PART 6 – STRATEGIC CHANGE INTERVENTIONS
Chapter 19 | Continuous Change
I. Continuous Change
This chapter describes interventions that enable organizations to change themselves continually.
These change processes are increasingly common in organizations, but are still being developed and refined. They are
aimed at the growing number of organizations facing highly turbulent environments, such as firms in high technology,
entertainment and fashion, and biotechnology industries, where timing is critical, technological change is rapid,
and competitive pressures are unrelenting and difficult to predict.
In these situations, standard sources of competitive advantage—strategic positioning and core competencies—erode
quickly and provide only temporary advantage. 1 What is needed are dynamic capabilities2 built into the organization
that enable it to renew forms of competitive advantage constantly to adapt to a rapidly shifting environment.
Continuous change interventions extend transformational change into a nonstop process of strategizing, designing, and
implementing.3 Rather than focus on creating and implementing a particular strategy and organization design, continuous
change addresses the underlying structures, processes, and activities for generating new forms of competitive advantage.
Thus, the focus is on learning, changing, and adapting—on how to produce a constant flow of new strategies and
designs and not just on how to transform existing ones.
Continuous Change Interventions:
1. Dynamic strategy
2. Self-designing organizations
3. Learning organizations
4. Built-to-change organizations
II. INTERVENTIONS
1. DYNAMIC STRATEGY
Making uses a process of “guided involvement” to help organizations implement a strategic system.4 A
statement of strategic direction—the organization’s competitive logic, goals, organization design, and
action plan— and a repeatable strategic process define the strategic system.
OD practitioners work with managers and key stakeholders to build a system that continually adapts.
Dynamic strategy making addresses both the content (the “what”) of strategy formulation and the process
(the “how” and “who”) of strategy implementation.
Represents a new type of OD intervention that combines OD’s traditional human process focus on
relationships among organization members with strategic management’s customary emphasis on strategy
and organization design to help organizations manage strategic change.
Similar to integrated strategic change (ISC) (Chapter 18), dynamic strategy making is a deliberate,
coordinated process that leads to continuous realignments between an organization and its
environment.
a. Dynamic Strategy-Making Process
Greiner and Cummings developed the dynamic strategy-making process based on their research and
practice in strategy implementation.6
They found that managers consistently underestimated the impact of change and human process issues
during strategy execution.7
Greiner and Cummings’ analysis of the history and practice of strategy formulation and implementation,
along with the increasing pace of change in complex environments, led them to propose several
criteria for an effective strategic change process:8
1. Speed over delay. New opportunities and threats need immediate strategic action, but organizations
are often slow to react, gathering more information and assessing more solutions instead of acting.
2. Breadth over narrowness. Unpredictable and complex conditions require expansive thinking and
openness to innovative ideas, but organizations tend to be discipline focused and take input from
select stakeholders.
3. Flexibility over rigidity. Organizations must discover new solutions, adjust priorities, and reallocate
resources constantly, but they are often ruled by rigid policies and annual budgets.
4. Empowerment over autocracy. Strategy making must permeate the entire organization and give
members the freedom to respond to local changes; it cannot remain the sole domain of top
management.
5. Simplicity over complexity. Complexity threatens to overwhelm organization members; strategy
needs to be concrete and specific enough to be acted on but not so detailed that members cannot
respond and improvise as situations change.
6. Unity over fragmentation. Strategy must promote consistent and integrated action, because
organizations spread out across countries, markets, and businesses tend to fragment, lose
coordination, and deviate from the intended strategy.
b. Conceptual Framework of Dynamic Strategy Making
Dynamic strategy making is a comprehensive and pragmatic approach to strategic change.
It views strategy as a central concept that permeates the organization rather than being another
element to align with other parts. It treats the process of creating and implementing strategy and the
content of strategy interactively and seeks strategies that are executable and flexible. Figure 19.1 broadly
outlines the framework.
The strategic system is the core of dynamic strategy making. It includes strategy content in the form of a
statement of strategic direction and a strategic process for developing and executing the strategy. When
designed effectively, the strategic system continually matches the firm’s resources and capabilities to
changing environmental opportunities and demands.
The specific issues addressed in the strategic system come from senior managers’ situational
assessments about the organization and its environment. The organization is examined to identify
core capabilities, resources, know-how, and all potential strengths needed to succeed in the marketplace.
Because neither the organization nor its environment is static, this assessment is not a one-shot event
and so the strategic process is ongoing and built into the organization. In fast-moving environments, the
results of strategic analysis have a short shelf life, so data collection and assessment need to be
continuous and keep pace with change.
Statement of Strategic Direction
A written statement of strategic direction is the primary outcome from the situational
assessment—it makes strategic information about the organization and environment concrete
and permits revision over time. It provides a way to record, communicate, and implement the
strategy.
A written statement avoids misunderstandings in the future and provides a clearer way to
articulate the content with organization members and other stakeholders about the journey
ahead.9
The statement of strategic direction includes four elements:
(1) the competitive logic that describes the organization’s market position and customer
Tiebreakers, or the business model for gaining competitive advantage;
(2) the financial and rallying goals that will direct and motivate members’ behavior;
(3) the organization design that will structure and link members to work activities, each other,
and company values; and
(4) the action plan that includes strategic initiatives and specific steps for implementing the
strategic system.
