Management of Permanent Change

Organizational management theory chases after practice. The theory remains rather static, and in practice managers constantly have to adapt their companies under permanent change. Joseph Schumpeter considered the “pioneers” as those companies that accelerate change and the “latecomers” as those that fight to keep pace. Schumpeter answered the question of who the pioneers are and what latecomers do for survival in permanent situations of change, calling it a process of “creative destruction”: companies develop new products in their research departments displacing old products from the market.

Digitization—the continuing convergence of the real and the virtual worlds will be the main driver of innovation and change in all sectors of our economy. The exponentially growing amount of data and the convergence of different affordable technologies that came along with the definite establishment of Information and Communication Technology are transforming all areas of the economy. In Germany, the Internet of Things, Data and Services plays a vital role in mastering the energy transformation, in developing a sustainable mobility and logistics sector, in providing enhanced health care and in securing a competitive position for the leading manufacturing industry. This article discusses the impact, challenges and opportunities of digitization and concludes with examples of recommended policy action. The two key instruments for enhanced value creation in the Age of Industrie 4.0 are platform-based cooperation and a dual innovation strategy.

Change initiatives have the tendency to fail in organizations because the employee’s central role in the process of change is disregarded. With the focus on the individual in corporate change, management has to create an environment which encourages change in organizations. In this work we recommend cooperation as being one important change enabler in a way that cooperation positively supports and increases employees’ participation in change initiatives. We thus show how the conditions can be designed to support employees’ cooperation during their change processes – even if the cooperation is against the employee’s benefit. Besides a human actor in business who cooperates in change initiatives in the case of colleague's cooperation (conditional cooperation), we refer to the importance of cooperation norms in order to establish cooperation supportive conditions. We conclude by emphasizing how these cooperation norms can create stability in the long-run through cooperation rules and opportunities for participation as important structural components for change.

Workforce diversity has become an essential issue in business. The modification of the personnel structure in companies requires effective diversity management as an integral part of the company. Recognizing and valuing heterogeneity with a view to improving organizational performance is the result of change processes aligning management, employees and co-determination as the representative of employee interests and as an active multiplier for diversity management. There are still specific solutions which have to be found for the operational coordination of equal opportunities and equal treatment on a legal basis. To ensure diversity balance, a relevant question that still remains to be answered is if and to what extent the fair and effective allocation of scarce resources as well as the securing of labor rights can be provided for a diverse workforce given the implementation of core workforces versus non-core workforces and the disturbance of allocative justice inside a company by the increasing number of multiple collective bargaining agreements. In practice emerging conflicting interests require suitable approaches which imply a shifted perspective of co-determination in order to strengthen its role in the company and the change process.

The network form of organizing is usually considered to provide organizations with the strategic flexibility needed to survive in increasingly turbulent environments. At the same time, empirical research demonstrates that the network form—not least strategic alliances, regional networks and clusters, and global production and supply networks—runs the risk of becoming inert over time, reducing not only the networks’ strategic flexibility but also making organizational change increasingly difficult. Upon closer inspection, some of the structural inertia or institutional persistencies of this form may turn out to result from organizational path dependencies which are particularly difficult to detect and to overcome. It is argued that the emerging theory of organizational path dependence that builds on previous economic and institutional approaches in this field may be particularly helpful in this respect.

The innovation imperative is clear—organizations (both public and private sector) which wish to survive and flourish in a turbulent environment need to change. But making changes in products, services, processes or business models requires careful management and continuous learning. The responsiveness to and the implementation of change has become a core capability which organizations need to develop. The good news is that we have a variety of proven and tested approaches to the challenge of ‘change management’ which can help organizations in this activity.

But we are also entering an era where, as a result of significant technological and social shifts, the nature of the change process itself is changing. In particular there has been a massive increase in the potential for participation in the process in active fashion, shaping both the rate and direction of innovation. Interactive web-based technologies enable rapid mobilization and articulation of different viewpoints and fast construction of coalitions for action. At the same time the shift towards social networking is more than a passing fad—in Europe more adults in the population are now active participants on such platforms than not. Across such communities the potential for ‘democratization’ of change processes—whether in company decision-making around product or service development, or amongst citizens shaping and co-creating the services which they consume—is growing.

This chapter explores the implications of this shift for our understanding and management of change and argues that, in the same way as the early (and somewhat static) models for using advanced information technologies gave way to a far more interactive perspective (Web 2.0), we may as well need new models that understand and work with ‘change management 2.0’; those which reflect the rapid shift and openness in the innovation landscape.

