Organizational change management is an integral aspect for all organizations. In fact, change is part of our life, which can be positive or negative, intentional or non-intentional or any other characteristic. There are many stories which prove that. One of them is the escape story of one of the most famous business celebrities “Mr. Carlos Ghosn”, the former Chief Executive Officer of Nissan, Renault & Mitsubishi (The Alliance) end of December 2019. His status changed from a visionary man and famous celebrity to an international fugitive. This post discusses change management, the topic of the first three chapters in the 3rd part (Organizational Change) of the 3rd book (Organizational Theory, Design & Change) in your channel “Management with Merits – Manage to Prosper”. Some points in these chapters have been discussed before, such as “Decision Making”, which was taken in the channel’s 1st book (Management 2015). Other topics will be discussed in details when we take two of the channel’s future books, especially (Change Management 2017) and (Management Information Systems 2014). As a reminder, please note that we have introduced this book (Organizational Theory, Design & Change 2013) before and finished parts 1 (Organizations & Environment) and 2 (The Design – Structure & Culture) of it before. To download the associated presentation with this video, kindly go the video at YouTube and click on the appropriate link in the description section below the video.
Organizational Change Management Hero – Carlos Ghosn
Carlos Ghosn is one of the greatest heroes in organizational change management. Perhaps one of his innovation secrets is his triple status nationality because he holds three nationalities simultaneously from three different continents, which are Brazil (North American), Lebanon (Asia) and France (Europe). He has earned multiple prestigious awards & nicknames, such as Man of the Year 2003, Le Cost Killer & Mr. Fix It. His biggest organizational change management success was when he took charge of the alliance between “Nissan” and “Renault” the global automobiles companies of Japan and France respectively in 1999. Nissan was in a terrible condition, with debts over 19 billion dollars. However, with Ghosn’s marvelous change action, he transformed the company in 6 years (1999 to 2005) and made Nissan the 2nd automaker in Japan in 2005. After that, Mitsubishi joined the alliance in 2016, and Ghosn was also in charge of it.
What is Organizational Change Management?
Change is simply a transition from a current status to a preferred future status. Therefore, each decision is considered change. In organizational context, organizational change is a matter of choice between various alternatives for organizations, which is moderated by various contingencies, such as the conditions of the organization, business industry, national and international characteristics, internal & external environments, future trends etc. Thus, change is not a goal by itself. It is a means towards ends, which is achieving organizational goals.
Types of Organizational Change
There are various types and taxonomies for change. However, it’s difficult in reality to categorize change to only purely one type. Thus, change in practice is a mixture of various types, despite having more proportion of specific types. This first taxonomy is the division to “Planned” and “Emergent” Change. In Planned Change, prescriptions for change are made then execution & implementation follows. On the other hand, Emergent Change doesn’t have prior prescriptions. It has only broad & general values and guidelines for change, then the fluctuations of the environment determines the change to be made and its methods. Another taxonomy is “Revolutionary” VS “Evolutionary” Change. Revolutionary Change is transformational and has broad and wide range, such as culture change. On the contrary, evolutionary change is mostly tactical and incremental. Well, the change story of Carlos Ghosn is primarily transformational & revolutionary because his aim was to transform the way at which Nissan worked. However, this happened by making various “Evolutionary” changes, such as closing some factories and forming autonomous work teams etc.
Planned Change : Kurt Lewin 1947 Model
The first and the most important planned change model is the one made by Kurt Lewin in 1947, which was based on the Change Forces’ Fields Theory & Action Research, which were also made by Lewin. For any change, there are forces that call for change and others that resist change. Therefore, change occurs as long as the forces that favor change are stronger than the opposing ones. For example, when Carlos Ghosn made his change with Nissan in 1999, there were strong forces for change, especially the adverse financial condition. Other factors included the business industry forces which drew Nissan away from competition due to its current malpractices in management & operations. On the other hand, there were other factors that restricted change, especially the conservative Japanese culture which favored bureaucracy and hinders innovation. Therefore, they didn’t even accept the idea of having a foreign manager to be in charge of a Japanese company.
The Three-Steps’ Model of Planned Change
Based on the above, Lewin presented his famous “Three-Steps’ Model” of planned organizational change management in 1947. By applying the steps of Ghosn story, he first did “unfreezing” by raising the awareness and urgent need to change. He insisted on transforming Nissan as the only way to put it back on the correct competitive track. Also, he was able to find out the root causes of the problem, so he didn’t restrict his mission to reduce cost only, but rather to transform the way at which Nissan operated. These efforts paved his way to go the 2nd step of the model. He started making changes in the design of Nissan, which included both structure and culture. In the structure part, he changed the authority, role & task characteristics via empowerment and encouragement to raise concerns, suggest & help implement solutions. He also combated bureaucracy and hierarchy by forming autonomous production & work teams who were empowered to take decisions that improved the company. Also, he imposed strict production & quality targets for managers, asking them to adopt innovation & creativity to meet them. Finally, these efforts that took him six years were strongly anchored in Nissan’s culture, and therefore refreezing was attained successfully.
First of all, refreezing in the Lewin’s Model should be permanent because change is always a method towards effectiveness and not a target by itself. Therefore, should the conditions state variations from the new refreezed status, change has to also be made. This is clear in the Action Research philosophy, which states that continuous learning, participation and collaboration are important for change and for organizational effectiveness. Second, keeping positive change refreezed is perhaps the most difficult step in Lewin’s Model. For example, despite the famous success of Ghosn’s change with Nissan, problems began to arise when he started being accused for financial charges in 2018. When these legal problems continued, the alliance of Nissan, Renault & Mitsubishi has suffered as well. This was evident in the stock price situation of all these three companies, which suffered big losses in 2019. Therefore, we can say that the outstanding success of Ghosn’s change story can be put under investigation & suspicion because it was not sustainable enough. Ghosn is now an international fugitive in Lebanon, facing the risks of 10 years of imprisonment should charges get confirmed. Therefore, even our life conditions can never sustain forever and are subject to change at any time and any rate.
This was our session for today guys. Thank you so much for watching us. We discussed the 1st three chapters in part 3 “Organizational Change” in our 3rd book in the channel “Organizational Theory, Design & Change 2013”. Next session, we will finish the rest of this part. Our production is every Thursday. Please subscribe to the channel at YouTube and activate the notifications bell there. Please stay with us, follow us, participate with us, and widely share the channel and all its electronic contact platforms.