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11/17/21, 1:20 PM Print
After reading this chapter, you should be able to do the following:
1. Explain planned organizational change and analyze Kotter’s eight-step change process.
2. Compare and contrast the �ields of organizational development and change management.
3. Examine Lewin’s force-�ield analysis and how it can be used to overcome resistance to change.
4. Describe the forces for change and organizational responses to these forces.
5. Summarize the various types and models of organizational change.
6. Differentiate between the balanced scorecard, contingency alignment framework, and stakeholder
1 Organizational Change Management: AnIntroduction
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Everybody has accepted by now that change is unavoidable. But that still implies that change is like death and taxes
—it should be postponed as long as possible and no change would be vastly preferable. But in a period of upheaval,
such as the one we are living in, change is the norm.
The Chinese international commerce company Alibaba was founded in 1999 by Jack Ma, a visionary businessman with a
knack for change in his DNA. He launched Alibaba.com—an e-commerce platform that focused on small export �irms—from
his Hangzhou apartment. It has since grown to an estimated market cap of $223 billion and has more than 24,000 employees
(Alibaba Group, n.d.; China Internet Watch Team, 2014; Pearlman, 2014; Reeves, Zeng, & Venjara, 2015).
This company is a good example of how organizations in complex, uncertain environments must continually change to
remain competitive. This is especially true of technology-driven �irms that rapidly expand in size and scope to gain and
maintain market dominance. Alibaba, like Amazon, Google, and Net�lix, uses automatic algorithms (a decision-making form
of arti�icial intelligence) to routinely change, adjust, and leverage product choices for millions of customers in real time, a
process known as self-tuning (Reeves et al., 2015). The company then extends this type of practice into its business plan by
utilizing current consumer behavior to in�luence its vision, strategy, structure, and culture, as well as product offerings. As
researchers Reeves et al. (2015) stated, “Self-tuning is related to the concepts of agility (rapid adjustment), adaptation
(learning through trial and error), and ambidexterity (balancing exploration and exploitation)” (p. 78).
A quick examination of Alibaba’s brief history demonstrates how the company has used self-tuning concepts to adjust to—
and even create—customer demand. The company moves quickly to diversify its product offerings and markets by creating
spin-off companies. This practice characterizes Alibaba’s successful change and evolution—at least to date. For example, in
2003 Alibaba launched Taobao Marketplace to test China’s consumer demand. It then rapidly created yet another spin-off,
Aliwangwang, in 2004 that enabled instant messaging on the Taobao website. Enlarging the company’s business model,
Alipay was also started in 2004, creating an infrastructure that experimented with and strengthened consumer con�idence in
online business transactions. It worked. In 2008 Taobao was renamed TMall, which included a business-to-customer platform
and e-commerce ecosystem.
In 2009 Alibaba Cloud Computing was started to keep up with bleeding edge storage and retrieval technology. AliExpress
was launched in 2010, which moved the company into a global position and provided it with an online international
consumer website. In 2011 TMall and eTao (a shopping comparison website) became independent platforms in order to
enable Alibaba to explore the future of customer demand and e-commerce in China. Cainiao, China Smart Logistics, was then
launched in 2013, further enlarging the company’s scope from e-commerce to emphasizing infrastructure. In 2014 Ant
Financial Services Group was formed, which further enlarged the scope of the company. In 2015 Alibaba’s innovative
adaptation to Chinese customers surpassed Baidu’s (the Chinese version of Facebook) mobile ad revenue in China.
The company’s leadership has and is likely to continue to balance experimentation with innovation and real-time data
algorithmic analysis to form self-adjusting organizational systems ( for example, vision, strategy, culture, business models,
and product offerings).
1. Traditionally and currently, planned organizational change has been characterized by solving problems or
crises that have arisen. Alibaba and other industry-leading technology-driven �irms have employed
organizational change to gain and expand market share and dominance. Brie�ly explain how Alibaba has used
organizational change, and offer a few examples.
2. How would you feel about working within a fast-paced, ever-evolving company like Net�lix, Alibaba, or Google?
Explain your reasoning.
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Christoph Dernbach/picture-alliance/dpa/AP Images
Companies like Google and Alibaba
continually scan their environment, buying
and integrating new and innovative
companies to stay ahead of rivals. Some of
Google’s main revenue streams and major
competitors include the Google website
(versus Yahoo! and AOL) and total
advertising (versus the Walt Disney
Company, Facebook, and Twitter).
