Spectrum of organizational change

In the spectrum of organizational change, which is the most radical type of change: automation, rationalization of procedures, business reengineering, or paradigm shifts? (you are expected to read an article about this question) .. The change constitutes numerous meaning. The word “change” is similar with alteration, modification, variation, transformation, revolution, conversion, adjustment, amendment and etcetera. In every different application, process and preference of the word “change” it only shows and explain one thing, what is good and better now may not be useful tomorrow. It is true in every aspect of life, and it is most feasible and clear in the world of technology at this very moment and for the next generation. We have to remember that we are in a fast-changing environment and what happens tomorrow can be very different from today. From that context alone, changes in an organization can be considered inevitable. Even the slightest changes can make a huge difference for the organization. Therefore, the type of radical change for the organization should be properly weighed according to the level of risk as well as the return of investment for the organization. Organizational Change… Organizational change is any action or set of actions resulting in a shift in direction or process that affects the way an organization works. Change can be deliberate and planned by leaders within the organization, or change can originate outside the organization and be beyond its control. Change may affect the strategies an organization uses to carry out its mission, the processes for implementing those strategies, the tasks and functions performed by the people in the organization, and the relationships between those people. Naturally, some changes are relatively small, while others are sweeping in scope, amounting to an organizational transformation. Change is a fact of organizational life, just as it is in human life. Organizational change is the term used to describe the transformation process that a company goes through in response to a strategic reorientation, restructure, change in management, merger or acquisition or the development of new goals and objectives for the company. The realignment of resources and the redeployment of capital can bring many challenges during the transformation process and organizational change management seeks to address this by adopting best practice standards to assist with the integration of new company vision. Organizational change is not just change for the sake of change itself. The major precursor for organizational change is some form of exogenous force such as an external event. Cuts in a companies funding, the streamline of operations due to a merger are common examples of the magnitude of an event that creates organizational change and development. Companies that are nearing the end of the product life cycle make organizational changes in response to exiting a market or reorienting resources to new or existing business operations. Organizational processes are the systematic way a company defines, organizes and implements its operations through the stages of the product life cycle. This can include strategic measures to improve business performance, proprietary models and intellectual property that contribute to an organizations goals and objectives. Process improvement is closely related to life cycle management. At any stage of companies operations, the analysis of inputs and outputs can be audited, assessed and graded according to a set of performance requirements. Improving productivity, minimizing costs, reducing social costs and environmental emissions form part of the process improvement paradigm. A company continually works towards organizational process improvement to enhance its bottom line. The organizational change process can be analyzed by breaking down the stages of the product or service life cycle. By identifying each stage and the procedures used, organizations are better able to assess the impact of changes and build models to quantify the effects of the change on the companies’ organizational processes. Change management seeks to balance the goals and objectives of an organization and align capital and resources to optimize a company’s performance. The organizational change can be brought about by the fast changing environment or acts as a strategic move in order to adapt in the current situation or get ahead with the competition. Either way, the organizational change that can occur in an organization can be defined into four kinds of structural organizational changes that is brought about by information technology. These are: automation, rationalization of procedures, business reengineering, or paradigm shifts. Causes of Organizational Change Companies are required to modify productive processes or strategic goals and aims in response to an external influence, change in consumer behavior or a shift in the industry landscape. This necessitates a reorientation of capital, resources, employees and corporate systems. Below are some of the common causes of organizational change: Exit Strategy at The End of the product Life Cycle: As the market for a companies product reaches maturity, market growth and profits begin to diminish. Despite the fact that cost cutting occurs and marketing budgets are reduced, when the opportunity cost of deploying capital and resources to another more favorable opportunity presents, companies either sell off existing operations or cease production altogether. This can be in response to a new superior product release, a change in consumer purchasing habits or the introduction of a new technology. Irrespective of the cause, capital and labor are redeployed to new more promising business activities. The exit strategy is a common cause of organizational change. Change in Government: Employees that work for government departments can find existing initiatives get discontinued when a change in government takes place. The subsequent refocus of priorities that takes place as a result of the new governments mandate can create redundancies or a radical change in the way the department conducts its affairs. Mergers and Acquisitions: When two competitors merge the existing business operations of both companies get centralized and streamlined. This can result in the merging of departments and processes, cost cutting and a redeployment of existing resources. Mergers and acquisitions are one of the most frequent causes of organizational change. Strategic Refocus: When the company changes its business processes to adopt a new paradigm organizational change ensues. Consider the plight of a company that shifts its focus form a product centric to a customer centric platform. New manufacturing specifications, new marketing and a change in logistical operations create a change reaction for change throughout the organization. Structural Change: When new administrative processes get introduced, organizational change results. Consider the ramifications of