Theoretical Matrix Assignment

In order to understand and analyze the dynamics of change, and particularly the requirements of effective change implementation, it is important to sort out and distinguish the various approaches an organization can take. This chapter will explore multiple paths to change, paying special attention to behavioral change. In particular, this chapter will:

Identify the role of strategic renewal in propelling change Focus on the behavioral aspect of organizational change Analyze the dynamics of motivating employees to alter their behaviors Differentiate the three faces of change Understand the source of both employee resistance to and support for change

We will start by looking at an attempt by the president of a small but prestigious local bookstore to improve financial performance in the face of competition from national chains as well as from Internet giant Amazon. Theoretical Matrix Assignment

Tales of Woe at Concord Bookshop *

*David Mehegan, “Tales of Woe at Concord Bookshop,” Boston Globe, December 23, 2003, p. E1. Copyright © 2003 Bell & Howell Information and Learning Company. All rights reserved.

It’s like a family quarrel that nobody wants and nobody knows how to stop. Theoretical Matrix Assignment

The Concord Bookshop, a 64­year­old independent store regarded as one of the best in New England, is beset by a bitter clash between owners and staff. The conflict puts pressure on the store at a time when independent booksellers are reeling from competition from chains and the Internet. **

**Concord, a prosperous suburb of Boston, Massachusetts, is the site of the opening battle of the American Revolutionary War. Its rich literary history dates back to the nineteenth century when it was the home of the transcendental writers, notably, Ralph Waldo Emerson and Henry David Thoreau.

Eight of Concord Bookshop’s employees, including the trio of top managers, have quit or given their notice. The staffers’ years of service add up to 73. The three managers, including [the] general manager . . . have worked at the store for a total of 34 years. Meanwhile, a group of outraged local authors . . . has fired off a letter to the owners supporting the staff.

The precipitating event was a surprise announcement last month by the owners—a group of three families represented by a board led by President Morgan “Kim” Smith of Concord—that a new general manager will be hired. No one was laid off, and no one’s salary was cut. Yet many

of the staff were outraged at the de facto demotions, as well as by what they saw as the owners’ immovable stance. . .

“We asked for a meeting with the whole board,” says [a departing staff member]. “We presented our concerns, and they thanked us for our input and said, ‘We’re going to do it our way, and if you don’t like it, each of you will have to make up your mind as to how to proceed.’ Something in me died, the fragile alchemy that made it such a great place to work had died. They had made their plans, we were expendable employees, and we could take it or leave it.”. . .

“We’re heartbroken about it,” says David Donald, professor of history emeritus at Harvard University . . . “These are people we deal with all the time. It’s a wonderful store, beautifully arranged. They are knowledgeable and are glad to look things up.” Adds Joanne Arnaud, director of the Boston Literacy Fund and a Concord resident who also signed the letter: “What makes the Concord Bookshop different is the people and their institutional memory and their memory for a customer. I can say, ‘I’m looking for a book for someone who liked the last book by Nicholas Basbanes. Can you help me?’ They are so warm and welcoming.” Theoretical Matrix Assignment

The clash appears to be rooted in finances. Smith declined to give numbers but portrayed the store’s financial situation as dire.

“Things have never been worse,” he says. “We are offering something important to the town of Concord, which is wonderful, but it isn’t profitable.” Smith praises the three managers but says, “The owners felt the three­way management was not working out.”

The managers say finances aren’t so bad. They . . . issued a written comment: “In explaining to us the change in management structure, the owners told us they wanted to take the store in a different direction. We hold different opinions regarding the financial health of the store. We are very proud of what we have been able to accomplish these past five years.”

There’s no disagreement, though, that profit margins are tighter than ever, and that the past few years have been rough on independent bookstores, especially in the age of Barnes & Noble, Borders, and Amazon.com. Smith believes some of the store’s programs should be reexamined, such as regular weeknight author appearances and signings, which require paying staff to keep the store open.

“Increasingly, people are buying their books elsewhere and bringing them to signings,” Smith says. “We had 70 people at the Tracy Kidder signing, but we sold only 10 books. I discovered a guy coming in with five copies of the book that he bought [elsewhere]. We want to preserve the store, but we need to make the finances work.” Theoretical Matrix Assignment

There’s no dispute, either, on Concord’s national reputation in the trade. “It is one of the jewels of New England,” says . . . [the] executive director of the New England Booksellers Association. . . “They are the kind of store that’s on everyone’s A list. Publishers are interested in what Concord buys. They ask, ‘How is Concord doing with the book?’ They are exemplars for reaching out to the community and in cultivating authors”. . . Theoretical Matrix Assignment

The conflict illustrates the special place a bookstore can have in a small community, especially one such as Concord, with its numerous authors and links to such literary giants as Emerson and Thoreau. The store is regarded as a community resource, not just a business.

“This is Concord vs. Concord,” says Martha Holland, who is quitting after 18 years. “There

were a hundred points where it could have been smoothed over. How it got so out of hand, I don’t understand. The owners have every right to run their business as they see fit. But if the staff goes, it’s just a bunch of bookshelves and carpets.” Theoretical Matrix Assignment

Strategic Responsiveness Morgan Smith’s attempt to bring financial discipline to the Concord Bookshop seemed quite sensible in the face of new competitive realities. Owners, employees, customers, and suppliers all agreed on the desirability of maintaining the store’s viability. Yet Smith’s approach to change implementation—the actions taken by organizational leaders in order to support strategic renewal and achieve outstanding performance—led to resistance, conflict, and resentment. Recognizing the need for change is a vital first step. Successful implementation, however, is required to translate that recognition into an effective strategic response.

We live in a period of rapid and dramatic change: significant alterations in customer expectations and demands, new technologies, competitors with innovative business models, shifts in workforce demographics and values, new societal demands and constraints. Organizations need to respond to external dynamics in order to create and maintain outstanding performance.

Theory into Practice

Strategic responsiveness to a dynamic external environment demands organizational change. Theoretical Matrix Assignment

In response to those dynamics, organizational leaders often decide to engage in a process of strategic renewal. Strategic renewal refers to an alteration of an organization’s strategy with the intent of regaining sustainable competitive advantage. 1

Exhibit 1­1 provides examples of organizations whose leaders made a purposeful decision to renew their strategies. Some attempts have been more effective than others. Strategic renewal at IBM and Walgreens proved successful, while efforts to transform Enron’s strategy collapsed in failure. At different points in the text, we will explore and analyze the efforts of these companies to implement new strategies effectively.

