Strategic Management: Formulation and Implementation

Organizational Development

Another major approach to changing people and culture is organizational development. Although this approach focuses mainly on changing certain aspects of people, these changes are based on overview of structure, technology, and all other organizational ingredients.

Organizational development (OD) is the application of behavioral science knowledge to improve an organization's health and effectiveness through its ability to cope with environmental changes, improve internal relationships, and increase problemsolving capabilities.

There are three types of current problems that OD can help managers address:

Mergers / Acquisitions
The disappointing financial results of many mergers and acquisitions is caused by failure of managers to recognize that two firms may have widely different values, beliefs, and practices. Cultural differences should be evaluated in the acquisition process, and OD experts can be used to smooth the integration of two firms.
Organizational Decline / Revitalization
Organizations undergoing a period of decline and revitalization experience a variety of problems, including a low level of trust, lack of innovation, high turnover, and high levels of conflict and stress. OD techniques can contribute greatly to cultural revitalization by managing conflicts, fostering commitment, and facilitating communication.
Conflict Management
Conflict can occur at any time and place within a healthy organization.