Strategic Process
Strategic process has to do with the “who” and “how” of developing the statement and
subsequently implementing it. It involves identifying the relevant stakeholders who should be
involved directly in the strategy-making process and engaging them in a highly interactive set of
conversations and debates about the organization’s strategic direction and how to move forward.
As described below in the application stages, strategic process is informed by the philosophy of
“guided involvement,” 14 which includes a repeatable series of retreats and activities for
developing and executing strategic direction. Guided involvement speaks to the nature of the
dialogue expected among organization members and to the role OD practitioners can play in
building the required organization capabilities. It bridges the learning and applied behavioral
science aspects of OD with the technical aspects of strategic management and organization
design by holding organization participants to a high standard of direct, open, and concrete
engagement.
c. Application Stages
Making the statement of strategic direction actionable requires integrated content and a
supporting process.
Dynamic strategy making helps organizations construct content and process together into a
strategic system. The following tools and concepts in the form of building blocks support this
construction process.
1. Holding the first retreat. The purpose of the first retreat is to create an initial draft of the statement of
strategic direction, especially the competitive logic and goal elements.
2. Choosing relevant stakeholders - identifying and recruiting the relevant stakeholders
3. Engaging stakeholders between the first and second retreats. Between the first and second retreats,
senior managers reflect on their work and perform reality tests on the validity of assumptions in the
statement
4. Holding the second retreat. The purpose of the second retreat is to review the feedback, finalize the
competitive logic and goal statements, and complete the statement of strategic direction. Initially, the total
group reviews and discusses the input from stakeholders and builds consensus regarding the competitive
logic and goals.
5. Implementing actions. Following the second retreat, organizations have several options for moving
forward. All of them involve putting effort into pursuing the statement of strategic direction.
2. SELF-DESIGNING ORGANIZATIONS
Have the capability to alter themselves fundamentally and continuously.
Creating them is a highly participative process in which multiple stakeholders set strategic direction,
design appropriate structures and processes, and implement them.
This intervention includes considerable innovation and learning as organizations gain the capacity to
design and implement significant changes continually.
a. The Demands of Turbulent Environments
Turbulent environments are both complex and changing rapidly. To be effective in these situations
requires a coordinated organization response.
As a result, large-scale change needs to occur at multiple levels of the organization if new strategies are
to result in changed behaviors throughout the system. Top executives must formulate a strategy and
clarify a vision of what the organization needs to look like to support it. Middle and lower levels of the
organization need to put those broad parameters into operation by creating structures, procedures, and
behaviors to implement the strategy.19
Self-design processes help members change the organization systemically.
b. Application Stages
The self-design intervention focuses on all features of the organization (for example, structure, human resources
practices, and work design) and designs them to support the strategy. It is a dynamic and an iterative process aimed at
providing organizations with the built-in capacity to change and redesign them continually as the circumstances demand.
The approach promotes organizational learning among multiple stakeholders at all levels of the firm, providing them with
the knowledge and skills needed to continuously change and improve the organization.
Although the process is described in five stages, in practice the stages merge and interact iteratively over time. Each
stage is described below:
1. Clarifying the strategy - clarifies the organization’s strategic objectives, translates the strategy into descriptions of
breadth, aggressiveness, and differentiation, and explains how they are changing.
2. Laying the foundation - provides the design team with the basic knowledge and information needed to get large-scale
change started.
3. Creating design criteria- the design team develops the principles and standards that will guide the new organization
design.
4. Designing - design team generates alternative organization designs and innovations to reflect the strategy, values, and
design criteria.
5. Implementing and assessing - involves making the new design happen by putting into place the new structures,
practices, and systems.
3. LEARNING ORGANIZATIONS
Those with the ability to learn how to change and improve themselves constantly.
Distinct from individual learning, this intervention helps organizations move beyond solving existing problems to
gain the capability to improve constantly. It results in the development of a learning organization where
empowered members take responsibility for changing the organization and learning how to do this better and
better.
a. Conceptual Framework
Learning is organizational to the extent that
• It is done to achieve organization purposes.
• It is shared or distributed among members of the organization.
• Learning outcomes are embedded in the organization’s systems, structures, and culture.
Figure 19.3 provides an integrative framework for understanding OL and knowledge management
interventions,29 summarizing the elements of these change processes and showing how they combine to affect
organization performance.
This framework suggests that specific organization characteristics, such as structure and human resources
systems, influence how well organization learning processes are carried out. These learning processes affect the
amount and kind of knowledge that an organization possesses; that knowledge, in turn, directly influences
performance outcomes, such as product quality and customer service.
As depicted in Figure 19.3, the linkage between organization knowledge and performance depends on the
organization’s competitive strategy. Organization knowledge will lead to high performance to the extent that it is
both relevant and applied effectively to the strategy. For example, customer-driven organizations require timely
and relevant information about customer needs. Their success relies heavily on members having that knowledge
and applying it effectively in their work with customers.
