ORGANIZATION

AL CHANGE
ORGANIZATIONAL CHANGE
 Organizational Change looks both at the process in which a company or any organization changes its
operational methods, technologies, organizational structure, whole structure, or strategies, as well as what effects
these changes have on it.

 Organizational change usually happens in response to – or as a result of – external or internal pressures.

 It is all about reviewing and modifying structures – specifically management structures – and business processes.

 Small commercial enterprises need to adapt to survive against larger competitors. They also need to learn to
thrive in that environment. Large rivals need to adapt rapidly when a smaller, innovative competitor comes onto
the scene.

 To avoid falling behind, or to remain a step ahead of its rivals, a business must seek out ways to operate more
efficiently. It must also strive to operate more cost effectively.
 To keep pace in a constantly evolving business world, organizations often need to implement
enterprisewide changes affecting their processes, products and people.

 Change is a fact of life in businesses today. It can be difficult, and people often resist it.

 But to develop an agile workplace culture, organizations should follow a systematic approach
to managing major change.

 Organizational development experts have established approaches for successfully navigating

through change.
 Organizational leaders must identify and respond quickly to market changes and unexpected
challenges, but most are not in a position to create an agile culture.

 Yet agile leadership—from CEOs down to line-level managers—separates high-performing

from lower-performing organizations.

 Companies that consistently outperform competitors in profitability, market share, revenue

growth and customer satisfaction reported much greater agility than lower performers. 
WHAT CAUSES ORGANIZATIONAL CHANGE?

Many factors make organizational change necessary. Some of the most common faced by
managers include: 

• New leadership at the helm of the company or within its departments

• Shifts in the organizational team structure
• The implementation of new technology
• The adoption of new business models
TYPES OF ORGANIZATIONAL CHANGE

 Organizational change is a broad term. Some change is sweeping: A substantial evolution in

the direction of a company. Other shifts are less dramatic, focusing instead on a small aspect
of a firm.

 It can be helpful to think of change as a spectrum.

 On one end, you’ll find adaptive change, which speaks to those modest iterations.

 On the other, there’s transformational change, in which vast change is pursued.

ADAPTIVE CHANGE
 Adaptive changes are small, incremental changes organizations adopt to address needs that
evolve over time. Typically, these changes are minor modifications and adjustments that
managers fine-tune and implement to execute upon business strategies. Throughout the
process, leadership may add, subtract, or refine processes.

 One example of an adaptive change is an organization that upgrades their computer operating
systems from Windows 8 to Windows 10.
 TRANSFORMATIONAL
CHANGE
 Transformational changes have a larger scale and scope than adaptive changes.

 They can often involve a simultaneous shift in mission and strategy, company or team structure, people and
organizational performance, or business processes.

 Because of their scale, these changes often take a substantial amount of time and energy to enact.

 Though it's not always the case, transformational changes are often pursued in response to external forces, such as the
emergence of a disruptive new competitor or issues impacting a company’s supply chain.

 An example of a transformational change is the adoption of a customer relationship management software (CRM),
which all departments are expected to learn and employ.

 Many changes will fall somewhere between adaptive and transformational on the spectrum. For this reason, managers
need to understand that the change process must be tailored to the unique challenges and demands of each situation.
WHY IS ORGANIZATIONAL CHANGE
MANAGEMENT IMPORTANT?

 Organizational change is necessary for companies to succeed and grow. Change management
drives the successful adoption and usage of change within the business.

 It allows employees to understand and commit to the shift and work effectively during it.

 Without effective organizational change management, company transitions can be rocky and
expensive in terms of both time and resources.

 They can also result in lower employee morale and competent skill development. Ultimately, a
lack of effective change management can lead the organization to fail.
A MANAGER’S ROLE IN ORGANIZATIONAL
CHANGE

• The ability to communicate clearly and effectively—this includes actively listening to their
team and colleagues
• A highly developed level of emotional intelligence
• Strong organizational skills
• An eye for detail
• Problem-solving and decision-making skills
• Delegating without micromanaging
PREPARING FOR
ORGANIZATIONAL CHANGE
 To prepare for organizational change, it’s essential to first define the organizational change, understand why it’s critical, and garner
support from your colleagues.
 Then, create a roadmap that clearly articulates and measures success, and explains how the business—and its employees, customers,
and constituencies—will be affected.
 Ensuring that the process plan aligns with business goals and outlines the implementation and sustainability of the organizational
change.

