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Integrated Strategic Change: How OD Builds Competitive Advantage – Book Review – Doug Kuzenski

by on November 9, 2008

Integrated Strategic Change: How OD Builds Competitive Advantage. Christopher Worley, David Hitchin, and Walter Ross. Reading, MA: Addison-Wesley Pub., 1995. 158 pp. $55.40. (ISBN: 0-201-85777-4)

Intro

The most effective method of deciding an organization’s strategy is not always senior management seeking out the most lucrative business opportunity. Rather, according to the book Integrated Strategic Change, it can be a structured process of both internal assessment and external evaluation. By including the members of an organization in an initial process of discovering their core capabilities and most effective resources, the principles of Organization Development (OD) are leveraged to give strategic planning needed context. Only then can realistic and achievable strategies be designed and implemented effectively, altering the organization’s internal processes and structures so they are best aligned to the most appropriate business strategy.

Target Audience

Integrated Strategic Change was written with the managerial professional in mind. The content of the book assumes considerable knowledge in the reader, including OD and traditional strategic formulation methods. Also, the book assumes a fairly thorough knowledge of how most large companies are organized, including their functional divisions and power structures. Not a light-read, the authors intend this text to guide large corporations to successful major changes in the way they do business.

Background

In order to better understand why the authors felt the need to write this book for business professionals, some background information on OD and traditional strategic formulation in necessary. In the book Organization Development: A Process of Learning and Changing, W. Warner Burke introduces the fundamental principles of Organizational Development. Traditionally, it is used to increase the overall internal efficiency and effectiveness of an organization’s processes. An example of an area that might be improved upon is Human Resources. A typical OD change management process involves the following steps, often referred to as action research: diagnosis, feedback, discussion, and action (pg. 8). Essentially, by engaging all members of an organization to assess the effectiveness of an organization from a whole-system perspective, OD can help a business identify problem areas. The organization then creates an intervention plan to put the process back on course.

These internal processes can be contrasted with the more external process of traditional strategy formulation. An example of a strategic planning session would be mapping out the competitive environment, assessing opportunities, and choosing the path that will give the organization the greatest financial gains by, for example, being a loss leader in an industry. This path is then made explicit by a strategic planning group, often the head managers of the organization, developing a vision statement, strategy document, and detailed plan. Only then will this plan be integrated into the processes and structures of the business, top-down, as needed to accomplish the goals laid out (Dessler & Phillips, 2008).

Summary

The primary issue the authors of Integrated Strategic Change have with traditional strategic planning is that they perceive it to give insufficient attention to the thoughts, needs, and capabilities of the organization’s employees. As the authors are all professors specializing in OD, their natural conclusion is to apply the tenants of OD to strategic planning. Specifically, they make a distinction between the strategy of the company and the organization design of the company. Strategy includes the mission, objectives, intent and policies of the organization, while organization design includes the core processes, design factors, and culture of an organization (pg. 46). Together, these determine the overall strategic orientation of the company. After laying this framework, the authors dedicate the book to explaining, in depth, how the four steps of Integrated Strategic Change can bring about a successful change of an organization’s strategic orientation.

In the first step, strategic analysis, the organization works to better understand their existing strategic orientation. Specifically, they try to answer the question: how effective is the current organization’s performance? By thoroughly understanding both the strategic content (where the business is trying to be) and the implementation of that strategy, they are able to later determine which of these two aspects of the strategic orientation is failing, if not both (pg. 44). Also, the current “dominant competences” and “distinctive competences,” or: the business’ skills needed to stay in business and skills that distinguish their firm, respectively, are assessed (pg. 54). This process, to be successful, needs to include the participation of as many members of the organization as possible.

The next stage is strategy making. In this two-part process, the vision and type of change needed are clarified, and also the strategic orientation is designed. These two processes are work in tandem. The visioning and type selection is differentiated from traditional strategy formulation in that it is broader in scope, more integrative, and has a greater concern for the vision process (pg. 66). The authors explain how the organization can decide whether the prescribed change should be primarily internal process oriented (organizational design), business-alignment oriented (strategy), or both (a complete reorientation) (pg. 77). The second piece of the strategy making stage, designing the strategic orientation, is a return to a more traditional format. A small group of senior management assesses the findings from the strategic analysis and from the visioning processes. Using this information, they choose what needs to change and how. The authors propose two possible routes for deciding this. The “outside-in approach” uses all the relevant information about the culture, values and capabilities of an organization to dictate its ideal mission, goals and objectives. This is a change to what is being done, rather than how it is being done. The “inside-out approach”, though, involves realigning the internal processes and capabilities towards an existing business opportunity. This is a change of how things are being done rather than what is being done. The end products of this stage are a strategy and an organization design that are aligned with the environment, the business’ capabilities, and with each other (pg. 90-103).

