Including the questioning of the underlying assumptions that ground them, need to be updated throughout the course of a change initiative. By tracking changing conditions, adjustments can be made along the way. When Target entered Canada, evidence suggests it assumed that replicating what it did in the United States would lead to success. That assessment was faulty. Twenty-three months after entering Canada, they exited, taking a $5.4 billion loss. One of the main causes of this was tied to Target’s failure to adapt its supply chain to the Canadian context— something that was arguably preventable.4
Further, the analyses attached to a change initiative need to drill down into the different parts of an organization in order to assess what specifically needs to change in each area to support the overall change program. One size does not fit all.
In summary, to be a successful change leader we need to understand both how to change (i.e., a focus on process) and what to change (i.e., an analysis of organizational problems). We need to know that organizations are dynamic, they can be viewed at different levels of analysis (from individual to group to organizational), they change over time, and they are complex. Each model described in this chapter builds our conceptual toolkit to better lead change.
Open Systems Approach to Organizational Analysis Organizations interact with their environments in complex and dynamic ways. This open systems perspective is based on the following assumptions:5 Open systems exchange information, materials, and energy with their environments. As such, a system interacts with, and is not isolated from, its environment.
A system is the product of its interrelated and interdependent parts and represents a complex set of interrelationships rather than a chain of linear cause–effect relationships. A system seeks equilibrium: when it is in equilibrium, it will only change if some energy is applied. Individuals within a system may have views of the system’s function and purpose that differ greatly from the views held by others. Things that occur within and/or to open systems (e.g., issues, events, forces) should not be viewed in isolation, but rather should be seen as interconnected, interdependent components of a complex system.
The adoption of an open systems perspective allows managers to identify areas of misalignment and risk between the external environment and the organization’s strategy and structure. Open systems analysis helps practitioners to develop a rich appreciation for the current condition of an organization and plausible alternatives and actions that could improve it. For example, when people, products, or services within systems have operated without considering their environment for extended periods of time, they risk becoming seriously incongruent with the external environment.6 Or, if an environment changes rapidly, the results can prove disruptive and, in some cases, disastrous for an organization. Consider how the innovations and actions at Apple and Google disrupted the smartphone market in ways that left Blackberry and Nokia scrambling to revive and reinvent themselves as relevant technology providers. Innovation by one company led to significant disruption and change for other organizations. Disruptions can shake organizations to their foundations, and they also have the potential to sow the seeds for renewal.
In summary, organizations should not be analyzed as if they exist in a bubble, isolated from their environments. But rather, organizations should be analyzed as to how effectively and efficiently they garner resources from the external environment and transform these resources into outputs that the external environment welcomes. Nadler and Tushman’s Congruence Model does just that.