 Noting what challenges may arise and be flexible enough to adjust accordingly.

 Celebrating small victories along the way.

 Change management doesn’t stop once the transition is successfully executed.

 Both throughout and following the process, one needs to continuously assess outcomes, measure data, train employees on new
methodologies and business practices, and readjust goals as necessary.
 Organizational change is tough. It requires vision, large budgets, and a tailored strategy in order to
deliver successful results.

 In fact, 70% of change initiatives fail as a result of bad management, poor implementation, and even
bad luck.

 Every company is in a different place when it comes to its position, its market, and its current needs.
There’s no one size fits all strategy that every company can use to make organizational change a
breeze.

 What does help is to see how other companies managed to implement organizational change
successfully, understand why it worked, and apply that knowledge to your own organization.
MICROSOFT'S ORGANIZATIONAL
TRANSFORMATION AND NEW PURPOSE
 Microsoft was running into serious internal problems with its organizational structure.

 It wasn’t until the new CEO Satya Nadella took charge and started to undertake some major restructuring for this massive
company.

 Even after the phenomenal and long-lived success of Windows and Office products, Microsoft was struggling to keep up with
other companies — specifically, with Google becoming dominant in the search and software market and Apple owning the
phone market.

 The tech giant was stagnant and rife with internal wars between major departments that often viewed each other more as
competitors than partners within the same company.

 As a result, innovation was being thwarted by a toxic environment that kept the company increasingly dependent on Windows
and Office. While both products are very successful, the stagnation put the company in a dangerous “comfort” zone.
HOW MICROSOFT OPTIMIZED ITS
PROCESSES AND UNIFIED ITS TEAMS:
 After being named CEO in February 2014, Satya Nadella undertook a major restructuring of the tech giant to
eliminate its destructive internal competition.

 Microsoft products and platforms would no longer exist as separate groups. Instead, all employees would start
focusing on a limited set of common goals — and bringing them all together. Their new common functions include:
 Reinventing productivity and business processes
 Building an intelligent cloud platform
 Creating more personal computing

 In September 2016, Nadella created a new AI and Research Group by merging their original research group with
the Bing, Cortana, and Information Platform teams.

 This move brought roughly 5,000 engineers and computer scientists together to focus on artificial innovation across
all Microsoft product lines.
 Right at the beginning, Nadella shared a new sense of mission with his employees: “To empower
every person and every organization on the planet to achieve more.”

 He also recalled his thought process: “Over the past year, we’ve challenged ourselves to think about
our core mission, our soul — what would be lost if we disappeared... We also asked ourselves, what
culture do we want to foster that will enable us to achieve these goals?”

 Prior to the restructuring, employees had been lacking a positive sense of purpose, with the result
being low morale and weakened employee engagement.

 And thanks to Nadella’s initiative, all Microsoft’s employees are following a common goal that
brings real meaning to their work.

 As of today, Microsoft’s restructuring is still in progress. But its future still looks brighter — perhaps
even brighter than ever — as a result of its new, well-established mission.
GOOGLE SPLITS UP UNDER
THE ALPHABET UMBRELLA
GOOGLE SPLITS UP UNDER THE
ALPHABET UMBRELLA
 Imagine growing so much that you need to break yourself apart to work better. Think that sounds unbelievable? Well, that’s exactly what Google
did when it became Alphabet.

 After dominating a plethora of hi-tech projects, Google co-founder Larry Page thought it was time for him to reorganize the entire company again.

 In the early 2000s, Google was already a monster, dominating internet search and making itself indispensable in our lives with products like Google
Maps and Gmail.

 Its R&D teams were seemingly interested in everything, searching for what co-founder Larry Page termed “moonshot” projects, which were
supposedly impossible for Google engineers to make real. But the company wanted them to try anyway.