Introduction: Importance of Organizational Change
The prevalence of organizational change management is growing exponentially. Three decades ago, most university
curricula did not include courses on change management. Now such courses are commonplace (Worren, Ruddle, &
Moore, 1999; see also Project Management Institute, 2015). A McKinsey & Company study of 189,000 employees from
81 diverse organizations found that championing desired change was one of the most important leadership behaviors
(as cited in McKeown, 2015). The growing popularity and need for organizational change management is due in large
part to the rapid and pervasive amount of change we regularly face.
The world has changed dramatically over the past 30 years, as have how we think, what we think, and how we
communicate. Globalization and technology have made the world far more interconnected, so what affects one business
sector or one part of the world invariably affects everyone. Economic uncertainty in Europe and Asia affects exports in
the United States. An oil spill in the Gulf of Mexico affects the restaurant industry in every corner of the country, from
Boston to Seattle. Decades ago, events could be isolated; today change is everywhere and can occur at any time. To be
effective in such a marketplace, it is essential to manage change. Leading and managing organizational change has
become a core competency for business professionals. Companies not only need to manage change to survive, but to
create a competitive advantage.
Rival Internet companies Google and Facebook are good examples of
the importance of using change to gain a competitive advantage.
Although Facebook is the leading social networking website and has
overtaken websites like Friendster and Myspace, larger competitors
like Google, Microsoft, and Apple are not waiting for their territory to
be encroached on—they are therefore continually moving forward
with technological breakthroughs. In the words of David Rowan,
editor of Wired magazine, Facebook and Google are “in the ultimate
battle for control of the Internet” (Rowan, 2010). He asserts that
Google hires the world’s smartest software engineers, and this, along
with algorithm-based computing power, has helped them dominate
the desktop-Internet era for a decade. On the other side, he suggests
that Facebook strives to know all of what society is thinking, doing,
and purchasing, and this helps it play a critical role in all of its
members’ big and small life decisions (Rowan, 2010; see also
As Facebook’s scope and reach continues to grow, Google’s
executives are taking note and ensuring they follow suit. Both
companies are extending into markets that no one ever anticipated.
As this trend unfolds, more companies will no doubt implement
change to maintain their competitive advantage as well.
Change is not an issue for only giant corporate �irms. Universities, hospitals, nonpro�its, and small businesses (with 250
employees or less) across all industries must also plan for change. The U.S. Small Business Administration estimates that
more than 50% of small businesses fail in the �irst year and 95% fail within the �irst 5 years (Scuteri, 2015). Note that 7
out of 10 new �irms survive just 2 years. A major challenge for small businesses in general is competitiveness (the
ability of a business or organization to succeed in meeting the owners’ broad business goals to serve customers). In
particular, small �irms fail for many reasons, which include being unable to gain access to needed capital and effectively
innovate and market; failing to adequately control growth; demonstrating poor accounting and operational
inef�iciencies; not enabling employees to work smarter (using technology); and failing to address regulations (U.S. Small
Business Administration, 2015; see also All Business, 2015).
Not all changes are dramatic, or even involve the entire organization. Some divisions, business units, departments,
teams, and individuals may require varying amounts of change to increase effectiveness and obtain desired results. As
we discuss in a later section, experts in change management offer particular knowledge in diagnosing and addressing
issues. Although we focus on large-scale change here, we also acknowledge and discuss different types, scales, and
scopes of organizational change, grounded in models and skills with which to plan and implement these strategies.
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In large and small organizations, signi�icant changes are typically not easy or linear to implement. Larger changes tend
to become overly complicated, especially if an organization lacks a realistic plan. Because organizational change involves
people and their emotions, resistance is natural. Who wants to change jobs and routines they know? A survey of 3,199
executives worldwide found that only 1 in 3 transformational organizational change programs succeeds. Other experts
estimate that between 50% and 70% of major organizational change efforts fail (All Business, 2015; Salim, 2015).
Organizational change efforts could avoid failure if leadership followed different strategic and tactical plans and
implementation steps. Leadership is particularly crucial to executing an effective change program. Effective change
projects call for leaders and managers who are emotionally intelligent and mindful. Such leaders need to be �lexible,
creative, and good communicators who work well with people. Also, companies must not only know what types of
change to watch for, but how to implement effective strategies to survive and thrive. This chapter will provide a broad
overview of types of changes, the forces that induce change, and organizational frameworks for dealing with change. We
begin with two of the most well-known frameworks for planned organizational change.