Exhibit 1­1 Strategic Responsiveness in Sample Companies.

Company Altered Strategy Enron Move from energy production to energy trading GE Move from commodity business to high value­-added products and services IBM Move from product to service/consulting company Marks and Spencer

Move from a department store appealing to traditional, conservative adult British shoppers to a store appealing to young, trendy shoppers

Theoretical Matrix Assignment

Renault Move from French­based to internationally focused automobile company

Walgreens Move from store­based chain in order to capture growing Internet business

Facebook

Move from restricted, college campus­only social network to become a “universal utility” open to everyone

Strategic renewal requires organizational change (see Exhibit 1­2). Strategic renewal

demands “wide­scale invention, reinvention, and redesign of business processes and organizational structures.” 2 IBM pulled off strategic renewal as it moved from a product to a service/consulting company. Harley­Davidson managed a different but equally significant strategic renewal by redefining its relationship with its customers.

Exhibit 1­2 Strategic Renewal and Organizational Change.

Theory into Practice

To implement a renewed strategy, organizational leaders need to engage in a change process.

For strategic renewal to be effective, organizations need to do more than announce a new strategy. Leaders need to align internal processes, structures, and systems with the demands of that new strategy. New organizational capabilities—talents and skills possessed by employees—need to be built. Underlying all those shifts is the requirement to engage in discontinuous change: large­scale, long­term reorientation of most or all of the central aspects of organizational life. The goal is to create lasting alterations in patterns of employee behavior in order to support strategic renewal. Theoretical Matrix Assignment

Strategic Renewal through a New Business Model

Apple Computer seemed well positioned to achieve a breakthrough into the corporate/business market. With the extraordinary popularity of its iPod and iPhone offerings, young customers were flocking to Apple products as never before. But successful penetration into the business market would require more than loyal customers and brand familiarity. Apple’s business mode would need to change. The company’s long­standing highly secretive culture (Steve Jobs enjoyed launching new products with high security prior to his grand announcements) would need to change. In the corporate world, customers expect to be treated as long­term partners, actually having a say in the development of new products. Theoretical Matrix Assignment

In order to extend its popularity among young, tech­savvy consumers into the corporate marketplace, Apple would need to alter its business model. Business model innovation has become an increasingly common avenue for corporate growth. At its most basic level, a business model is the organization’s approach to generating revenue and making a profit. More specifically, business models involve the configuration of and the nature of the linkage between

operations. 4

Start­up companies often gain a competitive advantage over long­standing market leaders by offering novel business models. Consider the following examples:

Starbucks offered high­priced coffee specialty drinks in a relaxed environment. Amazon sold books online. Southwest Airlines provided an air service that competed with bus service and driving. Dell built computers to customer specifications. Zara placed low­cost high­fashion items on shelves with incredible speed. YouTube revolutionized the creation and distribution of video. Facebook integrated web­based interconnectivity with traditional school­based yearbooks.

All of those companies had the advantage of building the innovative business model from scratch, “greenfield” as it is often called. They could harmonize their internal processes and employee competencies and behaviors with the requirements of their model. They did not face the challenge of nurturing a new business model within an existing, long­standing approach to generating revenue.

Theory into Practice

It is possible to gain competitive advantage through the creation of a new business model, but changing your existing business model will create special change challenges. Theoretical Matrix Assignment

Altering an existing business model, especially one that has been successful in the past, has proved much more challenging than a greenfield effort. 5 Some organizations have been successful:

Under Louis Gerstner, IBM transformed its business model for generating profits from the sales of hardware to generating profits from services and software. Lufthansa’s Jergen Weber moved the company from a centralized collection of functional stovepipes to a number of free­standing service offerings, including cargo handling, on­ plane catering, and service maintenance. Carlos Ghosn changed the failing business model of Nissan by simultaneously centralizing product design and globalizing the company’s supply chain.

Not all attempts to alter a company’s business model lead to success, of course. Michael Armstrong’s effort to move AT&T from a long­distance phone company to a full­service provider of a wide array of offerings—cable, long­distance, local, wireless, etc.—proved disastrous. 6 Most notoriously of all, Jeffrey Skilling’s alteration of Enron’s business model—from energy provider to energy futures trader—disintegrated over the company’s inability to build sustainable profitability (and its leaders’ willingness to hide that fact from the public, investors, and employees). 7

Corporate leaders believe that business model innovation will be the major source of growth over the next decade. 8 To achieve that desired growth, however, they will need to become effective change leaders. Because business model innovation alters the nature of linkages among employees, it disrupts existing patterns of behavior while demanding new competencies and skills. The failure of a company to engage in organizational change undermines a

company’s capacity to innovate in their business model. 9 All business model innovation—that is, moving from the status quo to a new model—requires organizational change.

Theory into Practice

Adaptation of a new business model within a corporation will require organizational change.

Behavioral Change Effective strategic renewal requires behavioral change that directly targets patterns of employee actions and interactions in order to meet the company’s strategy and to achieve and sustain outstanding performance.

Theory into Practice

If change interventions are to achieve significant and sustainable impact on performance, they must focus on altering patterns of employee behavior.

Effective implementation depends on an alteration in patterns of employee behavior. Behavior refers to the actions employees take to enact their roles and responsibilities within the organization. Behaviors involve what employees do and how they do it, how much effort they bring to their roles, and how persistent they are in achieving desired outcomes. Behavior also involves the enactment of relationships: how employees interact with others (peers, subordinates, superiors, customers, suppliers, the host community, and so forth). It is this enactment of roles, responsibilities, and relationships that constitutes employee behavior in organizations. The collective enactment of those roles, responsibilities, and relationships—that is, the patterns of employee behavior within organizations—constitutes the target of behavioral change efforts. Theoretical Matrix Assignment

Behavioral change seeks more than a short­term alteration. New behaviors that are adopted for a short period of time and then dropped as employees return to old approaches will undermine strategic renewal. In order to support strategic renewal and outstanding performance, new behaviors need to be sustainable and adaptive to shifts in the external environment.

The reason sustainability of new behaviors matters can be stated simply: the ways in which employees behave significantly impact the organization’s performance. Beyond products and market position, beyond plants and technology, employee behaviors affect the bottom­line performance of the organization. 10

Theory into Practice

Organizational change seeks to create long­term, sustainable alterations in employee behaviors.

Just how does that happen? How is it that patterns of employee behavior impact a company’s bottom­line performance? The key to understanding the relationship of behaviors to performance can be found in the idea of motivation.

