HBR-cracking_the_code_of_change_2000[1] - Until now, change...

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Cracking the Code of Until now, change in business has been an either-or proposition: either quickly create economic value for shareholders or patiently develop an open, trusting corporate culture long term. But new research indicates that combining these "hard"and "soft"approaches can radically transform the way businesses change. T \ HE NEW ECONOMY has ushered in great business opportunities -and great turmoil. Not since the Industrial Revolution have the stakes of dealing with change heen so high. Most traditional organizations have accepted, in theory at least, that they must either change or die. And even Internet companies such as eBay, Amazon.com, and America Online recognize that they need to manage the changes associated with rapid entrepreneurial growth. Despite some individual successes, however, change remains difficult to pull off, and few companies manage the process as well as they would like. Most of their initiatives-installing new technology, downsiz- ing, restructuring, or trying to change corporate culture-have had low success rates. The hrutal fact is that about 70% of all change initiatives fail. In our experience, the reason for most of those failures is that in their rush to change their organizations, managers end up immersing themselves in an alphabet soup of initia- tives. They lose focus and become mesmerized by all the advice available in print and on-line about why companies should change, what they should try to accomplish, and how they should do it. This proliferation of recommendations often leads to muddle when change is attempted. The result is that most change efforts exert a heavy toll, both human and eco- nomic. To improve the odds of success, and to reduce the hu- man carnage, it is imperative that executives understand the nature and process of corporate change much hetter. But even that is not enough. Leaders need to crack the code of change. by Michael Beer and Nit±i Nohria HARVARD BUSINESS REVIEW May-func 2000 133
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Cracking the Code of Change For more than 40 years now, we've been studying the nature of corporate change. And although every busincss's change initiative is unique, our research suggests there are two archetypes, or theories, of change. These archetypes are based on very differ- ent and often unconscious assumptions by senior executives- and the consultants and academics who advise them- about why and how changes should be made. Theory E is change based on eco- nomic value. Theory O is change based on organi- zational capability. Both are valid models; each theory of change achieves some of management's goals, either explicitly or implicitly. But each the- ory also has its costs -often unexpected ones. Theory E change strategies are the ones that
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HBR-cracking_the_code_of_change_2000[1] - Until now, change...

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