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1.1 Kotter’s Eight-Step Approach
Broadly speaking, planned organizational change is a process that moves companies from a present state to a
desired future state with the goal of enhancing their effectiveness. Ultimately, the goal of planned organizational change
is to improve an organization’s capabilities, thus enhancing its value to stakeholders and stockholders (Beer, 1980).
Organizational leaders, managers, and employees who do not—or cannot—use change to their strategic and
operational advantage may see change as threatening and may resist efforts to alter a problematic situation. Those
leaders and professionals who work with change specialists are more likely to view change as a competitive advantage if
change is conscientiously planned and implemented.
One of the most widely used planning methods is John Kotter’s (1996, 1998, 2008) eight-step change process. This
approach is used as a planning diagnostic and implementation method:
Step 1. Establish a sense of urgency.
Step 2. Form a powerful guiding coalition.
Step 3. Develop a vision and strategy.
Step 4. Communicate the change vision.
Step 5. Empower others to act on the vision.
Step 6. Generate short-term wins.
Step 7. Consolidate gains and produce more change.
Step 8. Anchor new approaches in the culture (Kotter International, 2006).
These eight steps are vital to producing change. Each step is discussed in detail in the following sections.
Step 1. Establish a Sense of Urgency
Kotter (2008) argued that signi�icant change generally fails if a sense of urgency is not �irst created and realized. The
sense of urgency refers to the “pressing importance” of action needed to address critical issues—those that are
essential to a group’s success, survival, or failure (Lohr, 2015). This goes against conventional wisdom, which assumes
that planning processes start with a vision or goal. However, Kotter believes that individuals are not motivated without
an initial sense of urgency. Creating one involves examining markets and competitive realities and identifying and
discussing crises, potential crises, or major opportunities. Small companies and start-ups usually have a greater sense of
urgency to change than do large organizations, because their very existence is at stake.
Kotter (2007) has found that more than 50% of companies fail during this �irst phase because executives (a) either
underestimate the dif�iculty of moving people out of their comfort zones or overestimate their own ability to create a
sense of urgency; (b) lack patience—or as some say, “Enough with the preliminaries, let’s get on with it”; or (c) become
paralyzed by the possible drawbacks, which can include defensiveness among employees, lack of morale among senior
employees, or an overarching fear that things will spin out of control, business will suffer, stocks will sink, and they will
be blamed for these and other mistakes. Kotter states the urgency rate is high enough when 75% of a company’s
management actually believe that “business as usual” is no longer acceptable.
Step 2. Form a Powerful Guiding Coalition
According to Kotter (2007), the second stage of planning change is to form a powerful guiding coalition. This is
accomplished by assembling a group with enough power to lead the change effort and encouraging the group to work
as a team. The team can consist of top-level of�icers and/or involve other key in�luential people in the organization.
Starting with one or two and including up to �ive people may be suf�icient in large and small companies. A critical mass
in this coalition is later needed for the effort to succeed.
The highest top-level executives are needed for an enterprise change initiative, with another 15 to 50 leadership
members (including senior managers), depending on the size of the company and the scope of the change. The coalition
can include board members, important customers, and union leaders. Without a powerful guiding coalition, the change
will likely incur opposition and fail.
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If change is to be successful, the guiding
coalition must effectively communicate the
new vision to employees.
Step 3. Create a Vision
This coalition next creates a vision that directs the change effort and presents a picture of the organization’s future
envisioned state once the change is achieved. Not only is the vision articulated, but strategies for achieving it are clearly
laid out and communicated later in the process, based on this step. The process of creating a sensible, realistic
statement and strategies can take 3 to 12 months. Large-scale change efforts that fail either have several plans and
programs but no vision or a vision that is overly complicated and “blurry.”
Step 4. Communicate the Vision
Kotter (2008) states that the coalition must actively communicate the
vision, which involves using every vehicle possible to ensure that
employees understand the new vision and strategies for achieving it.