Motivation, in this case, refers to the degree to which employees are committed to the

achievement of outstanding performance both for themselves and for their company. Employee motivation pays off in bottom­line performance. High motivation creates in employees the capability and willingness to work together to solve problems. Quality improves, customer responsiveness increases, and adaptation occurs.

Chapter 4 will examine in detail efforts to redesign organizations to capture the benefits of enhanced employee involvement and commitment. For now, we can suggest that behaviors count. The competitive advantage delivered by behavioral change can be long term and sustainable. The manner in which work is organized, information is shared, decisions are made, coordination occurs, and problems are solved are all performance differentiators. 11 Furthermore, that performance edge is sustainable for decades, leading to significant and often staggering competitive advantage. 12

Theory into Practice

The way employees behave impacts the bottom­line performance of the company.

Sources of Behavior

Effective change implementation needs to start with an appreciation of the source of an individual’s behavior. What is it that leads an individual to behave in a certain way? Individual psychology is important, of course: who the individual is, what values he or she brings to the workplace, even how that individual thinks and learns. But individual psychology can be difficult to assess and slow to change. A leader seeking leverage over employee behavior can start by focusing not on individual psychology but on the organizational context in which employees work.

Theory into Practice

Behavior comes from both the individual and the organizational context in which the individual works.

Organizational context—the setting and circumstances in which employees work—exerts a powerful impact on behavior. Companies as diverse as Google, Nordstrom, MySpace, and Southwest Airlines endeavor to promote an organizational context that shapes individual behavior. They call upon organizational culture and values, the behaviors of leaders, as well as rules and procedures to define a context that shapes how employees enact their roles, responsibilities, and relationships.

To appreciate the power of organizational context to shape behaviors, we can examine a specific example of an employee mistake. Sheryl Sandberg, an advertising manager at Google, made a mistake that cost the company millions of dollars. “Bad decision,” she admitted, “moved too quickly, no controls in place, wasted some money.” 13 Sandberg quickly informed Google cofounder Larry Page.

Employees make mistakes, even occasionally big ones such as Sandberg’s. Leaders have an important opportunity to shape organizational context by the manner in which they respond to those errors. Quick and harsh repercussions—firing, for example, or demotion—will have one kind of impact on the organizational context in which employees work. That response may be justified and reasonable, but it may also work to stifle future risk­taking behaviors. Or perhaps employees will be less willing to admit mistakes, slowing down an organization’s response time.

The boss may also respond in a less harsh and punishing manner. Listen to the reaction of Google cofounder Larry Page, to Sandberg’s admission:

I’m so glad you made this mistake, because I want to run a company where we are moving too quickly and doing too much, not being too cautious and doing too little. If we don’t have any of these mistakes, we’re not taking enough risk.

The point is not that Page’s response is the only “correct” or reasonable response to the admission of a mistake. Leaders have to determine what type of organizational context they seek to create. That context will need to be aligned with the company’s strategy and purpose.

Page and Google cofounder Sergey Brin believe that mistakes can provide fuel for improvements, even innovation. “We’re willing to tolerate ambiguity and chaos,” says senior vice president Shona Brown, “because that’s where the room is for innovation.” Google’s leaders want a context that tolerates risk in order to generate innovation. Theoretical Matrix Assignment

Employee Participation and Resistance to Change Not all employees greet change with equal enthusiasm. It is useful, therefore, to examine the sources of employee resistance to change and the ways in which managers can overcome resistance. Resistance refers to action, overt or covert, exerted on behalf of maintaining the status quo. 14

Why Employees Resist Change

You’re either for this change or you’re against it. That refrain may be familiar; it is not, however, accurate. Employee response to change runs across a broad spectrum, ranging from “commitment” at one end to “aggressive resistance” on the other (see Exhibit 1­3). 15 Each of these reactions to change helps shape the behavior of individuals and, ultimately, the success of a change effort.

Exhibit 1­3 Continuum of Individual Response to Change.

Commitment Involves a strong emotional attachment to the goals of the organization and the aims of the change effort

Involvement Involves a willingness to participate in the behaviors being called for by the change effort

Support Involves speaking on behalf of the change effort without taking any other explicit actions to promote the effort

Apathy Represents a neutral zone in which individuals know about the change effort and engage in no behavior either to support or oppose it

Passive resistance A mild form of opposition that involves a willingness to voice reservation or even threatening to resign if the change goes through

Active resistance Involves behaviors that block or impede change,

usually by behaving in ways that contradict the goals of the change effort. Theoretical Matrix Assignment

Aggressive resistance

Involves purposeful sabotage and subversion of the change effort

Based on Leon Coetsee, “From Resistance to Commitment”; Public Affairs Quaterly (Summer 1999), pp. 204–222.

Theory into Practice

Employees do not naturally resist change, but they often resist change because of the way change is implemented.

Theory into Practice

Try to understand the reasons behind employee resistance to change.

Most attention on employee resistance has focused on why individuals resist change; which is to say, why employees fail to “get on board.” There are a number of underlying causes for individual resistance: 16

Individuals may be satisfied with the status quo. Because their needs are being met, they may view any potential change as negative. Individuals may view change as a threat, fearing it will adversely affect them in some significant way. Individuals may understand that change brings both benefits and costs, but feel that the costs far outweigh the benefits. Individuals may view change as potentially positive, but may still resist because they believe that the organization’s management is mishandling the change process. Individuals may believe in the change effort, but still believe that the change is not likely to succeed.

Managers can see employee resistance in negative terms: It is a “bad thing” that represents an irrational response to a dynamic competitive environment. In this way, employee resistance can be dismissed as invalid or disobedient. 17 Resistance to change, in this view, is a force to be overcome.

There is another way of thinking about resistance to change, however; one that may actually improve the effectiveness of implementation.

Theory into Practice

Employee resistance is not just a negative force to be overcome; it also presents an opportunity to learn.

How Managers Can Inadvertently Fuel Resistance During Implementation

It is tempting to believe that a certain type of individual is likely to resist change. Perhaps you’ve heard, or even thought, ideas such as: Older workers are more likely to resist change than are younger workers. Middle managers are more likely to resist change than lower­level workers or upper­level executives. Men are more likely to resist change than women. And so on. Theoretical Matrix Assignment

Don’t take these explanations at face value. Study after study of employee resistance to change in organizations refutes these and other individualistic contentions. Individual differences may account for some variance in employee acceptance of or resistance to change. But the overwhelming determinant of employee reaction to change comes from how the process is managed and the degree to which employees are allowed to participate in the process. 18

Managers can inadvertently create resistance by the manner in which they pursue change. Here’s a checklist of employee resistance and possible sources of that resistance:

Employees resist because they remain satisfied with the status quo. Perhaps management has not included employees in the diagnosis and learning process. Employees resist because they view change as a threat. Perhaps management has not offered employees the opportunity to acquire the new skills that will be required in the renewed organization. Employees resist because they see the cost of change outweighing the benefits. Perhaps management has not articulated the goals of the change adequately to allow a true assessment of the costs and benefits. Employees resist because they believe that management is mishandling the process. Perhaps employees have not been given a voice in the process itself. Employees resist because they believe that the change effort is not likely to succeed. Perhaps management needs to articulate why this change process is more likely to be effective than past efforts.

