Strategic Management: Formulation and Implementation

Types Of Organizational Change

"Change," in its broadest sense, is a planned or unplanned response to pressures and forces. As a first step toward successfully managing organizational change, manager should understand the different types of change that organizations face.

Change can be considered in two dimensions: (1) the first is the scope of change: incremental changes and strategic changes; (2) the second is the positioning of the change in relation to key external events: reactive changes and anticipatory changes.

Incremental changes
Incremental changes are changes that focus on individual components, with the goal of maintaining or regaining congruence (for example, adapting reward systems to changing labor market conditions).
Strategic changes
Changes that address to the whole organization, including strategy, are strategic changes.
Reactive changes
Reactive changes occur in response to an event or series of events
Anticipatory changes
Anticipatory changes are other changes are initiated, not in response to events but in anticipation of external events that may occur.

The relationships between the dimensions can be described using the illustrates shown in Exhibit 51.

Four classes of change are the result of:

This is incremental change made in anticipation of future events. It seeks ways to increase efficiency but does not occur in response to any immediate problem.
This is incremental change made in response to external events. External events (e.g., action of competitors, new technology) require a response from an organization, but no one that involves fundamental change throughout the organization.
This is strategic change, made with luxury of time afforded by having anticipated the external events that may ultimately require changes. They involve fundamental redirection of the organization and are frequently put in terms the emphasize continuity with the past (particularly values of the past).
This is the strategic change necessitated by external events, usually ones that threaten the very existence of the organization. Such changes require radical departure from the past and include shifts in senior leadership, values, strategy, culture, and so forth.

These different types of change can be described in terms of their intensity (see Exhibit 51).

Intensity relates to the severity of change and, in particular, the degree of shock, trauma, or discontinuity created throughout the organization. Strategic changes are more intense than incremental changes, which can frequently be implemented without altering an organization's basic management processes.

Reactive changes are more intense that anticipatory changes because of the necessity of packing substantial activity into a short period of time without the opportunity to prepare people to deal with the trauma.

Relative intensity is further affected by organizational complexity. Organizations become more difficult to change as they increase in complexity complexity determined by (1) size of the organization in terms of the employees and (2) the diversity of the organization in terms of the number of different businesses, geographic dispersion, and so on.

Smaller organizations are easier places in which to implement changes than are larger, highly diverse organizations.

In general, the most difficult changes are those that are high intensity (strategic) and take place in highly complex settings.