Communication also involves teaching new behaviors, which the
guiding coalition should model and exemplify. Vision should be
simple, crisp, and concise: A vision that cannot be communicated to
someone in 5 minutes will usually not work. Effectively
communicating the vision can make or break the buy-in from
employees, who may be required to make signi�icant sacri�ices if the
change is to succeed. Kotter notes that employees will not make
sacri�ices if they do not believe the change is possible. Therefore,
credible communication must win so-called hearts and minds if
employees are to accept the changes. Moreover, a successful vision
typically includes a plan for growth and certain assurances, such as if
employees are laid off, they will be treated justly.
The guiding coalition should use words and actions to communicate the vision. Leaders and coalition members must
“walk the talk” rather than simply “talk the talk.” They become examples of the new corporate culture (an organization’s
shared behaviors and values) and of its change. To that end, all types of communication channels are featured in
successful transformations. Messages contain essential information about business problems and the new vision and
are framed and delivered to employees in interesting, exciting, and engaging ways.
Step 5. Empower Others to Act on the Vision
Communication alone, however, will not empower employees to adopt and adapt to the required changes. Enlisting
competent and willing individuals to enact change is important and is critical for success. The more people involved in
trying new behaviors and changes, the better. It is therefore important to remove obstacles that hinder change.
Organizational structures, compensation and performance criteria, or outdated technologies may have to be removed
or altered. Obstacles can also be individuals, such as department heads or managers who do not believe in the change
and/or refuse to adjust their attitudes, behaviors, and practices. However, whether someone accepts or resists the
change, everyone should be treated equally and in a manner that re�lects the new vision (Kotter, 2007).
Step 6. Plan for and Create Short-Term Wins
Next, Kotter (2008) advises planning for and creating short-term wins, which involves establishing visible and tangible
performance improvements. Once these improvements are evident, it is important to recognize and reward the
employees that facilitated them. Change efforts are unsuccessful when executives do not systematically plan for or
create short-term wins. Since large-scale transformations take time, employees need to see results around 12 to 24
months into the change; otherwise, resistance may set in.
Step 7. Consolidate Improvements and Produce More Change
After planning and celebrating short-term wins, Kotter (2008) says change leaders must consolidate improvements and
produce still more change. They can do this by using the credibility they have accrued from their expertise and
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AP Photo/Eric Risberg
Steve Jobs’s successor at Apple, Tim Cook,
has a dif�icult task in living up to Jobs’s
legacy and in helping Apple stay strong and
competitive—but so far, he is succeeding.
experience to change systems, structures, and policies that do not �it together or with the new vision. They can also hire,
promote, and train employees who can implement the vision and reinvigorate the process. It is important to note that
Kotter warns about declaring victory too soon into a major change initiative and emphasizes that real change takes time.
As he says:
In one of the most successful transformations that I have ever seen, we quanti�ied the amount of change that
occurred each year over a seven-year period.… The peak came in year �ive, fully 36 months after the �irst set of
visible wins. (Kotter, 2008)
Step 8. Institutionalize New Approaches in the Culture
Finally, it is important to anchor and institutionalize new approaches in the culture. This means making the change
accepted and established in the organization’s culture. Organizations accomplish this by increasing their performance
through customer- and productivity-related behaviors. It is also important to articulate and reinforce productive and
empowering relationships between the new behaviors and organizational successes so that employees do not
misinterpret the effects of the change. This is the �irst step toward institutionalizing the new approach in the company’s
culture. The second step is to cultivate the means to ensure leadership development and succession so that future
leaders understand and embody the changes.
Therefore, according to Kotter (2008), succession planning (that is,
setting the next chief executive of�icer [CEO] and other leaders in
place) is a worthy goal and one that helps an organization anchor
and institutionalize effective changes. When a strong leader guides an
organization through an effective change but fails to select and ready
a successor, the changes may not be sustained. However, �inding a
strong successor is easier said than done, especially for those who
must follow superstars like Apple’s Steve Jobs and General Electric’s
(GE’s) Jack Welch.
For example, Jeff Immelt, who replaced Welch as GE’s chair and CEO
in 2001, has won over many critics who originally disapproved of
Immelt’s leadership. During one of the worst economies in U.S.
history, Immelt had to meet many unexpected dif�iculties in reshaping
the company. As Immelt commented of his journey, “The trick, if you
follow someone famous, is that you’ve got to drive change every day
without ever pretending anything was ever wrong. It takes con�idence
and it takes time” (Lohr, 2015, para. 3).
Tim Cook, Jobs’s successor, has his own share of challenges in maintaining Apple’s dominance (see Chapter 2). Cook has
effectively transitioned into his role as CEO, sustaining the innovations Jobs created and moving on to newer ones.
