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Lesson#1
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The Challenge for Organizations
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Lesson 01
The Challenge for Organizations
We live in a world that has been turned upside down. Companies
are pouring money, technology, and
management expertise into regions that were once off limits,
acquiring new enterprises, forming joint
ventures, creating new global businesses from the ground up.
Many major companies are going through
significant changes, including outsourcing, downsizing,
reengineering, self-managed work teams, flattening
organizations, and doing routine jobs with automation and
computers. Some experts contend that if you
can describe a job precisely
or write rules for doing it, the
job will probably not survive.
Change is avalanching down upon our heads and most people are
utterly unprepared to cope with it.
Tomorrow’s world will be different from todays, calling for new
organizational approaches. Organizations
will need to be adapting to these changes market conditions and
at the same time coping with the need for
a renewing rather than reactive workforce. Every day managers
are confronting massive and accelerating
change. As one writer comments, “Call it whatever you like –
reengineering, restructuring, transformation,
flattening, downsizing, rightsizing, a quest for global
competitiveness – it’s real, it’s radical and it’s arriving
every day at a company near you.”
Global competition and economic downturns have exposed a glaring
weakness in American organizations:
the fact that many organizations have become overstaffed,
cumbersome, slow and inefficient. To increase
productivity, enhance competitiveness and contain costs,
organizations are changing the way they are
organized and managed.
The successful twenty-first century manager must deal with a
chaotic world of new competitors and
constant innovation. In the future the only winning companies
will be the ones that respond quickly to
change. Preparing managers to cope with today’s accelerating
role of change is the central theme/purpose
of my lectures (concern of this book). Modern manager must not
only be flexible and adaptive in a
changing environment but must also be able to diagnose problems
and implement change programs.
Tom Peters suggests that “the time for 10 percent staff cuts and
20 percent quality improvement is
past”.
Organizations are never completely static. They are in
continuous interaction with external forces (see
figure below). Changing consumer lifestyles and technological
breakthroughs all act on the organization to
cause it to change. The degree of change may vary from one
organization to another, but all face the need
for adaptation to external forces. Many of these changes are
forced upon the organization, whereas others
are generated internally. Because change is occurring so
rapidly, there is a need for new ways to manage it.
Figure: 01 The Organizational Environment:
The Growth and Relevance of OD:
Organizations must adapt to increasingly complex and uncertain
technological, economic, political, and
cultural changes. The rapidly changing conditions of the past
few years have shown that the organizations
are in the midst of unprecedented uncertainty and chaos, and
nothing short of a management revolution
will save them. Three major trends are shaping change in
organizations: globalization, information
technology, and managerial innovation.
First: globalization
is changing the markets and environments in which organizations operate as the
way
they function. New governments, new leadership, new markets, and
new countries are emerging and
creating a new global economy. The toppling of the Berlin Wall
symbolized and energized the reunification
of Germany: entrepreneurs appeared in Russia, the Balkans, and
Siberia as the former Soviet Union
evolves, in fits and starts, into separate, market-oriented
states; and China emerged as an open market and
as the governance mechanism over Hong Kong to represent a
powerful shift in global economic influence.
Second: information technology
is redefining the traditional business model by
changing how work is
performed, how knowledge is used, and how the cost of doing
business is calculated. The way an
organization collects, stores, manipulates, uses, and transmits
information can lower costs or increase the
value and quality of products and services. Information
technology, for example, is at the heart of emerging
e-commerce strategies and organizations. Amazon.com, E-Trade,
are among many recent entrants to the
information economy, and the amount of business being conducted
on the Internet is projected to grow at
double-digit rates for well over ten years. Moreover, the
underlying rate of innovation is not expected to
decline. Electronic data interchange, a state-of-the-art
technology application a few years ago, is now
considered routine business practice. The ability to move
information easily and inexpensively throughout
and among organizations has fueled the downsizing, delayering,
and restructuring of firms. The Internet
and the World Wide Web have enabled a new form of work known as
telecommuting; organization
members can work from their homes or cars without ever going to
the office. Finally, information
technology is changing how knowledge is used. Information that
is widely shared reduces the concentration
of power at the top of the organization. Organization members
now share the same key information that
senior managers once used to control decision making.
Ultimately, information technology will generate
new business models in which communication and information
sharing is nearly free.
