“Cracking the Code of Change”
Change is not a one-size-fits-all concept. There are many different approaches to change and each one has its own strengths and weaknesses. Some change strategies work well in some situations but not well in others. The key is finding the right method for your situation or perhaps even a mix of more than one, taking the best of each approach and making it fit your needs.
Initial Post Instructions
Search for a company whose leader used Theory E to drive the changes and another company whose leader used Theory O to drive the changes. Compare and contrast the two companies, including profitability. Which of the two theories would you use to drive the change? Why? Is effective communication more important in one theory than the other? Why or why not? Use and cite a minimum of three scholarly references beyond the texts used in the course to defend your reasoning.
Follow Up Posts
After your initial post, read over the items posted by your peers and your instructor. Select at least two different posts, and address the following items in your responses:
i. What insights did your peers share on Theory E and Theory O that will help you better understand and implement these theories?
ii. Do you agree with your peer’s assessments of Theory E and Theory O? Why or why not?
The biggest challenged organizations face today is managing of corporate change, and change is a must if any business expects to remain competitive. But businesses have a tendency resisting change which leads to businesses failing because of changes. In order to perform this challenging task of bringing the desired change, the two most famous approaches are Theory E and Theory O. But there is nothing wrong trying both theories.
Theory E is the hard line approach bringing about change, and using this method toward restructuring downsizing, layoffs, and economics incentives and in this structure the shareholders the more successful as well.
Companies that use Theory E for change are Amazon to maximize the economic values and Wal-Mart used this theory for restructuring to compete with Amazon.
Theory O is not as strong when bringing about changes because it emphasis on developing culture and human capability to focus on organization learning, behavior, commitment, input, and employee conduct. Companies that used Theory O to drive change are Richard Branson Virgin and Hewitt Packard.
Comparing Amazon and Hewitt Packard brings me determine Amazon applies the approach based on economics incentives and profits and Hewitt Packard was based on organizational capabilities.
Theory E requires directional approach whereas, theory applies consultation and full participation, Theory E communication is applied top-down and theory O is bottom up communication is applied.
Out of the two theories in my opinion, Theory O seems to be the best chose because communication and the power it carries and its importance.
Nohria Nitin &Beer Michael. Cracking the code of change. 2000. / Change management, Harvard business Review, May-June 2000 Issue
Biech Elaine, Thriving Through Change: A Leaders Practical Guide to change Mastery. 2007. ASTED, pg. 23
There are two primary theories of change that are utilized by businesses. The theories revolve either around principles of increasing economic value, or to improve organizational capability. Theory E changes emphasize the economic value that is measure purely by shareholder return (Beer, 2000). Theory O is an approach that focuses on investing into the organization to develop corporate culture and capability of employees thru teamwork and communication. Both strategies have benefits, but a successful approach typically utilizes a mixture of both approaches. An appropriate combination of both approaches are likely to achieve sustainability in the long run.
An example of an organization that has utilized the strategies of Theory E changes would be McDonalds. Over the past several decades McDonalds has been a leader in maximizing the inputs of time, money, and resources to optimize outputs (Hughes, 2017). They have incorporated automation in areas in which opportunities to improve performance outcomes were identified. This has maximized operational efficiencies which has resulted in a significantly increased economic valuation.
Companies such as Toyota have utilize Theory O changes to strengthen the organization. For example, Toyota focuses on maintaining a high level of motivation. Toyota utilizes open forums and allow employees to have input on process decisions. Toyota has a program that allows frontline employees to come up with and actually test new tools and ides on the assembly line (McGregor, 2015). Even though Toyota focuses energy into Theory O changes, they also utilize the principles of Theory E by developing the Toyota Production System. This is a manufacturing strategy that takes a logistical approach to reduce waste, improve productivity, and enhance the lean aspects of production (Spear, 2004). This system has been utilized in the manufacturing arena globally.
I feel that an approach like Toyota’s is most appropriate because it is a combination approach. It is important to focus on economic value for organizational growth, yet it should not be the primary or only focus. It is equally important to focus on improvements in the culture or moral of a department. A heightened morale of a department will create longevity which will also translate to increased economic value.
Beer, M., Nohria, N., Cracking the Code of Change. Harvard Business Review. May/June, 2000.
Hughes, B., How Business Process Management Will Change Your Small Business. The Huffington Post. December 6, 2017.
McGregor, L., Doshi, N., How Company Culture Shapes Employee Motivation. Harvard Business Review. November, 25, 2015.
Spear, S., Learning to Lead at Toyota. The Harvard Business Review. May, 2004.