Breaking the Code of Change

Organizational change may well be the most oft-repeated and widely embraced term in all of corporate America-but it is also the least understood. The proof is in the numbers: Nearly two-thirds of all change efforts fail, and they carry with them huge human and economic tolls. Lacking any overarching paradigm for change, executives of large, underperforming organizations have been left with little guidance in how to choose the strategies that will lead them to sustained success.

In breaking the code of change, editors Michael Beer and Nitin Nohria provide a crucial starting point on the journey toward unlocking our understanding of organizational change. The book is based on a dynamic debate attended by the leading lights in the field-including scholars, consultants, and CEOs who have led successful transformations-and presents a series of articles, written by these experts, that collectively address the question: How can change be managed effectively?
Beer and Nohria organize the book around two dominant, yet opposing, theories of change-one based on the creation of economic value (Theory E), and the other on building organizational capabilities for the long haul (Theory O). Structured in an unusual and engaging point-counterpoint style, the book enlists the reader directly in the debate, providing a comprehensive overview of the strengths and weaknesses of each theory along every dimension of the change process-from motivation to leadership to compensation issues.

The editors argue that the key to solving the paradox of change lies not in choosing between the two processes, but in integrating them. They identify the crucial considerations leaders must make in selecting strategies that satisfy shareholders and develop lasting organizational capabilities. With a groundbreaking conceptual framework applicable to established corporations and small organizations alike, breaking the code of change is a unique and authoritative contribution to academic research and management practice on the process of organizational change.

Michael Beer is the Cahners-Rabb Professor of Business Administration at Harvard Business School. Nitin Nohria is the Richard P. Chapman Professor of Business Administration at Harvard Business School.

(McGraw-Hill)

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Michael Beer is the Cahners-Rabb Professor of Business Administration at Harvard Business School.

(McGraw-Hill)

Preface and Acknowledgements

introduction resolving the tension between theory e and o of change
By Michael Beer and Nitin Nohria

section i: purpose of change: economic value or organizational capability

Chapter 1 Value Maximization and the Corporate Objective Function
By Michael Jensen

chapter 2 the puzzles and paradoxes of how living companies create wealth: why single-valued objective functions are not quite enough
By Peter M. Senge

Chapter 3 Purpose of Change
A Commentary on Jensen and Senge
By Joseph Bower

section ii: leadership of change: directed from the top or high involvement & participative

Chapter 4 Effective Change Begins At the Top
By Jay A. Conger

chapter 5 the leadership of change
By Warren Bennis

chapter 6 embracing paradox: top-down vs. participative management of organizational change
A Commentary on Conger and Bennis
By Dexter Dunphy

section iii: focus of change: formal structure and systems or culture

Chapter 7 The Role of Formal Structures and Processes
By Jay R. Galbraith

chapter 8 changing structure is not enough: the moral meaning of organizational design
By Larry Hirschhorn

chapter 9 initiating change: the anatomy of structure as a starting point
A Commentary on Galbraith and Hirshhorn
By Allan R. Cohen

section iv: planning of change: planned or emergent

Chapter 10 Rebuilding Behavioral Context: A Blueprint for Corporate Renewal
By Sumantra Ghoshal and Christopher A. Bartlett

chapter 11 emergent change as a universal in organizations
By Karl E. Weick

chapter 12 linking change processes to outcomes
A Commentary on Ghoshal & Bartlett and Weick
By Andrew Pettigrew

section v: motivation for change: financial incentives lead or lag and support

Chapter 13 Compensation Systems and Organizational Change: Ideas and Evidence from Theory and Practice
By Karen Wruck

chapter 14 compensation: a troublesome lead system in organizational change
By Gerald E. Ledford and Robert L. Heneman

chapter 15 pay system change: lag, lead, or both?
A Commentary on Wruck and Ledford
By Edward E. Lawler, III

section vi: consultants' role in change: large knowledge driven or small process driven

Chapter 16 Human Performance That Increases Business Performance: The Growth of Change Management and Its Role in Creating New Forms of Business Value
By Terry Neill

chapter 17 a...

(McGraw-Hill)