By looking at the aforementioned reasons for employee resistance, we can see how many can be understood in part as a natural and expected outcome of implementation.

Theory into Practice

Participation in the change process is the best way to build support and overcome resistance to change; but remember—it’s no guarantee.

In treating employee resistance as a negative force to be overcome, managers shut down the possibility that they can learn from resistance. When employee voice has been excluded from the change process, there is likely to be valuable data missing from the diagnostic and action planning phases of the effort. Employees may ask whether management really understands what customers expect from their products or services or what barriers the organization has erected to outstanding performance.

Even when employees question whether management has selected an appropriate strategic response, it is useful, perhaps even indispensable, for managers to learn about employee hesitations and concerns. Instead of treating resistance as a force to be overcome, managers may decide to treat resistance as an opportunity to learn from employees and improve the change process.

Theory into Practice

Employee resistance can offer leaders the opportunity to learn—what are the sources of resistance?

Not all resistance to change offers an equal opportunity to learn, of course. Some resistance will have to be addressed and overcome. We will explore specific techniques and approaches management can consider to avoid creating resistance. For now, let us understand employee

resistance as a form of expression that is not always a bad thing and that needs to be considered and understood by change leaders.

Theory into Practice

There comes a point in the change process where employee resistance will need to be addressed and overcome.

Employee Participation Builds Support for Change

Just as there are ways in which a change implementation process may inadvertently fuel resistance to change, there are also techniques for purposefully building support for change. Participation in the process of defining problems and designing solutions will help build commitment to the new directions that result from that process. 19 By diagnosing problems, understanding their importance, and being part of the process of formulating solutions, people develop a psychological sense of “ownership” over the outcome. That ownership now creates in employees the heightened motivation to implement change in order to achieve desired goals. 20

Change imposed from “above”—top executives telling employees that they must alter their behaviors in order to implement a new strategy or perform better under the old strategy—is likely to engender resistance. The employees resisting change at the Concord Bookshop complained that the board had dismissed employee suggestions to respond to the crisis by saying, “We’re going to do it our way.” Their felt loss of voice in the strategic response of the bookstore to new competitive realities contributed to high levels of resistance.

People don’t resist change, the saying goes, they resist being changed.

The difficult challenge for managers, then, becomes how and when to engage employees in the process of diagnosis, problem solving, and planning for change. General Motors (GM) can offer some historical perspective on both approaches; change that is imposed from above, and change in which employees participate in designing the solution.

Theory into Practice

Imposing change from above can lead to employee resistance.

In the 1970s, soaring fuel prices and gas shortages made the U.S. consumer much more aware of the fuel in efficiencies of domestic automobiles. At the same time, Japanese car manufacturers such as Toyota, Honda, and Nissan captured significant market share by offering small, reliable, and fuel­efficient alternatives. GM, with its fleet of gas­guzzlers built for an era of expanding interstate highways and cheap gas, was especially vulnerable.

When Roger Smith became chairman of GM in 1980, the company was hemorrhaging money and market share. Layoffs, factory closures, and the shedding of non­auto­related businesses followed. Smith had more in mind than trimming costs, however. To lead strategic renewal, he called on a massive multibillion­dollar investment in state­of­the­art robotics and assembly technology. Out of that effort came the Chevrolet Vega, a small, fuel­efficient model produced at the company’s newly retooled Lordstown, Ohio, plant.

The Vega represented GM’s intent to face down the rising tide of imports. State­of­the­art robotics and automation would help GM keep the costs of producing the Vega low. Employees

at the Lordstown plant, however, resisted the changes that had been imposed on them from above. In particular, they objected to the depersonalization and sped­up pace of new robotic technology. Resistance went far beyond complaining. Some employees engaged in sabotage, open rebellion, and a wildcat (unauthorized) strike. Six years after its appearance, GM discontinued the model that had once held such high hopes for meeting Japanese competition. 21

Theory into Practice

A participative process can help build support for change efforts.

Compare that resistance to a different initiative just a few years later at GM’s Cadillac plant in Livonia. Cadillac and Vega were worlds apart in terms of intended market niche. Nevertheless, GM executives hoped Livonia would help address some of the same pressures for strategic renewal: the need to produce a world­class car that would help the company regain slumping market share. As they had done at Lordstown, executives sought improved quality and increased efficiency at Livonia. Now, however, the company approached change quite differently. Management worked closely with labor through the United Auto Workers union. Instead of imposing new technology and work processes on the plant, management and the union involved hourly workers in a planning committee that would redesign the way the plant operated.

Theory into Practice

In a unionized environment, creating employee participation involves inviting the union itself into the decision­making process.

The joint worker­management planning committee created employee teams organized around a product line or function and given responsibility beyond production, including responsibility for quality control and material handling. Other design changes proposed by the planning committee—the removal of multilevel job classifications in order to improve flexibility and efficiency in the deployment of workers, extensive front­end training for all employees to gain teamwork and problem­solving skills—turned the plant into what some in the company called “a Lordstown that worked.” 22 Twenty­five years later, Livonia continued to operate as a high­ quality producer of Cadillac’s highly regarded Northstar engine.

Imposed change encourages resistance. Individuals can feel manipulated, coerced, or even ignored. When people participate in designing change, on the other hand, they are more likely to feel they are making an informed choice about altering their behaviors. Individuals can develop commitment to the choice as well as feeling responsibility for implementing that choice. When people participate in the design of change (in the diagnosis, action planning, and implementation stages), they will be more motivated to alter their behaviors.

And, to emphasize a point made earlier, employee motivation matters. New behaviors will not be sustainable if they have been prompted by manipulation or coercion. Effective change does not seek to fool employees into setting aside their better judgment. Rather, it seeks to encourage employees to find continually new and improved ways of applying their better judgment. How can internal processes be improved? What are customers telling employees about our products and services? How might we eliminate waste and improve quality? To support behaviors that can sustain outstanding performance, effective change efforts avoid manipulation and coercion, aiming instead to enhance employee willingness and ability to

contribute their own judgment.

