Organizational Change – Context Matters!

This post examines how non-simplistic approach to understanding organizational change can help improve change management efforts.

In a recent paper titled The Rationality Paradox of Nudge Professors Kai Wegrich and Martin Lodge  of the Hertie School of Governance and the London School of Economics respectively, discuss the limited awareness of the Nudge approach to policy making  of how bounded rationality (of implementers) affects its use (the Nudge approach is broadly defined as initiatives that aim to improve policy making through use of behavioral economics).

A part of the article that I really enjoyed was the detailed analysis of how implementation of the policy tools is shaped by Merton’s imperious immediacy of interests (in simple language basically it means that immediate interests over-ride longer term ones) to show how the adoption of new policy tools is shaped by bounded rationality.

As seen in the figure below, the authors identify two underlying mechanisms for the imperious immediacy of interests, namely group pressure and structure.

picture1

Let’s quickly go over the four quadrants resulting from the level of intensity of the underlying mechanisms:

  • Loos coupling: different units and departments within governments have different ways of thinking and doing things and as these are hard to align, new policy tools will be implemented for “show”
  • Marginalization: as constraints are low, policy tools rise and get marginalized as priorities change
  • Incrementalism: The way things are done are only tweaked because it is difficult and complex to change the way things are currently done
  • Decomplexificiation: complex tools are simplified and aligned with organizational norms  to reduce resistance and facilitate adoption

The above reasoning resonated with my experience with organizational change. The article was written with executive government in mind but I believe that some of the conclusions apply to organizational change more generally. Mainstream consulting and change management methodologies would lead you to believe that organizational change is about creating a “vision for change” and capturing “hearts and minds”. The analysis of context when implementing a new capability receives much less attention, most likely because of the effort required.

Looking back at my experience: I have established a Strategy Management Office (SMO) for a global logistics solutions provider. The aim was for the office to lead the implementation of new strategy and performance management processes. The project had substantial support from the leadership of the organization. Nonetheless the C-level sponsors of the project (some of which used the project for career aspirations) realized that this required a substantial change in how the organization worked and would generate a lot of resistance. Accordingly, they choose to loosely couple the SMO with the organization. In the end the establishment of the SMO was considered successful (an example of organizational bounded rationality).

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