Dynamics of Organizational Change

1. Dynamics of Organizational Change Özge Pala Jac A. M. Vennix Nijmegen School of Management Nijmegen University, The Netherlands

2. Contents • Previous SD models on organizational change • New model: • Base model • Appropriateness of strategy • Implementation success • Behavior of the model • Conclusions • Future research

3. Previous Models on Organizational Change • 1965: McPherson - Organizational Change: An Industrial Dynamics Approach. • 1989: Jacobsen&Samuel - Planned Organizational Change: Theory, Model, Data, and Simulation. • 1991: Frechette&Spital - A Model of Organizational Change. • 1996: Larsen&Lomi - The Dynamics of Organizational Inertia, survival, and Change. • 1997: Sastry - Problems and Paradoxes in a Model of Punctuated Organizational Change

4. Base model

5. Appropriateness added

6. Appropriateness added Old organization 1: base model 2: base model with appropriateness Young organization 1: base model 2: base model with appropriateness Old organization High initial inertia. Change starts too late when pressure is high and appropriateness low

7. consistency consistency + decrease increase - change percentage fit decrease internal + consistency - + fit of SO + + - + + performance + change in fit - perceived fit - + appropriateness inertia decr + + fit gap PERFORMANCE effectiveness - + - pressure to + completed changes implementation inertia incr change avg perf gap STRATEGIC FIT success + + + + - - accuracy of change in + new changes perception process started inertia + sust perf gap + + - - + INERTIA INFO PROCESS ability to - change threshold - information quality of processing capacity information processing + resistance to perc press to change communicative change IMPLEMENTATION nature + duration of SUCCESS + change effect of duration + + - + - effect of ch in normal resistance change in process to change + - resistance + Implementation Success

8. Appropriateness and success added Young organization Old organization Old organization with high inertia Old organization with high inertia, without threshold

9. Different kinds of environment 1: one time (punctuated) change, pulse function 2: incremental changes, fit decay function 3: one time (punctuated) change and incremental changes together Old organization Young organization

10. Decay + pulse, old organization old organization, better communication Under severe circumstances, e.g. faster incremental changes W/o info-processing loop, assume appropriateness =1

11. Conclusions • Not scanning the environment continuously can have detrimental effects for old, highly inert organizations • In environments in which there are incremental changes, organizations should • Scan their environment better • Be more alert to changes and • Have strategies other than punctuated change • Both reacting too fast and too slow can be harmful. • Too fast => unnecessary amount of changes, • Too slow => death • Organizational theorists should try to come up with criteria on how soon an organization should react to changes in the environment.