Theory into Practice

Behavioral change seeks to motivate employees to change their behaviors; not to force, coerce, or trick them into changing.

Because motivation is internal to each employee, the change leader’s challenge is complex. The task involves shaping the organizational context in such a way as to encourage and support an internal desire on a large number of employees to alter their behaviors in ways consistent with the shifting demands of the new strategy.

How that is done will be the subject of the remainder of this book. When change leaders are successful, the organizational context unleashes “people’s innate curiosity and desire to experiment,” says Peter Senge, which creates a powerful “engine for improvement.” 23 Motivation works to build initiative and a desire on the part of the employees themselves to innovate and alter behaviors in order to achieve outstanding performance.

The Three Faces of Change Not all change efforts take aim directly at behaviors. Let’s return to GM. In February 2006, with the U.S. automobile industry in a state of drastic decline, America’s leading auto manufacturer made some tough decisions: cutting dividends, reducing white­collar benefits, and slashing executive pay. On top of 30,000 job cuts announced the previous year, company losses totalling $10.6 billion, and share prices hitting their lowest point since the middle of the Great Depression of the 1930s, GM’s CEO (chief executive officer) Rick Wagoner declined to predict when the company would return to profitability, saying only it would be “as soon as possible.” 24

In 2008, after announcing a huge loss, the company dove even deeper into turnaround, offering a “special attrition program”—an offer to buy­out contracts in order to encourage retirement—for all 74,000 of its domestic hourly workers. 25

Theory into Practice

Not all change is behavioral.

GM’s approach to change can be characterized as turnaround. Rather than focusing on new behaviors, turnaround looks at a company’s assets and seeks to manage them in a new way in order to stabilize cash flow, shore up the balance sheet, and maximize shareholder wealth. GM’s turnaround may have been unusual in its scope. The activities of the turnaround effort— reducing capacity, shutting down facilities, reducing levels of pay, health insurance, and pension benefits—are typical.

Is turnaround by itself enough? “Cutting costs is not a business plan,” observed Gary Chaison. Turnaround does not by itself create sustained outstanding performance.

The impact of layoff announcements on the psychological state of employees—on their sense of security and belief in the future—accounts for part of the difficulty of translating downsizing into sustained outstanding performance. Employees who become insecure because of workforce reductions are less productive and less committed to the organization. 26

Given the short­term severance and outplacement costs of workforce reductions, the savings in compensation to the organization and subsequent impact on the bottom line are often overstated. Firms that engage in downsizing cannot count on those efforts finding their way to the bottom line. 27 Downsizing provided no “quick fix” for sagging performance.

Theory into Practice

Turnaround may be necessary, but it is not sufficient to ensure long­term effective change.

That is not to say that organizations can or should ignore the goals of turnaround. As Morgan Smith and the employees of the Concord Bookshop learned, all companies, large and small, need to keep a sharp focus on matters such as profits, earnings, and return on investment. Failure to do so can quickly lead to the loss of investor confidence and increased difficulty raising needed capital. Poor financial performance can quickly erode employees’ sense of efficacy and worth, thereby undermining motivation.

“Businesses have always tried to reduce costs,” Carlos Ghosn, CEO of Renault and Nissan who began his own transformational efforts with serious cost cutting measures, explained. “I don’t see how one can manage a business without keeping one eye glued to expenses. It’s a fantasy to think otherwise . . . There have been very few successful extravagant captains of industry.” 28 Turnaround efforts that initiate strategic renewal ensure that financial discipline will accompany behavioral change.

Another nonbehavioral face of change focuses on techniques and tools. 29 Some technique and tool changes occur in a virtual behavioral vacuum, requiring no significant alteration in patterns of behavior. In 2007, for instance, Netflix adopted a “new” technique for improving customer service. The company substituted a two­hundred­person customer service call center for its e­mail based response system. 30 True, two­hundred telephone service represents were added to the payroll. True, also, the change was viewed as a strategic response intended to differentiate Netflix from rival Blockbuster. Nonetheless, behavioral patterns among its existing employees were not altered.

One of the most common tools used to help achieve strategic renewal in recent years is outsourcing. Outsourcing involves the farming out of certain value chain activities—anything ranging from help desk support to logistics and manufacturing—to external vendors. 31

IBM CEO Samuel J. Palmisano has incorporated outsourcing into the company’s strategic reinvention. By moving low­value and routine technology jobs to overseas companies, IBM can focus its core activities on “the higher­value portions of our industry.” 32

Labor costs account for upwards of 80 percent of the total costs of technology service contracts, and salaries for computer programmers in India run about one­third of those in the United States. By carefully distinguishing between those routine, rules­based tasks that can be outsourced to overseas providers (India­based companies Infosys, Wipro, and Tata Consultancy are among the fastest growing independent providers), IBM can reduce labor costs by laying off U.S.­based workers. With lower­cost workers dispersed around the globe and linked by high­speed communications, IBM project managers can “search worldwide for the right people with the right skills for a job.” 33

Theory into Practice

Outsourcing is a change technique with important turnaround and transformational behavior change implications.

Companies find the technique of outsourcing to be of strategic importance for three main reasons:

1.  Outsourcing saves money by transfering jobs to lower­paid workers. 2.  Outsourcing enables companies to concentrate on core competencies. 3.  Outsourcing offers a hedge against shifting technologies and customer preferences by

lowering fixed costs and building flexibility.

Outsourcing is a technique with important turnaround (i.e., cost­savings) implications.

Although outsourcing can be used as a change tool to enhance organizational performance, its effectiveness can, and often is, undermined, by the manner in which that tool is applied. Not all activities should be outsourced, observes Jérôme Barthélemy, and poor application can lead to increased rather than reduced costs.

In particular, effective deployment of outsourcing requires attention to the behavioral impact, particularly on employees who remain with the company. “Outsourcing has a negative impact on employees’ sense of job security and loyalty,” Barthélemy writes. A firm may attempt to retain key employees as a way of preserving their firm­specific knowledge. If the commitment of those employees wanes due to the outsourcing, performance will suffer. Additionally, the retained employees will now be expected to shift their task focus from service delivery to interface and coordination between vendors and users. The firm is likely to need an investment in training and ongoing support to help coordinate that required interface. 34

Outsourcing is one of many change techniques and tools that require attention to simultaneous behavioral change in order to reap the hoped­for organizational benefits. Dorothy Rice, the vice­president for finance at Ultra Electronics Maritime Systems, found that many of her interventions—the introduction of an enterprise resource system for the firm’s Canadian arm, a new “lean office” initiative that created processes for simplifying operations, and the introduction of a Balanced Scorecard—all required behavioral realignment on the part of employees. 35 The act of aligning the behaviors of employees with company strategy and customer expectation—this is the change that allowed the various techniques and tools to make a difference.

