ' In general, they have beenchanges that encompass the whole organization, haveoccurred over a number of years, and have involved funda-mental shifts in the way the organization thinks about itsbusiness, itself, and how it is managed. Our experience hasincluded changes that both internal and external observersrate as successes, some that have been described as failures,and some that are still going purpose in this article is to share some insights,generalizations, and hunches about large-scale organiza-tional changes, working from our perspective of closeobservations. We begin by reviewing some basic concepts oforganization and change that have shaped the way we thinkabout and observe these events. Next, we briefly describe anapproach to differentiating among various types of organiza-tion change. Finally, we devote the rest of the article to ourconcept of " Frame bending " a particular kind of large-scale change found in complex Concepts of Organization and ChangeThinking About OrganizationsWe view organizations as complex systems that, in thecontext of an environment, an available set of resources, anda history, produce output.

4 To illustrate, we have developed amodel that consists of two major elements (see Exhibit 1).The first is strategy, the pattern of decisions that emergesover time about how resources will be deployed in responseto environmental opportunities and threats. The second isorganization, the mechanism that is developed to turn stra-tegy into output. Organization includes four core compo-nents: work, people, formal structures and processes, andinformal struaures and processes. The fundamental dynamicis congruence among these elements. Effectiveness is great-est when a firm's strategy is consistent with environmentalconditions and there is internal consistency, or fit, among thefour Organizational components. Our model emphasizesthat there is no one best way to organize. Rather, the mosteffective way of organizing is determined by the nature ofthe strategy as well as the work, the individuals who aremembers of the organization, and the informal processesand structures (including culture) that have grown up over194 Organizational Frame bending : Principles for managing ReorientationFxhibit 7 Organization Model' /WorkXInformalStructure& Process>People\FormalStructure/OutputSys temLevelUnit/CroupLevelIndividualLevelWh ile our model implies that congruence of organi-zational components is a desirable state, it is, in fact, adouble-edged sword.

5 In the short term, congruence seemsto be related to effectiveness and performance. A systemwith high congruence, however, can be resistant to develops ways of insulating itself from outside influencesand may be unable to respond to new situations.^ Organizational ChangeFrom time to time, organizations are faced with theneed to modify themselves. The change may involve one ormore elements of the Organizational system, or it mayinvolve a realignment of the whole system, affecting all of thekey elements strategy, work, people, and formal andinformal processes and structures. A central problem is howto maintain congruence in the system while implementingchange, or how to help the organization move to a wholenew configuration and a whole new definition of congru-ence. Critical issues in managing such changes include(1) managing the political dynamics associated with thechange, (2) motivating constructive behavior in the face ofthe anxiety created by the change, and (3) actively managingthe transition state.

6 "*While these approaches have been useful for man-agers and implementors of Organizational change, they havelimitations when applied to large-scale, complex organiza-tional changes. Specifically, these larger-scale changes entailat least some of the following characteristics: Multiple transitions. Rather than being confined toone transition, complex changes often involve many differ-ent transitions. Some may be explicitly related; others arenot. Incomplete transitions. Many of the transitions thatare initiated do not get completed. Events overtake them, orsubsequent changes subsume them. Uncertain future states. It is difficult to predict ordefine exactly what a future state will be; there are manyunknowns that limit the ability to describe it. Even when afuture state can be described, there is a high probability thatevents will change the nature of that state before it isachieved.

7 Transitions over long periods of time. Many large-scale organization changes take long periods of time toimplement in some cases, as much as three to seven dynamics of managing change over this period of timeare different from those of managing a quick change with adiscrete beginning and these factors lead to the conclusion that the basicconcepts of transition management must be extended todeal with the additional issues posed by large-scale changes.^195 August, 7989 Types of Organizational ChangeAs a first step toward understanding large-scaleorganizational change, we have developed a way of thinkingabout the different types of change that organizations can be considered in two dimensions. The first is thescope of the change that is, subsystems of the organizationversus the entire system. Changes that focus on individualcomponents, with the goal of maintaining or regaining con-gruence, are incremental changes.

8 For example, adaptingreward systems to changing labor market conditions is anincremental, systems-enhancing change. Changes thataddress the whole organization, including strategy, are stra-tegic changes. These changes frequently involve breakingout of a current pattern of congruence and helping anorganization develop a completely new configuration. Incre-mental changes are made within the context, or Frame , of thecurrent set of Organizational strategies and do not address fundamental changes in the definitionof the business, shifts of power, alterations in culture, andsimilar issues. Strategic changes change that Frame , eitherreshaping it, bending it or, in extreme cases, breaking it. Forexample, when John Sculley took the reins from Steven Jobsat Apple Computer, or when Lee lacocca took over atChrysler, systemwide changes second dimension of change concerns the posi-tioning of the change in relation to key external changes are clearly in response to an event or series ofevents.

9 These are called relative changes. Other changes areinitiated, not in response to events but in anticipation ofexternal events that may occur. These are called anticipatorychanges. (The relationship between the dimensions can bestbe described using the illustrations shown in Exhibit 2). Fourclasses of change are the result: Tuning. This is incremental change made in antici-pation of future events. It seeks ways to increase efficiencybut does not occur in response to any immediate problem. Adaptation. This is incremental change that is madein response to external events. Actions of a competitor,changes in market needs, new technology, and so on,require a response from an organization, but not one thatinvolves fundamental change throughout the organization. reorientation . This is strategic change, made withthe luxury of time afforded by having anticipated the exter-nal events that may ultimately require change.

10 These changesdo involve fundamental redirection of the organization andare frequently put in terms that emphasize continuity withthe past (particularly values of the past). Because the empha-sis is on bringing about major change without a sharp breakwith the existing organization Frame , we describe these asframe- bending changes. For example, the sweeping changesinitiated by Paul O'Neil and Fred Federholf at ALCOA areframe- bending changes in that they are not driven by per-formance crisis (that is, they are proactive) and they build onALCOA'S past even though they involve widespread organi-zation 2 Types of Organizational ChangeIncrementalAnticipatoryReactiveTun ingAdaptationStrategicReorientationRe-cr eation Re-creation. This is strategic change necessitatedby external events, usually ones that threaten the very exist-ence of the organization.