Preface and Acknowledgements
Introduction: Resolving the Tension between Theory E and O of Change By Michael Beer and Nitin Nohria
Section I. Purpose of Change: Economic Value or Organizational Capability
1. Value Maximization and the Corporate Objective Function By Michael Jensen
2. The Puzzles and Paradoxes of How Living Companies Create Wealth: Why Single-Valued Objective Functions Are Not Quite Enough By Peter M. Senge
3. Purpose of Change
A Commentary on Jensen and Senge By Joseph Bower
Section II. Leadership of Change: Directed From the Top or High Involvement & Participative
4. Effective Change Begins At the Top By Jay A. Conger
5. The Leadership of Change By Warren Bennis
6. Embracing Paradox: Top-Down vs. Participative Management of Organizational Change
A Commentary on Conger and Bennis By Dexter Dunphy
Section III. Focus of Change: Formal Structure and Systems or Culture
7. The Role of Formal Structures and Processes By Jay R. Galbraith
8. Changing Structure is Not Enough: The Moral Meaning of Organizational Design By Larry Hirschhorn
9. Initiating Change: The Anatomy of Structure as a Starting Point
A Commentary on Galbraith and Hirschhorn By Allan R. Cohen
Section IV. Planning of Change: Planned or Emergent
10. Rebuilding Behavioral Context: A Blueprint for Corporate Renewal By Sumantra Ghoshal and Christopher A. Bartlett
11. Emergent Change as a Universal in Organizations By Karl E. Weick
12. Linking Change Processes to Outcomes
A Commentary on Ghoshal & Bartlett and Weick By Andrew Pettigrew
Section V. Motivation for Change: Financial Incentives Lead or Lag Support
13. Compensation Systems and Organizational Change: Ideas and Evidence From Theory and Practice By Karen Wruck
14. Compensation: A Troublesome Lead System in Organizational Change By Gerald E. Ledford and Robert L. Heneman
15. Pay System Change: Lag, Lead, or Both?
A Commentary on Wruck and Ledford By Edward E. Lawler, III
Section VI. Consultants' Role in Change: Large Knowledge Driven or Small Process Driven
16. Human Performance That Increases Business Performance: The Growth of Change Management and Its Role in Creating New Forms of Business Value By Terry Neill
17. Assuring That Consulting Produces Benefits: Rapid Cycle Successes vs. The Titanics By Robert H. Schaffer
18. Scope and Involvement in Accelerated Organization Transformation
A Commentary on Neill and Schaffer By Robert H. Miles
Section VII. Research on Change: Normal Science or Action Science
19. Professional Science for a Professional School: Action Science vs. Normal Science By Andrew H. Van de Ven
20. The Relevance of Actionable Knowledge for Breaking the Code By Chris Argyris
21. Research That Will Break the Code of Change: The Role of Useful Normal Science and Usable Action Science
A Commentary on Van de Ven and Argyris By Michael Beer
Ending and Beginning
22. Breaking the Code of Change: Observations and Critique By Roger Martin
Epilogue By Michael Beer and Nitin Nohria
Index
About the Contributors
Author Bio: Michael Beer is the Cahners-Rabb Professor of Business Administration at Harvard Business School. Nitin Nohria is the Richard P. Chapman Professor of Business Administration at Harvard Business School.
We Live in a world in which the nature of organizations and the practice of management are being profoundly changed. Most people accept that we are living through a period of great business turmoil. And most managers and organizations have accepted Tom Peter's dictum that they must "change or die." Yet although executives, consultants, financial analysts, and academics all agree that change is a constant in today's world, they have very different views on the process by which underperforming mature companies ought to be changed. An integrated theory or framework for understanding change does not exist. Academics and consultants often give very different and contradictory advice. Economists recommend the use of incentives tied to shareholder value as the motivating force for change, whereas academics in the field of organization behavior recommend high employee involvement to motivate change and develop a high-commitment culture. Large management consulting firms employ legions of bright M.B.A.s to analyze a company and recommend a new strategy and structure, whereas smaller consulting firms believe that the client's management must be involved in analyzing the problem and deciding on what has to change. They aim to help the client through a process that surfaces difficult issues and makes them discussible, not to provide the expertise large management consulting firms see as their distinctive contribution. Not surprisingly, the lack of a widely agreed-upon approach leads to considerable variance in the outcomes of change initiatives. Most such initiatives-be they downsizing, restructuring, the introduction ofnew technology, or efforts to change the corporate culture-have very low success rates. Research suggests that only a third of these initiatives achieve any success at all.
' Given companies' acute need for change and the significant human and economic toll that accompanies any effort to change, we think it is imperative to create some knowledge and understanding that helps us improve the odds of success. If we can find ways to help managers and organizations more effectively manage the process of change, we cannot only enhance firm performance but increase employee well-being and reduce the economic anxiety that has gripped so many societies. In short, there are huge payoffs from producing usable knowledge about the process of change.
The 1998 "Breaking the Code of Change" conference at the Harvard Business School was a first step in an intellectual journey that we hope may ultimately unlock our understanding of organizational change. Our main purpose at the conference was to identify the key considerations in choosing among different change strategies in the transformation of large underperforming companies. This is the change task that many American corporations have confronted in the last decade. While many of these companies must now deal with the consequences of change strategies they have chosen, the pressure to change and the choice of a change strategy faces companies in Europe, Africa, South America, Japan, and the rest of Asia. As these companies struggle to become competitive, should they follow the example of Scott Paper, a company that delivered a rapid turnaround in shareholder value under the leadership of CEO A1 Dunlap? Should they follow the change process of Champion International, a paper company in a different segment of the industry, which over a decade dramatically changed its organizational capability and culture? Or should they follow the example of the British grocery chain Asda, which was led by Archie Norman and Allan Leighton through a very successful turnaround?
Although the conference focused principally on the problem of changing large established corporations buffeted by competitive pressures, the conceptual framework that we present in this chapter can...
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