 As a result, Google grew extremely diverse. The company started tackling all kinds of projects, including ones relating to human longevity, smart
vehicles, wearable tech, smart homes, and more.

 It was all connected, to an extent. But at the same time, it wasn’t. Google was becoming an increasingly impossible entity to manage. So, in order
to save serious troubles in the future, Page decided it was time to deconstruct the entire conglomerate.
HOW GOOGLE BECAME A PART OF ANOTHER COMPANY:

 Page broke up Google into different companies, all of them owned by a new umbrella
corporation called Alphabet.

 Page sits at the top as CEO of Alphabet, with Google co-founder Sergey Brin as president, and
long-time Google exec Eric Schmidt as chairman (who left Alphabet in 2020).

 Each of Alphabet’s companies has its own goals and a CEO focused solely on those goals.

 In a blog post, Page wrote this: “Fundamentally, we believe this allows us more management
scale, as we can run things independently that aren’t very related. Alphabet is about businesses
prospering through strong leaders and independence.”
Larry’s motivators to make this change included:
 Getting more ambitious things done
 Taking the long-term view
 Empowering great entrepreneurs and companies to flourish
 Investing at the scale of the opportunities and resources we see
 Improving the transparency and oversight of what we’re doing
 Making Google even better through greater focus
 Improving the lives of as many people as we can

 Google wanted to separate every major project into independent organizations with unique goals and ambitions. That way, it
would be easier to manage and scale. Giving employees accountability leads to 10x company growth.

 Larry Page made clear his thinking when the launch of Alphabet was announced, explaining that the reorganization would free the
employees to concentrate more productively and happily on their own mission without having to be concerned about Google
overall.

 This means that every Alphabet company is now responsible for its own expenditures and income. But at the same time, the
increased responsibility could make innovation more meaningful.

 In the end, what truly paid off for Google (now Alphabet) was the long-term vision Page had for the company, which drove him to
lead a change management initiative for the good of his organization.
BRITISH AIRWAYS RESTRUCTURES ITS ENTIRE
ORGANIZATION

• British Airways is the largest airline in the U.K. as a result of merging with four other companies.

• Due to this massive merger, the organization faced huge problems to manage itself and bring a
decent service in the immediate aftermath.

• It wasn’t until its privatization and the incorporation of the new chairperson, Lord King, that the
company started to enjoy positive momentum — and increase its profits accordingly.
STANDARDIZE CUSTOMER SERVICE AFTER
THE NEW CHAIRPERSON TAKES CHARGE

 Created in 1974 from four other companies — BEA, BOAC, Northeast Airlines, and Cambrian
Airlines — they formed a business with 215 aircraft supported by 50,000 employees.

 This level of staffing was — even then — viewed as precariously oversized.

 And on top of that, the oil crises of the 1970s shrunk the airline’s customer base, which, in
tandem with its huge staff, resulted in massive financial losses.

 The company soon developed a reputation for its terrible service. So, in 1981, British Airways
brought on a new chairperson, Lord King, who noticed that the company was operating very
inefficiently and wasting valuable resources.
HOW BA BOOSTED ITS PROFITS BY
REDUCING PERSONNEL AND UPGRADING ITS
FLEET:
 To increase profits, King decided to restructure the entire organization by reducing its
workforce from 59,000 to 39,000, eliminating unprofitable routes, and modernizing the fleet.

 Over the course of two years, Lord King had replaced over half of the company’s board.

 He repaired the airline’s image by bringing in a new marketing expert and hiring Colin
Marshall as the new CEO in 1983.

 Within 10 years, the airline reported the highest profits in its industry: $284 million.
 TRANSPARENT COMMUNICATION AND
EFFECTIVE CHANGE MANAGEMENT LEAD
TO GREATER PROFITS
 Before King began announcing layoffs, he explained his reasons for the restructuring to the entire
company to prepare them for the upcoming change.

 His communication effort arose a sense of urgency within the company and prepared them to
embrace change.

 Without his transparency, British Airways could have experienced employee backlash and negative
press around all the layoffs.

 But the chairperson always communicated honestly and frequently to manage the change.
ORGANIZATIONAL CHANGE MANAGEMENT