Theory into Practice

Outsourcing can be a helpful change tool, but be careful! If not applied carefully, it can undermine motivation and distrupt important linkages and relationships.

Attending to techniques and tools without paying at least equal attention to the behavior of employees—as demonstrated by GM’s Lordstown experience—can be a path not just to disappointment but also to dysfunction. When employees participate in the design and implementation of new technology, as occurred at Livonia, they are more likely to alter their behaviors in ways that will help ensure effectiveness.

Theory into Practice

Effective strategic renewal efforts combine aspects of turnaround, tools and techniques, and transformational behavioral change.

We have identified three faces of change: turnaround aimed at financial improvement, tools and techniques aimed at improving internal organizational processes, and transformation of employee behaviors (summarized in Exhibit 1­4). All three offer options available to leaders in search of strategic renewal. Although leaders may opt to approach each of these “faces” as separate and independent options, effective change efforts combine the three.

Exhibit 1­4 Three Faces of Change.

Type Target Rationale Turnaround Internal resources Improve short­term bottom­line

performance Tools and techniques

Processes Increase internal efficiencies

Transformation Behaviors Enhance human capabilities

Trigger Events and Change Organizational change is typically initiated in response to a trigger event—a shift in the environment that precipitates a need for altered strategies and new patterns of employee behavior. For the Concord Bookshop, the increasing penetration of online booksellers into the store’s market space triggered the requirement for strategic renewal. For Facebook, the more freewheeling approach to open networking employed by successful rival MySpace demanded a strategic response.

Trigger events, says Lynn Isabella, “are so named because their magnitude and potential for organizational as well as personal impact set into motion a series of mental shifts as individuals strive to understand and redefine a situation. By their very nature, they unbalance established routines and evoke conscious thought on the part of organizational members. They stir up feelings and emotions that come to affect people’s reactions to the change. In short, trigger events bring people’s mindsets into the arena of change.” 36 Theoretical Matrix Assignment

Theory into Practice

Trigger events, either external or internal to an organization, precipitate the need to alter behavioral patterns of employees.

Trigger events can be external, such as the one faced by the Concord Bookshop. Trigger events may also come from inside the organization, most typically with the infusion of new leadership at the top of the organization. When Jack Welch was promoted to CEO of General Electric (GE) in 1981, the company was enjoying decades of prosperity and success. Yet he set about, virtually from the outset, in a quest for transformational change.

To propel that change, Welch eliminated strategic business units and instead refocused resources on a small number of strategic circles (manufacturing, technology­intensive businesses, and services). He demanded that internal businesses become number one or two in their respective industries or disengage. He altered the company’s budgeting process from an

internal to an external focus.

Those changes, significant as they were, represented only the initial stages in a two­decade­ plus transformation effort. The external environment—a deep national recession—that greeted Welch on his accession to CEO undoubtedly added force to his message that GE needed to change. Nonetheless, the transformation at GE grew largely from Welch’s own views of the need for strategic renewal.

Conclusion Strategic responsiveness to a dynamic environment requires organizational change. Change, however, is not a singular concept. The three faces of change suggest that change leaders face options. Turnaround addresses the need to improve the balance sheet and technology focuses on improved processes. By itself, however, neither will achieve the full, intended impact of strategic renewal. Effective change will also require attention to employee behaviors—patterns of action and interaction—no less than financial and technological effectiveness. Theoretical Matrix Assignment

Not all employees will greet change efforts with equal enthusiasm. Employee resistance arises from a number of sources, some internal to individual employees and others externally located in the implementation processes of change leaders. By allowing employees to participate in the formulation of change plans, however, leaders will increase employee ownership over and support for those efforts. Theoretical Matrix Assignment

Trigger events—either discontinuities in a firm’s competitive environment, new leadership, or a combination of the two—precipitate the requirement for strategic renewal and organizational change. Recognizing the requirement for change and being able to manage change effectively are, of course, two different matters. Chapter 2 will examine the theoretical underpinnings of effective change implementation.

Discussion Questions

1. Review Exhibit 1­1. Select one of the companies. Based on the brief statement of its renewed strategy (or research the company for further details), think about how patterns of employee behavior will have to change.

2. Explore the challenges that faced Morgan Smith at the Concord Bookshop. What explanations can you offer for the high level of employee resistance that emerged from the changes?

3. What are the three approaches to organizational change? In what ways are they different and in what ways do they overlap?

4. Identify the main external forces triggering the requirement for organizational change. Pick three and discuss how they might necessitate behavioral change on the part of organizational employees. Theoretical Matrix Assignment

5. Why is motivation important to behavioral change? How might leaders approach change differently if they are trying to motivate employees to change rather than forcing employees to change?

Case Discussion

Read “Two Stories of Outsourcing” and prepare answers to the following questions:

1. What is the nature of the changes sought by Auratek and K­PUB? Are they turnaround, tools and techniques, transformation, or some combination?

2. How do you account for the apparent differences in effectiveness in the use of outsourcing by these two companies?

Two Stories of Outsourcing

Two engineers, John Hearst from Auratek and Caroline Matthews of K­PUB, met at a professional conference and exchanged stories about their companies experiences with outsourcing.

John Hearst’s Story

The Auratek Corporation of Burlington, Massachusetts manufactured an industry­ leading data storage device, DataSafe. At the heart of the system were field­ programmable gate arrays (FPGAs), the microchips that ran the DataSafe’s director boards. From Auratek’s perspective, the main drawback to the product was the cost to fabricate the many FPGA revisions necessary for a reliable, finished product. Theoretical Matrix Assignment

To help control costs, Auratek’s vice president of hardware engineering announced the creation of the Verification Group (VG). VG amounted to a step inserted between design and fabrication (manufacturing) of the FPGA. The 33 engineers hired for VG worked closely with the engineers responsible for designing the FPGAs. Their main responsibility was to identify flaws in the chip design prior to fabrication. The cost of the 33 engineers was approximately $3.3 million per year, and the benefits to Auratek were greatly improved quality and a decrease in the development and fabrication process (plus decreases in after­sales support).