Anchoring and institutionalizing effective transformational changes from one CEO or management team to another is
not easy, but effective succession planning allows companies to continue approaches that have worked in the past and
plan new ones to meet future environmental challenges.
Let’s now turn our attention to how planned organizational change is developed, by whom, and how an understanding
of two types of change specialists can help organizations negotiate and manage changes that occur both internally and
Check Your Understanding
1. The �irst step in Kotter’s eight-step model is to establish a sense of urgency. How do you think companies like Apple,
Amazon, and Google can create a sense of urgency when they are already leaders in their industries?
2. Kotter believes it is necessary to create short-term wins when establishing change. Why do you think this is
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1.2 Organizational Development and Change Management
Who plans and helps architect planned organizational changes? The larger the planned change, the more top-level
leaders and human resources (HR) staff are involved, especially if the change affects most, if not all, of the enterprise.
Organizational consultants and change specialists are generally called in to partner with internal staff to diagnose and
implement changes. Depending on the organization’s size, high-level leaders may not be heavily involved if a change
involves a division, a department, or work units.
In this section, we compare and contrast the two �ields that created the modern principles of planned change:
organizational development and change management. The approaches used by specialists in these �ields are essential
for achieving planned change in organizations, and these specialists are in high demand.
The �ield of organizational development (OD) is “the practice of changing people and organizations for positive
growth” (OD Portal.com, n.d., para. 1). OD is the planned, organization-wide improvement of business processes to
increase a company’s effectiveness and overall health. The planned changes are managed by executive leadership and
based on behavioral science knowledge.
OD was the �irst professional �ield in management/organizational behavior and development to establish social science–
based strategies and tools to diagnose, plan, and help business leaders implement organizational improvement changes.
OD as a specialized area has been described as a “data-based process supported by survey feedback, a sociotechnical
approach that is centered on job tasks and characteristics, and an interpersonal process approach led by group
dynamics” (Waclawski & Church, 2002; see also Burke & Noumair, 2015, p. 16). This �ield differs from those such as
accounting, law, or politics, because it overlaps with other �ields such as organizational behavior, change management,
and consulting processes. Other disciplines have a focused sense of purpose, whereas OD is always evolving and does
not yet have basic boundaries or parameters, despite discussion and debate from OD practitioners regarding the nature
of the �ield (Church, Hurley, & Burke, 1992; Friedlander, 1976; Greiner, 1980; Weisbord, 1982; Waclawski & Church,
Pioneers and those active in OD pride themselves on the inclusivity and diversity of their profession’s values and
methods. Organizational development specialists, many of whom are academics and organizational behavior
professionals, are a major source of organizational change expertise, both theoretical and applied.
OD differs from change management in several ways. OD is based on humanistic, egalitarian, and process-oriented
values; in short, it is grounded more in the “people side” of things. Change management, on the other hand, is based on
the content-based disciplines of business, �inance, strategic, and operations management. Both �ields have expanded to
include parts of each, while still maintaining certain subject matter expertise. Leaders and consultants from both �ields
are important and complementary to planning organizational change. We use the term specialists for both OD and
change management experts. This term encompasses consultants, practitioners, and others with expertise in these
Specialists use organizational development methods that focus mainly on people and the human dimensions of
organizations, such as culture, climate, leadership, and communication. These methods involve team building, survey
feedback, quality of work life, restructuring work and positions, and job satisfaction (French & Bell, 1978). As the �ield
of OD has evolved, it has incorporated change planning and interventions that also focus on structural, work process,
and organizational design changes for top-level leaders as well as the entire organization.
Consider the following example of an OD specialist’s work. Suppose the leaders of a midsize �irm need to identify
objective criteria for the outputs of key goals of a major division. The CEO and the division manager want to hold
employees accountable for the stated goals, the criteria underlying the goals, …
We have all watched organizations around us change in response to technology, legislation, consumer demand, pandemic, and other factors.
Provide an example of an organization that has changed for the better and define how this transition benefited its customers, employees, and investors. Utilize the concepts provided within the video and the text when analyzing the change outcomes.
Your initial post should be at least 200 words in length. Support your analysis with a minimum of one resource in addition to the video and the textbook. Properly reference and cite your resources.
Watch the video and write a discussion using the info above. PLEASE use the book, the video and a 3rd reference