centralizing an archiving process using computer technology. Old redundant processes get replaced by new software and hardware and staff members are required to retrain to operate the new systems. Process Oriented: When a company redefines its manufacturing operations by changing its manufacturing process to a JIT operation, infrastructure, warehousing and logistical operations are required to be redesigned and deployed. This structural shift in the way a product is created has a domino effect on organizational change. Terminologies of Radical Type of change 1.Automation is the use of control systems (such as numerical controlprogrammable logic control, and other industrial control systems), in concert with other applications of information technology (such as computer-aided technologies [CAD, CAM, CAx]), to control industrial machinery and processes, reducing the need for human intervention. In the scope of industrialization, automation is a step beyond mechanization. Whereas mechanization provided human operators with machinery to assist them with the muscular requirements of work, automation greatly reduces the need for human sensory and mental requirements as well. Processes and systems can also be automated. Automation plays an increasingly important role in the global economy and in daily experience. Engineers strive to combine automated devices with mathematical and organizational tools to create complex systems for a rapidly expanding range of applications and human activities. Many roles for humans in industrial processes presently lie beyond the scope of automation. Human-level pattern recognition, language recognition, and language production ability are well beyond the capabilities of modern mechanical and computer systems. Tasks requiring subjective assessment or synthesis of complex sensory data, such as scents and sounds, as well as high-level tasks such as strategic planning, currently require human expertise. In many cases, the use of humans is more cost-effective than mechanical approaches even where automation of industrial tasks is possible. Specialized hardened computers, referred to as programmable logic controllers (PLCs), are frequently used to synchronize the flow of inputs from (physical) sensors and events with the flow of outputs to actuators and events. This leads to precisely controlled actions that permit a tight control of almost any industrial process. Human-machine interfaces (HMI) or computer human interfaces (CHI), formerly known as man-machine interfaces, are usually employed to communicate with PLCs and other computers, such as entering and monitoring temperatures or pressures for further automated control or emergency response. Service personnel who monitor and control these interfaces are often referred to as stationary engineers. Advantages • Replacing human operators in tedious tasks. • Replacing humans in tasks that should be done in dangerous environments (i.e. fire, space, volcanoes, nuclear facilities, under the water, etc) • Making tasks that are beyond the human capabilities such as handling too heavy loads, too large objects, too hot or too cold substances or the requirement to make things too fast or too slow. • Economy improvement. Sometimes and some kinds of automation implies improves in economy of enterprises, society or most of humankind. For example, when an enterprise that has invested in automation technology recovers its investment; when a state or country increases its income due to automation like Germany or Japan in the 20th Century or when the humankind can use the internet which in turn use satellites and other automated engines. Disadvantages • Technology limits. Current technology is unable to automate all the desired tasks. • Unpredictable development costs. The research and development cost of automating a process is difficult to predict accurately beforehand. Since this cost can have a large impact on profitability, it's possible to finish automating a process only to discover that there's no economic advantage in doing so. • Initial costs are relatively high. The automation of a new product required a huge initial investment in comparison with the unit cost of the product, although the cost of automation is spread in many product batches. The automation of a plant required a great initial investment too, although this cost is spread in the products to be produced. 2. Rationalization of Procedure.It is the streamlining of standard operating procedures, eliminating obvious bottlenecks, so that automation makes operating procedures more efficient. • Deeper change - streamlining of procedures to improve efficiency. • Automation often reveals bottlenecks in production, existing procedures become painfully cumbersome. • Procedures change to remove bottlenecks Example in banks, which have standard rules for issuing account numbers, and standard methods for calculating interest and account balances. The actual procedure divides the product line in to four zones: The least profitable products would be dropped. Products that need to be in the catalog would be outsourced, thus simplifying the supply chain and manufacturing operations. The cash-cows would remain and the balance would be improved with a better focus in product development, operations, and marketing. Because these products no longer need to subsidize the "losers," they can now sell for less. The combination of better focus and lower overhead changes will soon restore the "lost" revenue from the dropped products. • The Value of Product Line Rationalization. Eliminating or outsourcing low-leverage products will immediately: • Increase profits by avoiding the manufacture of products that have low profit or are really losing money because of their (unreported) high overhead demands and inefficient manufacture/procurement • Improve operational flexibility because, typically, low-leverage products are inherently different with unusual parts, materials, set-ups, and processing. Often, these are older products that are built infrequently with less common parts on older equipment using sketchy documentation by a workforce with little experience on those products. • Simplify Supply Chain Management. Eliminating the products with unusual parts and materials will greatly simplify supply-chain management. • Free up valuable resources to improve operations and quality, implement better product development practices, and introduce new capabilities like build-to-order & mass customization. "Product line rationalization freed up a lot of people!" - Jon Milliken, VP Engineering, Fisher Controls div., Emerson Electric • Improve quality from eliminating older, infrequently-built products, which inherently have more quality problems than current, high-volume products that have benefited from continuous improvement and current quality programs and techniques. • Focus on most profitable products in product development, manufacturing, quality improvement, and sales emphases. Focusing on the most profitable products can increase their growth and the growth of similarly profitable products. According to Richard Koch, writing in The 80/20 Principle • Protect most profitable products from "cherry picking" (launching a competitive attack on the most profitable products), which is becoming more common as "virtual," cyberspace enterprises skim off the most profitable products. • Stop cross-subsidizes. Remaining products will no longer have to subsidize the "dogs" and so they can generate more profit or offer a more competitive selling price. 