Figure 19.3 also shows how OL and knowledge management are interrelated. OL interventions address how
organizations can be designed to promote effective learning processes, and how those learning processes
themselves can be improved. Knowledge management practices operate on the outcomes of learning processes;
on how strategically relevant knowledge can be effectively organized and used throughout the organization.
Each of the key elements of OL—organization characteristics and organization learning processes—are
described below along with the interventions typically associated with them.
b. Organization Learning Interventions
As shown in Figure 19.3, OL interventions consist of change programs designed to alter organization design features and
OL processes. Changes in organization design are intended to create a learning organization that promotes effective OL
processes. In turn, these processes can affect the organization’s knowledge management and performance.
Learning Organizations The designs of most traditional organizations are ineffective at learning and may even intensify
errors. Referred to as Model I learning, it includes structures and management processes as well as values and norms
that emphasize unilateral control of environments and tasks, and protection of oneself and others from information that
may be hurtful.30 These structures and norms result in a variety of defensive routines that inhibit learning, such as
withholding information and feelings, competition and rivalry, and little public testing of norms and the assumptions
underlying them. Model I is limited to learning that improves the status quo.
Organization Learning Processes Figure 19.3 suggests that OL processes consist of four interrelated activities:
discovery, invention, production, and generalization. 34 Learning starts with discovery when errors or gaps between desired
and actual conditions are detected. For example, sales managers may discover that revenues are falling below projected
levels and set out to solve the problem. Invention is aimed at devising solutions to close the gap between desired and
current conditions; it includes diagnosing the causes of the gap and creating appropriate solutions to reduce it. The sales
managers may learn that poor advertising is contributing to the revenue problem and may devise a new campaign
to improve sales. Production processes involve implementing solutions, and generalization includes drawing conclusions
about the effects of the solutions and extending that knowledge to other relevant situations. For instance, if the new
advertising program is implemented and successful, the managers might use variations of it with other product lines.
Thus, these four learning processes enable members to generate the knowledge necessary to change and improve the
organization.
4. BUILT-TO-CHANGE ORGANIZATIONS
Include strategizing processes, design elements, and managerial practices that support change as the primary
driver of effectiveness.
This intervention provides design and implementation guidelines for building change capabilities into the
structures, processes, and behaviors of the organization so that it can respond continually to a rapidly
changing environment.
One of the newest continuous change interventions involves intentionally designing an entire organization
for change and not stability. Lawler and Worley’s built-to-change (B2C) approach to designing organizations
is based on the simple fact that most organizations are designed for stability and dependable operations.
Traditional organization design components and managerial practices aim to reinforce predictable
behaviors for sustaining a particular competitive advantage. Lawler and Worley argue that many change
efforts are unsuccessful, not because of human resistance or lack of visionary leadership, but because most
organization design features assume that stability leads to effectiveness. Such built-in assumptions can be a
recipe for failure in rapidly changing environments, where the ability to change constantly is the best
sustainable source of competitive advantage. The B2C intervention helps organizations design themselves for
change.
a. Design Guidelines
As shown in Table 19.1, the B2C intervention includes the following design guidelines and challenges the
assumption of stability in the specification of design components.
From Strategy to Strategizing The stability assumption first shows up in the way organizations formulate
strategy. Most strategy processes rely on relatively static and short-term views of the environment. Most
environmental scanning tools, such as SWOT and industry attractiveness models, implicitly assume that the
forces operating today will operate tomorrow and reinforce the pursuit of a single sustainable competitive
advantage. Although most managers and organizations describe the environment as changing, they act and
decide as if it is not. As a result, strategies are formulated, budgets and goals are set, and any successful
competitive advantage is expected to last.
From Design to Designing Traditional organizations view organization design as a set of relatively stable
features that only get better through continuous improvement.
Rather than thinking about how structure, work, management processes, and HR systems need to change to
increase effectiveness, traditional organizations become enamored with short-term efficiency and reliability
initiatives. Such a focus tends to lock the organization into a way of operating that is very difficult to change.
b. Application Stages
Lawler and Worley stress that not all organizations should be built to change, though most could benefit from
applying some B2C principles. This intervention is mainly for organizations having problems adapting to complex
and rapidly changing environments.
They require a change capability for success in the future. For them, and following a thorough diagnosis, 54 the
following three initiatives can help the transition to a B2C organization:
1. Reframe culture as a facilitator of change. This first stage addresses the organization’s culture—the
established set of core values, norms, and beliefs shared by organization members. Culture is the most stable
part of an organization—it is deep-seated, taken for granted, and guides decisions and behaviors like an invisible
hand—but it does not need to be a constraint to changing. As described in Chapter 18, organization culture can
promote or hinder organization change depending on whether it supports change or stability. 55
2. Redefine organization design components for flexibility. Each feature of an organization’s design can be
created under an assumption of stability or flexibility.
3. Build an orchestration capability. This stage helps the organization leverage the flexibility built into the
organization’s strategy and design. An orchestration capability enables the organization to implement changes in
strategy and to execute design changes effectively over and over again.
