Organizational Change

What is organizational change?

Organizational change is the process of an organization changing how it works or operates.  In the past, organizational change was planned and episodic.  With the onset of the Fourth Industrial Revolution, the world is changing faster than ever, and this is of a scale, speed, and complexity that is unprecedented.  Organizational change is now a constant reality which requires organizations to become increasingly agile to enable them to pivot and adapt on a regular basis.  The most successful organizations are those who respond – at pace – to emerging challenges and opportunities.

Organizational change comes in many forms. Types of organizational change range from relatively small-scale adaptive changes, (e.g. implementing new processes, systems, IT software), to more transformational change of an organizations mission, strategy, and culture.  This large-scale transformation change may be prompted by mergers and acquisitions, the arrival of a new CEO, entering new markets, or major technical innovations.  As an example, many local, in-town retailers are having to change their business model in response to competitors that are disrupting the market and creating growing online competition. 

The objectives of organizational change are to remain competitive and to achieve strategic objectives such as maximizing growth, innovation, or customer service.

Why is it important to manage organizational change?

Large-scale organizational change is challenging and requires investment of time and energy to succeed and realize desired improvements in performance.  Much of the research into organizational change indicates low success rates. The stakes are high, and left to chance, the risks of poorly managed change can lead to a resistance to new ways of working, poor morale, diminishing performance, and a loss of key talent.  Failure to successfully achieve change also leads to cynicism, making it harder to garner engagement in the future.

Managing change is therefore essential to ensure successful outcomes.  This requires the active involvement of leaders and managers throughout the organization; to set direction, engage, and motivate people and to role model and embed new ways of working.

Read our blog for 5 tips on driving organisational change for leaders.

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What is culture change?

Organizational culture is the shared beliefs and assumptions within an organization that characterize ‘how we do things around here.’  Culture is akin to the ‘personality’ of an organization, the enduring characteristics, and preferred ways of doing things.  Climate is the feel of the organization, how it feels to work around here.  This is akin to the emotional intelligence of an organization, how it manages itself and engages its workforce.  Leadership climate is a subset of this, where the climate is set by the behaviors of leaders within the organization.  Large scale organizational change often requires a change to an organization’s culture.  Peter Drucker once famously quoted that, “Culture eats strategy for breakfast,” meaning that strategy can only succeed if the culture supports it.  For example, an organisation looking to introduce diversity, equity, and inclusion policies to increase representation of minority groups is unlikely to be successful unless they have a culture that values difference.  An organization whose success relies on responding quickly to changing customer needs will struggle to achieve this if they have a bureaucratic culture where front-line employees are required to follow rigid rules.

Culture change can be the most challenging aspect of organizational change as it requires changes to how people, think, feel, and behave, and this requires changing shared underlying beliefs.

How do you achieve culture change?

The first step in achieving culture change is to align strategy with culture by articulating the desired culture that will support the strategy.  For example, if a business wants to develop customer loyalty and trust, they will need to move from a culture of hierarchical control to one of empowerment and trust in the front line. This will ensure they have greater organizational agility and can quickly respond to customer needs and demands.  Once this is clear, the next stage is to articulate the systems, processes, behaviors, and beliefs that underpin the desired culture.  This leads to the process of managing change and instilling new beliefs and habits which reinforce the desired culture.  Changing ingrained habits and beliefs takes time, and focusing on leadership climate is a powerful catalyst in this process.

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How to successfully manage organizational change?

The three keys to successful change management are:

  1. A clear change story
  2. Engagement from leaders 
  3. Change enablement


To engage in change, people need to understand why it is happening and to care enough about it to make the necessary changes in how they work.  There needs to be a compelling vision or story of change – so that people understand and buy into why it is needed, and why now.  They also need to understand what it means for them – what they might need to do differently – and to be motivated and see the opportunities this presents.  People are also more likely to engage with and adopt changes when they are involved in shaping it and feel empowered during the process.  Finally, celebrating progress and wins along the way will bring much needed energy during large-scale transformational change. 


For successful change, leaders need to understand their primary role is to influence employee mindsets and behaviors and that this requires providing support to the employees.  Leaders must role model the desired changes to demonstrate their buy-in to new ways of working. 


Organizations in transformation need to ensure that people can make the required changes – that they have the right resources, systems, and support to work in new ways.  Change enablement is an effective way to reinforce the change story and win engagement. 


Finally, change needs to be reinforced through formal and informal means – through performance metrics, processes, and ways of working, and also by how senior leaders behave and role model the desired changes (fundamentals described by McKinsey’s four building blocks of change).


Whilst essential, these components are not sufficient because successful change requires organizations to manage the emotions of change.  


Psychologically speaking, our brains seek predictability which means, whilst we may understand the rationale for change and accept it cognitively, emotional change is often experienced as ‘painful’ or a threat.  If left unattended, this can derail even the best-planned changed efforts.  All change requires some kind of loss and a challenge to our fundamental psychological needs of status, certainty, autonomy, relationships, and sense of fairness.  Leadership neuroscientist David Rock calls this the SCARF model. By recognizing the emotions associated with change, leaders and change agents can support people to better understand their responses, build coping strategies and resilience, and move more quickly towards accepting new ways of working. 

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