Next, the business will need to create a Strategic Change Plan. First, by explicitly communicating the desired strategic orientation to employees, everyone working to accomplish the change plan will be able to understand the overall purpose of their actions. Essentially, the better the design of the strategic orientation from the previous step, the easier it will be to communicate it. Second, the strategic orientation is mapped to specific plans to improve the company. This is done by stating every activity needed, categorizing them, and then assigning them priorities and sequences. A traditional responsibility chart is explained in the book for how to gives roles to employees to finish the tasks. Also, the authors explain how to assess stakeholder impacts and find measurements. This section of the book is very explicit and formulaic, as the plan deals with traditional management concepts (pg. 110-122).

Finally, the Strategic Change Plan is implemented in the organization. The authors explain the various ways to increase the chance that a plan implementation will be successful. Some of these include making the vision real, providing resources and support, and controlling the process (pg. 125). This section of Integrated Strategic Change incorporates many of Organization Development’s basic tenants for success. By concentrating on the internal needs of the business, and understanding the needs of the individual, the organization has a better chance to foster the core competencies of their employees. As the author’s state on page 9, successful businesses must have a “good strategy implemented well.”

Critique

Overall, this book did a good job conveying the authors’ ideas for incorporating OD with organization strategy formulation. The discussion was much deeper than simply reciting the need to conduct an analysis of the organization’s internal Strengths and Weakness and external Opportunities and Threats, also known as a SWOT analysis. Rather, they explain the process, step-by-step, for a business to gain a deeper understanding of themselves and their environment, and then integrate these findings to have a functioning strategic orientation. Also, by giving equal emphasis to redesigning the internal processes as to the redesign of the strategic alignment of an organization, the authors are advocating for a systemic change of an organization that has better odds for a successful outcome (pg. xix).

Especially interesting in Integrating Strategic Change was the consistent theme of the capabilities of an organization and its members. Understanding the capabilities of the organization to execute change is one of the four key themes of the ISC model (pg. 12). This allows the organization to have a better conception of the potential success rates of various directions for change. The authors explain that, when the reality of the organization’s capabilities is assessed, better decisions can be made; this includes the amount of work required to improve capabilities to achieve a certain change. In the same way, if the assessment shows strong capabilities are being under-utilized, the authors explain how to change the strategy of the organization so that these are being leveraged.

In regards to the writing style and organization of this book, the authors clearly stated their propositions in systematic and explicit ways. There are many references to supporting literature and research, which shows that their ideas and models are informed by many other prominent management thinkers of our time. Also, drawing on their consulting and case histories, the authors clarify their points many times throughout the book with real-world case studies. These serve as a valuable tool in gaining understanding of how their ideas can be implemented in actual businesses. Overall, the book, though a difficult read, gives strong arguments and solid methodology for management professionals.

Application to Change Management

For an organization looking to improve their business using the principles of change management, this book has much to offer. The ninth and final chapter, ISC as a Competitive Advantage, explains how Integrated Strategic Change can be utilized to make an organization excel beyond its competition. While typical strategic change isn’t needed every day, the skills and processes for it can lay dormant for long stretches of time between changes. The authors’ focus on having a continual process in place to respond to change (pg. 12) by using the OD techniques offers an organization a unique type of agility. The authors describe Integrated Strategic Change as a valuable and differentiating skill for an organization, when it has been learned and embraced as a priority for all employees (pg. 137).

Application to Information Management

Also, there are several key points that stand out as especially useful for Information Management professionals. On page 61, the authors explain how “information and control systems” play a vital role in “integrating and rationalizing the different demands of the work environment.” By utilizing information, a manager will be able to understand how work is being done. By keeping the strategic orientation of the organization in mind, the manager will then be able to understand if adjustments need to be made to align work with the strategic goals of the company. There are several criteria given for evaluating information systems, including “accuracy,” the “benefits of the information given the cost of collecting and distributing it,” and “the extent to which the information is aligned with critical strategic goals.” These are all important for Information Management professionals to consider when they are trying to align themselves to and enable the organization’s strategic orientation.

Conclusion

By combining the tenants of Organization Design with traditional strategy formulation techniques, the authors of Integrated Strategic Change advocate for a change management methodology that is a participatory, well thought out process utilizing systemic thinking. These guidelines help turn the traditionally inward-looking skills of OD outwards to the environment and strategic orientation of the company. The authors’ step-by-step process can give an organization the needed edge in an ever-changing business landscape, allowing them to anticipate change and be ready to adapt for it when it arrives.

Citations:

  • Burke, W. (1994). Organization Development: A Process of Learning and Changing. 2nd Edition. Reading, MA: Addison-Wesley Publishing Company.
  • Dessler, G. & Phillips, J. (2008). Managing Now!. New York, NY: Houghton Mifflin Company.
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One Comment
  1. Very informative!

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