The way we view change and the strategies of how to manage change are many, and reading the book “Breaking the code of change” I have seen an inspiring way of structuring these approaches to change that I would like to share with you.
The authors call it the Theory E and O of change. – E stands for Economical Value and O for Organizational Capabilities.
Curious? Read more…
Theory E sees change initiatives as a mean to optimize shareholder value and maximize profits. Leaders set goals based on the expectations of the financial markets, and as one leader puts it. “I have a goal of $176 million this year and there is no time to involve others or develop organizational capabilities.”
Leaders of this approach do not trust lower-level managers with tough, strategic decisions, and do not have the time to build consensus through participation. The natural focus is on achieving results by changing strategies, structures and systems – the “hardware” of the organization.
Capital market expectations force a short and tight schedule for change and the change will most often be a carefully planned, well-sequenced program for change.
Theory E changes rely on financial incentives to motivate a singular focus on creating economic value.
To achieve rapid and extraordinary improvements in economic value, companies often hire large consulting firms to infuse specialized knowledge, market knowledge and best practice across industries.
Theory O change aims to develop organizational capabilities – especially the capabilities of the employees to become involved in identifying and solving work-related problems and challenges. A main driver is emotional commitment to the change and to improving the performance of the company.
Leading change from this perspective involves a high level of involvement and collaboration at all levels of the organization. Involvement is seen as vital for building the partnership, trust and commitment that key to long-term performance improvements.
Theory O will see the main challenge as changing culture, belief systems and values that over time has given structure and systems legitimacy. There is a natural focus on values and behavior and top management will use these to shape the company culture and guide employee behavior.
The change is managed by a clear vision and values and will be implemented with local participation and experiments – providing a space for a more emergent, bottom-up process that is well anchored in the reality of every business unit.
Focus will be on providing personal incentives with less emphasis on financial incentives and more on skills and collaboration. The consultant role in Theory O change initiatives focuses on designing and facilitating processes, being an experienced resource and sparring partner for how to move the change along as we learn, adjust and get better.
——
As the authors point out, it’s not necessarily an either or situation but a matter of integrating both approaches in the design for change. But at the end of the day, I believe that we must choose which initial path we are taking and what underlying principles we use when looking at change and working to see it come true.
I have to say that I’m a believer in the “O” way of working with most change initiatives. What about you?
Excellent change 