The two groups of engineers—from both the design and verification groups—created a close and interactive relationship. They developed shared pride, mutual trust, and a willingness to pull together for long days and nights when delivery schedules required. Even as DataSafe shifted from FPGA to application­specific integrated circuits (ASICs), the transition went smoothly and efficiently.

Under further pressure to cut costs, Auratek’s CEO made a public commitment to shareholders. The company would double the amount of engineering work to be outsourced. The vice president of hardware engineering, looking at the $3.3 million annual budget allotted to VG, decided that the company had the opportunity to cut costs with little risk to the overall process. VG in Burlington would be reduced from 33 to 6 engineers, and the main verification work would now be subcontracted to the Veritas Group, a large (the second largest in the world), independent R&D (research and development) services provider located in Bangalore, India.

The cost savings to be achieved by the move would be significant: approximately $2 million annually due to the reduced cost of engineering personnel in India. The vice president believed that the verification work itself was relatively routine and well within the capacity of the Bangalore­based engineers employed by Veritas. The verification engineers in Burlington would act as liaisons between the design engineers and the

engineers performing verification work in India.

The project experienced problems from the outset. Misunderstandings resulted from e­ mail communication between Bangalore and Burlington, and the 12­hour delay due to the time zone difference led to confusion. The Veritas engineers hesitated in raising concerns about design in order to avoid offending their American managers. Root­ cause analysis of design defects all but disappeared. Theoretical Matrix Assignment

Morale among the six remaining VG engineers deteriorated. Few had skills as coordinators and liaisons or an interest in changing their job responsibilities so dramatically. A number of them treated to resign. Auratek offered stock options and retention bonuses to motivate them to stay. Even so, four resigned. The remaining two verification engineers found themselves under increasing pressure to pick up the work load, not just that of the Burlington­based group, but also of the Veritas engineers in whom Auratek no longer had trust.

The results proved disastrous. Delayed product releases and lengthened time to fix defects led to a deterioration of the company’s previously dominant market position in storage devices.

“Maybe we saved $2 million in salaries,” concluded Hearst. “I wonder what we’ve lost in present and future sales.”

Caroline Matthews’ Story

K­PUB is an electronic publishing company located in suburban Portland, Oregon. In pursuit of the company mission, “Spread Knowledge,” K­PUB targets Information Technology professionals with both printed and online material. The company barely survived the burst in the high technology market, and has since grown rapidly. Much of that growth has come from partnering with traditional publishers to put their material on the Internet.

Part of the value chain involved in placing traditional material on the Internet included the “translation” of the material from desktop publishing formats (DTP) into an XML (extensible markup language) format that could easily carry technical content. At first, that translation work was done internally, using company­developed software tools and staff. The process of translating from DTP to XML is similar to translating from one language to another. Even with the technical nature of the material (perhaps because of the technical nature), translation was often subjective, prone to misunderstanding and error. Therefore, the process required a fair amount of quality assurance checking on the final output to ensure acceptable translation. Theoretical Matrix Assignment

K­PUB worked continually to improve the translation process. In particular, the company sought to enhance software conversion tools and automate more and more of the process. More recently, an initiative was launched to leverage newer software tools and rewrite the conversion tools from the ground up. Even with those efforts, the cost to K­PUB of translating a book to XML ran between $800 and $1,000, with quality assurance and rework taking up to eight hours.

After a year, K­PUB identified a private offshore provider—in Pune, India—that could perform the translation for between $300 and $400 a book. Although the process would take longer—40 hours on average compared with eight hours—company

executives agreed to outsource the translation process. The longer time period, they believed, would not be critical since most titles remained “in print” and available on the Internet for between two and three years. “The revenue impact of the off­shore outsourcing has been minimal,” said Caroline Matthews, “and we hope that within a year or two, this step will be completely automated so there will be no need for outsourcing.”

Conclusion

“You were lucky outsourcing worked out so well for you,” John Hearst concluded. “I suppose you’re right,” Caroline Matthews responded, although she doubted very much that luck had much to do with their companies’ different experiences.

Endnotes 1Barbara Blumenthal and Philippe Haspeslaugh’s definition of strategic renewal is from Michael A. Mische, Strategic Renewal: Becoming a High­Performance Organization (New Jersey: Prentice Hall, 2001), p. 23.

2Mische, Strategic Renewal, p. 24.

3Peter Burrows, “The Mac in the Gray Flannel Suit,” Business Week, May 8, 2008, p. 36.

4José Santos, Bert Spector, and Ludo Van­Der­Heyden, “Toward a Theory of Corporate Business Model Innovation,” Northeastern University College of Business Administration Working Paper, 2008.

5 Ibid.

6Charles Stein, “The Trapeze Act: Reinventing a Firm,” Boston Globe, May 8, 2005, pp. C1, C5.

7Bert Spector, “HRM at Enron—The Unindicted Co­conspirator,” Organizational Dynamics 32 (May 2003), pp. 207–221.

8George Pohle and Marc Chapman, “IBM’s Global CEO Report 2006: Business Model Innovation Matters,” Strategy and Leadership 34 (2006), pp. 34–40; Joanna Barsch, Marla M. Capozzi, and Jonathan Davidson, “Leadership and Innovation,” McKinsey Quarterly (April 2008), pp. 37–47.

9Henry W. Lane, Bert Spector, and Dennis Shaughnessy, “A Dynamics Capacity Perspective on the Transfer of Innovations,” Northeastern University College of Business Administration Working Paper, 2008.

10D. Ulrich and D. Lake, Organizational Capacity: Competing from the Inside Out (New York: Wiley, 1990); J. Arthur, “The Link Between Business Strategy and Industrial Relations Systems in American Steel Minimills,” Industrial and Labor Relations Review 45 (1992), pp. 448–506; A. A. Lado and M. C. Wilson, “Human Resource Systems and Sustained Competitive Advantage: A Competency­Based Perspective,” Academy of Management Review 19 (1994), pp. 699–727; M. A. Huselid, “The Impact of Human Resource Management Practices on Turnover, Productivity, and Corporate Financial Performance,” Academy of Management Journal 38 (1995), pp. 635–677; J. J. Lawler, R. W. Anderson, and R. J. Buckles, “Human Resource Management and Organizational Effectiveness,” in G. R. Ferris, S. D. Rosen, and D. T. Barnum, eds., Handbook of Human Resource Management (Cambridge: Blackwell, 1995), pp. 630–649; J. T. Delaney and M. A. Huselid, “The Impact of Human Resource Management Practices on Perceptions of Organizational Performance,” Academy of Management Journal 39 (1996), pp. 949–969; S. A. Snell, M. A. Youndt, and P. M. Wright, “Establishing a Framework for Research in

Strategic Human Resource Management: Merging Resource Theory and Organizational Learning,” in G. R. Ferris, ed., Research in Personnel and Human Resource Management, Vol. 14 (Greenwich, CT: JAI Press, 1996), pp. 61–90; J. E. Delery and D. H. Doty, “Modes of Theorizing in Strategic Human Resource Management: Tests of Universalistic, Contingency, and Configurational Performance,” Academy of Management Journal 39 (1996), pp. 802–835; M. A. Huselid, S. E. Jackson, and R. S. Schuler, “Technical and Strategic Human Resource Management Effectiveness As Determinants of Firm Performance,” Academy of Management Journal 40 (1997), pp. 171–188; David Ulrich, “Intellectual Capital = Competence × Commitment,” Sloan Management Review 39 (1998), pp. 15–26.