Third: managerial innovation
has responded to the globalization and
information technology trends and
has accelerated their impact on organizations. New
organizational forms, such as networks, strategic
alliances, and virtual corporations, provide organizations with
new ways of thinking about how to
manufacture goods and deliver services. The strategic alliance,
for example, has emerged as one of the
indispensable tools in strategy implementation. No single
organization, not even IBM, Mitsubishi, or
General Electric, can control the environmental and market
uncertainty it faces. Sun Microsystems’
network is so complex that some products it sells are never
touched by a Sun employee. In addition, new
methods of change, such as downsizing and reengineering, have
radically reduced the size of organizations
and increased their flexibility, and new large-group
interventions, such as the search conference and open
space, have increased the speed with which organizational change
can take place. Managers, OD
practitioners, and researchers argue that these forces not only
are powerful in their own right but are
interrelated. Their interaction makes for a highly uncertain and
chaotic environment for all kinds of
organizations, including manufacturing and service firms and
those in the public and private sector. There
is no question that these forces are profoundly affecting
organizations.
Fortunately, a growing number of organizations are undertaking
the kinds of organizational changes needed
to survive and prosper in today’s environment. They are making
themselves more streamlined and nimble
and more responsive to external demands. They are involving
employees in key decisions and paying for
performance rather than for time. They are taking the initiative
in innovating and managing change, rather
than simply responding to what has already happened.
Organization Development is playing an increasingly key role in
helping organizations change themselves.
It is helping organizations assess themselves and their
environments, and revitalize and rebuild their
strategies, structures, and processes. OD is helping
organization members go beyond surface changes to
transform the underlying assumptions and values governing their
behaviors. The different OD concepts
and methods increasingly are finding their way into government
agencies, manufacturing firms,
multinational corporations, service industries, educational
institutions, and not-for-profit organizations.
Perhaps at no other time has OD been more responsive and
practically relevant to organizations’ needs to
operate effectively in a highly complex and changing world.
What is Organization Development (OD)?
What makes one organization a winner, whereas another fails to
make use of the same opportunities? The
key to survival and success lies not in the rational,
quantitative approaches, but rather in a commitment to
irrational, difficult-to-measure things like people, quality,
customer service, and more importantly, develop
the flexibility to meet changing conditions. For example, in a
study that examined the “high tech-high
touch” phenomenon at Citicorp, the crucial component in adapting
to technological change was the human
factor. Employee involvement and commitment is the true key to
successful change.
Defining Organization Development (OD):
The words
organization development
refers to
something about organizations and developing them. “An
organization is the planned coordination of the activities of a
number of people for the achievement of
some common explicit purpose or goal, through division of labor
and functions, and through a hierarchy of
authority and responsibility.” Organizations are social systems
possessing characteristics and OD efforts are
directed toward organizations or major subparts of them.
Development is the act, process, result, or state of being
developed – which in turn means to advance, to
promote the growth of, to evolve the possibilities of, to
further, to improve, or to enhance something.
Two elements of this definition seem important: first,
development may be an act, process, or end state;
second, development refers to “bettering’ something.
Combining these words suggests that organization development is
the act, process, or result of furthering,
advancing, or promoting the growth of organization. According to
this definition, organization
development is anything done to “better” an organization. But
this definition is too broad and all-inclusive.
It can refer to almost anything done in an organizational
context that enhances the organization – hiring a
person with needed skills, firing an incompetent, merging with
another organization, installing a computer,
removing a computer, buying a new plant, and so on. This
definition serves neither to identify and specify
nor to delimit (perhaps something done to “worsen” an
organization would be ruled out). The term
organization development must be given added meaning, must refer
to something more specific, if
productive discourse on the subject is desired.
Another way of defining OD is to examine the following
definitions which have been (suggested in the
literature).
Definition of Organization Development (OD):
OD is an effort (1) planned, (2) organization-wide, and (3)
managed from the top, to (4) increase
organization effectiveness and health through (5) planned
interventions in the organization’s “processes,”
using behavioral science knowledge. (
Richard
Beckhard
)
Analysis of the definition suggests that OD is not just
“anything done to better an organization”; it is a
particular kind of change process designed to bring about a
particular kind of end result.
OD thus represents a unique strategy for system change, a
strategy largely based in the theory and research
of the behavioral sciences, and a strategy having a substantial
prescriptive character. OD is thus a
normative discipline, it prescribes how planned change in
organizations should be approached and carried
out if organization improvement is to be obtained.
In summary, OD is a process of planned system change that
attempts to make organizations (viewed as
social-technical systems) better able to attain their short- and
long-term objectives. This is achieved by
teaching the organization members to manage their organization
processes and culture more effectively.
Facts, concepts, and theory from the behavioral sciences are
utilized to fashion both the process and the
content of the interventions. A basic belief of OD theorists and
practitioners is that for effective, lasting
change to take place, the system members must grow in the
competence to master their own fates.
Finally, it is important to note that OD has two broad goals:
organization development and individual
development. Although it is not stated explicitly in the above
definitions, improving the quality of life for
individuals in organizations is a primary goal of organization
development. Enhancing individual
development is a key value of OD practitioners and a key outcome
of most OD programs.
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