3. Business Process Re-engineering (BPR): The radical redesign of business processes, combining steps to cut waste and eliminating repetitive, paper-intensive tasks to improve cost, quality, and service and to maximize the benefits of information technology • Involves radical rethinking • Can change the way an organization conducts its business • IT allowed Baxter to be a manager of its customer’s supplies • Strikes fear, its expensive, its very risky and its extremely difficult to carry out and manage • Develop the business vision and process objective • Identify the processes to be redesigned (core and highest payback) • Understand and measure the performance of existing processes • Identify the opportunities for applying information technology • Build a prototype of the new process 4.Paradigm shifts Paradigm: The word "paradigm" was originally one of those obscure academic terms that has undergone many changes of meaning over the centuries. The classical Greeks used it to refer to an original archetype or ideal. Later it came to refer to a grammatical term. In the early 1960s Thomas Kuhn (1922-1996) wrote a ground breaking book, The Structure of Scientific Revolutions, in which he showed that science does not progress in an orderly fashion from lesser to greater truth, but rather remains fixated on a particular dogma or explanation - a paradigm - which is only overthrown with great difficulty and a new paradigm established. Thus the Copernican system (the sun at the center of the universe) overthrew the Ptolemaic (the earth at the center) one, and Newtonian physics was replaced by Relativity and Quantum Physics. Science thus consists of periods of conservatism ("Normal" Science) punctuated by periods of "Revolutionary" Science. Paradigm Shift : When anomalies or inconsistencies arise within a given paradigm and present problems that we are unable to solve within a given paradigm, our view of reality must change, as must the way we perceive, think, and value the world. We must take on new assumptions and expectations that will transform our theories, traditions, rules, and standards of practice. We must create a new paradigm in which we are able to solve the insolvable problems of the old paradigm. Definition: Radical re-conceptualization of the nature of the business and the nature of the organization • Change in view of business and its organization • Affects design of entire organization • Transforms how business conducts business and possibly nature of organization Paradigm shift (or revolutionary science) is the term first used by Thomas Kuhn in his influential book The Structure of Scientific Revolutions (1962) to describe a change in basic assumptions within the ruling theory of science. It is in contrast to his idea of normal science.The term paradigm shift, as a change in a fundamental model of events, has since become widely applied to many other realms of human experience as well, even though Kuhn himself restricted the use of the term to the hard sciences. According to Kuhn, "A paradigm is what members of a scientific community, and they alone, share." (The Essential Tension, 1977). Unlike a normal scientist, Kuhn held, "a student in the humanities has constantly before him a number of competing and incommensurable solutions to these problems, solutions that he must ultimately examine for himself." (The Structure of Scientific Revolutions). Once a paradigm shift is complete, a scientist cannot, for example, posit the possibility that miasma causes disease or that ether carries light. In contrast, a critic in the Humanities can choose to adopt a 19th-century theory of poetics, for instance.Since the 1960s, the term has been found useful to thinkers in numerous non-scientific contexts. Compare as a structured form of Zeitgeist. Conclusion In a correlation to being a radical change in an organization, automation is the type of change that uses technology to the tasks in an organization more efficiently and effectively. Automation have the lowest risk but also the lowest return of investment or reward for an organization. It just means that among the four types of structural changes that can occur in an organization, automation is the least radical change because of the low risk as well as the low reward that an organization can get. During automation, new bottlenecks in production are frequently revealed and make the existing arrangement of procedures and structures painfully cumbersome. This is where a deeper form of structural change called the Rationalization of Procedures can be adapted. Basically, the rationalization of procedures is streamlining of procedures and eliminating obvious bottlenecks that are revealed by automation for enhanced efficiency of operations. A more powerful type of organizational change is what we call as Business Process Reengineering. In plain definition, business process reengineering is the reorganization of way business is run. It is a management approach that examines aspects of a business and their interaction and attempts to improve the efficiency of the underlying processes. It is in business process reengineering in which business processes are analyzed, simplified and redesigned. Using information technology, organizations can rethink and streamline their business processes to improve speed, service and quality. Business reengineering reorganizes work flows, combining steps to cut waste and eliminating repetitive, paper intensive tasks. It is usually much more ambitious than rationalization of procedures, requiring a new vision of how the process is to be organized. Reengineering is the radical redesign of business processes that depends upon information technology intensive radical redesign of workflows and work processes. Compared to automation and rationalization of procedures, business process reengineering change conquers higher risk however it also covers the possibility of higher rewards for the organization. Rationalizing procedures and redesigning business processes are limited to specific parts of a business. New information systems can ultimately affect the design of the entire organization by transforming how the organization carries out its business or even the nature of the business. A more radical form of business change is called Paradigm Shift. Paradigm shift involves rethinking the nature of the business and the nature of the organization. In many instances firms seeking paradigm shift and pursuing reengineering strategies achieve stunning, order or magnitude increases in their returns on investment.