In mass customization, customer co-design is the process in which customers and business providers collaboratively map the personal requirements of customers into design specifications for individualized products. Whether this process is realized in-store or entirely via the internet, efficient systems for customer co-design are the linchpin to leveraging mass customization. The increasing proliferation of digital media at this customer interface calls for a better understanding of media impact on the co-design process. Hence, the goal of this study is to explore the impact of digital media on customers’ perceived value in processes of co-design. We employ social presence theory for an in-depth analysis of six mass customization providers’ co-design processes. Data was collected through web-based documentary research, participant observation, semi-structured expert interviews and two focus groups with customers. Three key challenges are identified and explored: (1) Encouraging discovery addresses the issue that digital media tend to limit discovery yield. (2) Fostering creativity addresses the issue that digital media are better in supporting creative achievement. (3) Facilitating reinforcement addresses the issue that digital media tend to under-serve the need for direct human feedback and enjoyment. Mass customizers need to thoughtfully manage the level of social presence in the co-design process, i.e., by providing spaces of low social presence to foster creativity in-store, and by providing high social presence offers to foster positive reinforcement online.

The changing economic environment did affect the nature of banking in a profound way. Both easy monetary policy causing low interest rates as well as increasing globalization exerting competitive pressure on lending margin significantly reduced net interest margins in traditional lending. In particular, after the high interest rate period of the late 1980s long-term lending and house-bank relations did suffer severely. As a reaction the banking sector at large increasingly focused on short-term trading and investment banking. This process was accompanied by regulatory incentives and internal governance structures. In particular, the increasing focus on short term compensation based on return on equity, together with the Basle process of capital regulation opened ways of reducing loss absorbing capital and thus undermining banks’ stability as well as the resiliency of the banking sector at large. Both, the reactions of business models to a changing competitive environment as well as reactions to monetary as well as regulatory policy significantly contributed to systemic risk in Europe and the US.

Due to its binding character law has a high impact on change. This article will concentrate on the innovation of products and take an example from the health care sector, the Computer Tomography-Scanner. In this field law has two main roles: It has to ensure the highest level of patient safety while also promoting the innovation and the competitiveness of this sector. To fulfill these contrary tasks and to keep up with the ongoing developments, law for its part chooses the path of dynamization.The article will line out that the legislator and the companies both should follow some rules to achieve an optimal functioning of the interaction between legislation and business.

Change management offers different approaches that force organizations to tackle many priorities simultaneously. In doing so leader still fail to rigorously balance hard and soft factors of change. The purpose of this paper is to develop a holistic model that integrates these factors through theory-based methods in order to facilitate effective change management. The approach consists of theory-building and heuristics by drawing upon change and management consulting literature and examining implications for linking hard and soft factors in change management. We found that heuristics and theory-based change concepts can act as the precondition and vehicle for effective change strategies fostering learning, reflection, and self-organizing problem solving activities. This paper helps leaders to be better prepared for shaping their organization’s change strategy. Three examples that link hard and soft factors of change provide insights into the means by which organizations applying heuristics can outperform the change efforts of their counterparts.

The paper presents a case study of organizational transformation adopting Galpin’s model of Change Management Process. Oil and Natural Gas Corporation (ONGC), a public sector enterprise, is a ‘maharatna’ (the greatest corporate jewels of India), an Indian multi-national, which contributes to 72 % of the nation’s crude oil and 48 % of natural gas production. It has been responsible for building up 7 billion tons of in-place hydrocarbon reserves of the country. All its installations were certified for Quality, Health, Safety and Environment Management (QHSE). The paper traces ONGC’s evolution, growth and transformation with focus on green management and triple bottom line. It had received several awards, inter alia, Golden Peacock Award several times including one in 2013 for its heath, climate, safety and impeccable record in the climate change mitigation. Thus, a traditional government owned organization, ONGC, has emerged as a leading global player in the energy sector. It had successfully faced competition and had been recognized as one of the most respected companies in India with the 3 Ps—people, profit and planet without losing focus on green management.

Brand management of companies has to maintain flexibility to be successful in an environment, which is characterized by changing technologies, changing consumer needs, organizational changes, and a changing competitive environment. The state-of-the-art brand management approach, which explicitly views brand management as continuous task considering a feedback loop in the brand management process, is identity-based brand management. In context of flexibility and change in brand management there are two challenges companies have to overcome to adapt successfully. The first challenge is related to the component and the level of change in brand identity. The first question to answer in this context is which component of the brand identity can be changed without damaging it. While the core of the brand identity, i.e. essential identity components, must not be changed, the periphery of the brand identity, i.e. nonessential identity components, can be changed. The second question to answer in this context is how much a brand identity can be changed without damaging it. Overall, the level of brand identity change must not be too radical because customers cannot connect the new brand identity with their current brand image if the change is too radical. The case study of FRoSTA illustrates this first challenge of dynamic brand management: Radical changes of the brand identity especially regarding essential identity components can lead to economic failures. The second challenge is related to the internal implementation of the brand, its identity, and change of the identity. The question to answer is how the brand identity and subsequent changes of the brand identity can be communicated to employees as internal stakeholders responsible for living the brand and for communicating the change to external stakeholders. In order to implement the brand within the organization companies have to engage in internal brand management (IBM), which is a concept that implements the brand cognitively (brand understanding), affectively (brand commitment), and behaviorally (brand citizenship behavior) at employee level. Managerial tools to implement the brand within the organization are internal and external brand communication, brand-oriented leadership, and brand-oriented human resource management. The case studies show that companies engaging in these activities are able to create strong brands and competitive advantages.