11Daniel R. Denison, Corporate Culture and Organizational Effectiveness (New York: Wiley, 1990).

12John P. Kotter and James L. Heskett, Corporate Culture and Performance (New York: Free Press, 1992); Jim Collins and Jerry I. Porras, Built to Last: Successful Habits of Visionary Companies (New York: HarperCollins, 2004).

13This story is reported in Adam Lashinsky, “Chaos by Decision,” Fortune, October 2, 2006, p. 88.

14This definition of resistance is from Kurt Lewin, “Group Decision and Social Change,” in G. E. Swanson, T. M. Newcombe, and E. L. Hartley, eds., Readings in Social Psychology, 2nd ed. (New York: Holt, 1952), pp. 459–473.

15Leon Coetsee, “From Resistance to Commitment,” Public Affairs Quarterly (Summer 1999), pp. 204– 222.

16Kenneth E. Hullman, “Scaling the Wall of Resistance,” Training and Development (October 1995), pp. 15–18.

17Several authors have argued for a reconsideration of the meaning of “change resistance,” suggesting even that the term “resistance” should be dropped because of its pejorative implications. See, for example, Tony J. Watson, “Group Ideologies and Organizational Change,” Journal of Management Studies 19 (1982), pp. 259–275; and Sandy Kristin Piderit, “Rethinking Resistance and Recognizing Ambivalence: A Multidimensional View of Attitudes toward an Organizational Change,” Academy of Management Review 25 (2000), pp. 783–794.

18That research was highlighted at a session, “Changing Individuals,” at the 2007 Academy of Management meetings. See, in particular, Jane D. Parent and D. Anthony Butterfield, “A Model and Test of Individual and Organization Factors Influencing Individual Adaptation to Change.”

19See, for example, L. Coch and J. R. French, “Overcoming Resistance to Change,” Human Relations 1 (1948), pp. 512–533; Lewin, Field Theory in Social Science; R. Likert, The Human Organization (New York: McGraw­Hill, 1967); Edwin A. Fleishman, “Attitude versus Skill Factors in Work Productivity,” Personnel Psychology 18 (1965), pp. 253–266; Chris Argyris, Intervention Theory and Method (Reading, MA: Addison­Wesley, 1970); Warner W. Burke, Organization Development: Principles and Practices (Boston: Little, Brown, 1982); Frank Heller, Eugen Pusic, George Strauss, and Bernhard Wilpert, Organizational Participation: Myth and Reality (New York: Oxford University Press, 1998).

20The connection between employee participation and commitment to change has been demonstrated in Rune Lines, “Influence of Participation in Strategic Change: Resistance, Organizational Commitment and Change Goal Achievement,” Journal of Change Management 4 (September 2004), pp. 193–215.

21James O’Toole, “Lordstown: Three Years Later,” Business and Society Review (Spring 1975), pp. 64– 71.

22Paul Lawrence and Bert Spector, “General Motors and the United Auto Workers,” in Michael Beer, Bert Spector, Paul R. Lawrence, D. Quinn Mills, and Richard E. Walton, Human Resource Management: A General Management Perspective (New York: Free Press, 1985), pp. 698–700.

23Peter Senge, “It’s the Learning: The Real Lessons of the Quality Movement,” Journal for Quality and Participation (November/December 1999), p. 35.

24Wagoner is quoted in Jeremy W. Peters, “G. M. Vice Chairman Rebuffs Critics of Turnaround,” New York Times, April 13, 2006, p. C6.

25Bill Vlasic, “GM Offers New Buyout to 74,000,” New York Times, February 13, 2008, p. C1.

26Leonard Greenlaugh, “Maintaining Organizational Effectiveness During Organizational Retrenchment,” Journal of Applied Behavioral Science 18 (1982), pp. 155–170.

27John W. Slocum, Jr., James R. Morris, Wayne F. Cascio, and Clifford E. Young, “Downsizing after All These Years: Questions and Answers about Who Did It, How Many Did It, and Who Benefited From It,” Organizational Dynamics 27 (Winter 1999), pp. 78–88; Paul C. Nutt, “Organizational De­Development,” Journal of Management Studies 41 (November 2004), pp. 1083–1103.

28Carlos Ghosn and Philippe Ries, Shift: Inside Nissan’s Historical Revival (New York: Currency, 2005), pp. 39–40.

29Mark Hughes, “The Tools and Techniques of Change Management,” Journal of Change Management 7 (March 2007), pp. 37–49. Theoretical Matrix Assignment

30Katie Hafner, “Humans Regain Jobs from Mice,” New York Times, August 16, 2007, pp. C1, C11.

31That definition is based on Arthur A. Thompson, Jr., A. J. Strickland III, and John E. Gamble, Crafting and Executing Strategy: The Quest for Competitive Advantage, 15th Edition (Boston: McGraw­Hill Irwin, 2007), pp. 175–177.

32Steve Lohr, “At IBM, A Smarter Way to Outsource,” New York Times, July 5, 2007, p. C1.

33 Ibid.

34Jérôme Barthélemy, “The Seven Deadly Sins of Outsourcing,” Academy of Management Executive 17 (May 2003), pp. 87–98.

35Robert Coleman, “Navigating Strategic Change,” CMA Management (October 2006), pp. 40–42.

36Lynn A. Isabella, “Managing the Challenges of Trigger Events: The Mindsets Governing Adaptation to Change,” Business Horizons 35 (September–October 1992), pp. 59–60.

Implementing Organizational Change. Theory into Practice, Second Edition Chapter 1: Organizational Change ISBN: 9780136074281 Author: Bert Spector Copyright © Pearson Education (2010)