Most discussions of change readiness focus on people and culture. Change experts characterize the organization as a collection of individuals who, together, will be eager and able to change, if only leaders build support for the change initiative, model new behaviors, and communicate openly and honestly, clearing all obstacles that might sabotage their goals. Unfortunately, many professionals overlook another critical aspect of change readiness: the appropriateness of an organization’s design to enable successful, ongoing change.
“If a change in strategy requires new behaviors—such as entrepreneurialism and measured risk-taking—but compensation and incentive systems reward the status quo, old behaviors will remain entrenched. Addressing these issues up-front increases the probability that an organization will become a change champion, with a proven, repeatable change process that is embedded in its culture.”
When we refer to an organization’s change capability, we mean the degree to which an organization’s structure and infrastructure contribute to or hinder change. For example, some organizations are rigid and bureaucratic, restricted by policies, processes, and models that force them to muddle along rather than take on the difficult task of altering longstanding patterns of mission, strategy, sales, and product. Conversely, organizations that acknowledge the pervasiveness of change have flexible strategies, structures, and processes that can help them thrive and grow, even in turbulent times. Writing in 2000, in a report called Designing Change Capable Organizations, Ed Lawler, Director of the Center for Effective Organizations at the Marshall School of Business, University of Southern California Center for Effective Organizations, went so far as to call the ability to change rapidly and continuously “the ultimate competitive advantage.” Fourteen years later, Lawler’s statement is still spot on.
What elements of organization design allow companies to stay ahead of their competitors and meet the demands of an ever-changing marketplace? A report from the University of Amsterdam identifies six: strategy, structure, culture, technology, job characteristics, and power relations, defined in the table below.
| Strategy | A clear strategy and goals that are oriented externally, to market demands and developments, and that are flexible enough to adapt readily when circumstances change. |
| Structure | The organization of work and decision-making about operations, e.g. decentralized, autonomous, team-oriented vs. hierarchical, in a way that facilitates rapid adjustment, when and where necessary. |
| Culture | A focus on innovation and collaboration, people-oriented leadership, and human resource practices that reward learning and growth rather than traditional career paths, job security, and empire building. |
| Technology | Information systems that ensure everyone in the organization receives real-time information about the business, the environment, and the competition, in order to make good decisions. |
| Job characteristics | Division of labor in a manner that reflects how results are achieved and encourages high-quality work, strong relationships with colleagues, and career perspectives that lead to both individual and organizational success. |
| Power relations | Non-traditional leadership models built on the principle that “leaders” operate at all levels of the organization, not just the top, and that it is important to balance the interests of individuals and departments or teams, and cooperation against internal competition. |
We do not mean to say that every organization must adhere to these definitions, only that approaches like these are more conducive to successful change. A change management consultant can help you assess the extent to which your organization’s design supports change, as well as what alterations may be appropriate. On the whole, however, three points are key:
- All six elements must be aligned with each other and the overall organizational design.
- Clear communication to the organization with respect to intent and outcomes is essential
- Flexibility must be built into each element, so that continuous change is not only possible, it is inevitable.
We are not so naïve as to suggest that the right design and structure will magically make your organization change capable. Establishing the parameters in which you wish people to operate is a necessary foundation, but organizations are made up of people, and people naturally resist change. However, even when people are willing, the wrong structure, communication, and rewards can send messages that are counterproductive to the change.
For example, if a change in strategy requires new behaviors—such as entrepreneurialism and measured risk-taking—but compensation and incentive systems reward the status quo, old behaviors will remain entrenched. If the rapid, timely delivery of data and information is critical, but technology and communication systems are antiquated and perform poorly, autonomous decision-making will be undermined. If, instead of cooperative, team-oriented employees, the recruiting system continues to favor individual superstars who pursue their own agendas, the organization will be mired in its old culture, regardless of its stated intent. Addressing these types of issues up-front increases the probability that an organization will become a change champion, with a proven, repeatable change process that is embedded in the organization and a record of successful change.
That said, as stated above, organizations are made up of people, and various constituents—including shareholders, leaders, managers, employees, and even customers—have their own reasons to be wary of change. In our next post, we will talk about how you can identify these groups, understand their agendas, and overcome their resistance.