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Organization Development and Change

Organization Development and Change. Chapter Twenty Two: Transorganizational Change. Thomas G. Cummings Christopher G. Worley. Learning Objectives for Chapter Twenty Two. To understand the rational behind transorganizational interventions

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Organization Development and Change

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  1. Organization Development and Change Chapter Twenty Two: Transorganizational Change Thomas G. Cummings Christopher G. Worley

  2. Learning Objectivesfor Chapter Twenty Two • To understand the rational behind transorganizational interventions • To compare and contrast the three types of transorganizational OD interventions: mergers and acquisitions, strategic alliance interventions, and network interventions within each category Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  3. TransorganizationalRationale • Transorganizational strategies allow organizations to perform tasks that are too costly and complicated for single organizations to perform • Goods and services are exchanged between organizations and transactions occur • Transorganizational strategies work best when transactions occur frequently and are well understood Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  4. Transorganizational Systems • Members maintain their separate organizational identities and goals • Tend to be underorganized and member organizations are loosely coupled • Different from mergers and acquisitions • Network interventions may be appropriate Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  5. Mergers and Acquisitions • Merger - the integration of two previously independent organizations into a completely new organization • Acquisition - the purchase of one organization by another for integration into the acquiring organization. • Distinct from transorganizational systems, such as alliances and networks, because at least one of the organizations ceases to exist. Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  6. Merger and Acquisition Rationale • Diversification • Vertical integration • Gaining access to global markets, technology, or other resources • Achieving operational efficiencies, improved innovation, or resource sharing Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  7. Merger and Acquisition Application Stages • Pre-combination Phase • The organization must identify a candidate organization, work with it to gather information about each other, and plan the implementation and integration activities • Legal Combination Phase • The two organizations settle on the terms of the deal, gain approval from regulatory agencies and shareholders, and file appropriate legal documents • Operational Combination Phase • Implementing the operational, technical and cultural integration activities Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  8. Strategic Alliances • When two organizations formally agree to pursue a set of goals • There is sharing of resources, intellectual property, people, capital, technology, capabilities or physical assets • Common alliances are licensing agreements, franchises, long-term contracts, and joint ventures Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  9. Alliance InterventionApplication Stages • Alliance Strategy Formulation • Clarify the business strategy and why an alliance is needed • Partner Selection • Leverage similarities and differences to create competitive advantage • Alliance Structuring and Start-up • Build and leverage trust in the relationship • Alliance Operation and Adjustment Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  10. Network Interventions • Involves three or more companies joined together for a common purpose • Each organization in the network has goals related to the network as well as those focused on self-interest • Characterized by two types of change: creating the initial network (transorganizational development) and managing change within an established network Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  11. Application Stages for Transorganizational Development Identification Convention Organization Evaluation • How to organize • for task • performance? • Communication • Leadership • Policies and • procedures • Who should • belong to the • transorganizational • System (TS)? • Relevant skills, • knowledge, • and resources • Key stakeholders • Should a TS • be created? • Costs and • benefits • Task • perceptions • How is the TS • performing? • Performance • outcomes • Quality of • interaction • Member • satisfaction Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

  12. Managing Network Change • Create instability in the network • Manage the tipping point • The Law of the Few: Salespeople, Mavens, Connectors • Stickiness • The Power of Context • Rely on self-organization Cummings & Worley, 9e (c) 2008 South-Western/Cengage Learning

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