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MGT504 - Organization Theory and Design - Lecture Handout 28

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INNOVATE OR PERISH; THE STRATEGIC ROLE OF CHANGE

If there is one theme or lesson that emerges from previous lectures, it is that organizations must run fast to keep up with changes taking place all around them. Organizations must modify themselves not just from time to time, but all of the manufacturing firms need to reach out for new computer- integrated manufacturing technology and service firms for new information technology. Today’s organizations must poise themselves to innovate and change, not only to prosper but merely to survive in a world of increased competition. Organizations that invest most of their time and resources in maintaining the status quo cannot hop to proper in today’s world of constant change and uncertainty. Number of environmental forces drives this need for major organizational change. Powerful forces associated with advancing technology, international economic integration, the maturing of domestic markets, and the shift to capitalism in formerly communist regions have brought about a globalize economy that impacts every business, from the largest to the smallest, creating more threats as well as more opportunities, to recognize and manage the threats and take advantage of the opportunities, today’s companies are undergoing dramatic changes in all areas of their operation.

As we saw, many organizations are responding to global forces by adopting self-directed teams and horizontal structures that enhance communication and collaboration, streamlining supply and distribution channels, and overcoming barriers of time and place through e- commerce. Other becomes involved in joint ventures or consortia to exploit opportunities and extend operations or markets internationally. Some organizations adopt structural innovations such as the network to focus on their core competencies while outside specialists handle other activities. New software programs for information sharing, knowledge management, and enterprise resources planning facilitate the network and help today’s businesses keep pace with the rapid changes going on both within and outside the organization. In addition, today’s organizations face a need for dramatic strategic cultural change and for rapid and continuous innovations in technology, services, products, and processes.

Change, rather than stability, is the norm today, whereas change once occurred incrementally and infrequently, today, it is dramatic and constant. A key element of the success of companies such as 3M Corporation, described in the opening case, Starbucks Coffee, and PepsiCo has been their passion for creating change, former Pepsi CEO Wayne Calloway insisted that the worst rule of management is, “if it ain’t broke, don’t fix it,” Calloway preached that in today’s economy, “if it ain’t broke, you might as well break if yourself, because it soon will be,”

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