Understanding Organization Change

Introduction
Organizations have to change in order to grow. Typically, organizations change as a result of their strategies to re-position themselves and adapt or react to changes in external factors that create market opportunities and/or threats. All businesses have internal and external environments in which they exist and operate; organization change invariably involve change in these environments' factors. Change is a certainty so business managers must actively engage in a process that identifies change in the environments and modifies organizational behavior to best take advantage of this change. 

Organizational change invariably involves change in people's behavior and relationships in the internal/external environments of the organization. Change in the internal environment factors involve those factors that are influenced by how the company is run, or strategic decisions that introduce conditions inside an organization that forces a change. Managers however, do have some control over how the business reacts to changes in the external environment through management of the internal environment factors which is to some extent are controllable and changeable through the strategic management process. Change in the external environment involve external environment factors that are not controllable by the organization; these include business competitors, changes to law, general economic conditions, etc. 

​​Internal Environment and Factors
The internal environment is defined by the set of internal factors resulting from either the way the business is run, or decisions made, or both. The factors resulting from how the business is run include: business reputation and image, credit worthiness, etc. The factors resulting from business decisions include:

• Direction - []
• management structure - ​The structure or form of an organization flows from (aligned with) its intended function and purpose which are realized through the organization's operations guided by the organization's strategy. 
• staffing - [TBD]
• physical decor of facilities/offices, etc.

The factors resulting from the way the business is run - how the organization moves forward both as a self contained organizational entity and its responses to factors in its external and enabling environments - include:

• Learning - This involves feedback mechanism and feedback loop. The feedback loop is a process in which a system receives internal/environmental responses to its behavior and in turn, reacts to those received responses by accommodating and assimilating the energy/information received, by altering the system's structure, and then engaging in altered exchanges of energy/information. Feedback measures output against a standard in some form of cybernetic procedure that includes communication and control. Feedback can be positive or negative; routine or informational. Negative feedback generally provides the controller with information for action. Positive feedback reinforces the performance of the system, and is routine in nature.
• People - Organizational change invariably involves change in people's behavior and relationships. “Whether proposing a change in the executive compensation structure, establishing priorities for a diverse group of business units, consolidating redundant operations, or preparing for plant closings, etc., a senior executive’s conscious thoughts are foremost among the processes for accomplishing a change or implementing a decision: ‘who are the key players, and how can I get their support? Whom should I talk to first? Should I start by getting the production group’s input? What kind of signal will that send to the marketing people? I can’t afford to lose their commitment in the upcoming discussions on our market strategy.’” Change to individuals involve learning and their interactions and behavior.
• Knowledge - The knowledge, experience and capability of an organization workforce is a determining factor in the organization's success. For this reason, organizations must pay particular attention to the recruitment of staff and also to engage in the training of staff and volunteers to build the organization's capability. In pursuing both recruitment and training strategies, the organization is often limited by its financial strengths. Training of staff is an essential is an essential aspect of good business management practices; and even in difficult financial; circumstances is an achievable strategy.
• ​Organizational Culture -Culture and values describe the expected cultural norms for how people collaborate within and across functions or teams. Culture includes the organizational values, visions, norms, working language, systems, symbols, beliefs and habits. Culture manifests itself in the particular way things are done in an organization. It affects who gets hired, how they get trained (formally or informally), what behaviors get rewarded, who gets promoted, and virtually all organizational procedures and administrative protocols. Culture reflects and affects the ownership that individuals feel for execution related goals. The culture within the organization is a very important factor in attaining business success. The attitudes of staff and volunteers, and their ability to "go the extra mile" makes a very significant difference. Negative attitudes can have severe impact on the organization's ability to implement strategies for development despite however thorough the planning processes are. Positive attitudes of staff and volunteers will not only make the management tasks easier, but also will be noticed and appreciated by customers as well as members of the organization. Organizational culture is the collective behavior of humans who are part of an organization, and the meanings they attach to their actions. Organizational culture can be supportive of the following: Learning and Development (Growth), Participatory Decision-Making, Power Sharing, Support and Collaboration, 
• ​Leadership - [TBD]

Internal factors can be controlled directly or indirectly; but changing these factors usually involves indirect costs such as lost productivity for example, while new employees are being trained, some direct costs such as a penalty for terminating a lease before it expires. The performance of an organization is influenced by factors or elements in the internal and/or external environments that shape the behavior as well as determine the strengths and weaknesses of the organization that are relevant to its survival and growth.

External Environment Factors 
The external environment is defined by external factors such as characterized by PESTEL factors e.g., Economic conditions - tight lending conditions, Legal - government regulations, etc., and competition. These factors are uncontrollable, and can be modeled as the institutional relations between the business and the external organization/entity of interest to the business, but are not directly controlled by it.

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Managing Organizational Change
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Competitive Advantage
A competitive advantage is what makes an organization's goods or services superior to all of a customers' other choices. ​An organization is unlikely to achieve sustainable competitive advantage leading to sustainable growth and profitability if it fails to effectively convert ideas into good strategies, and translate those strategies into workable and effective actions which are executable. Competitive advantages are attributed to a variety of factors including: cost structure, branding, quality of product offering, the distribution network, intellectual property, and customer service. the more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.

To be successful, you need to be able to articulate the benefit you provide to your target market that's better than the competition. This is your competitive advantage. You must reinforce that message in every communication to your customers and employees through advertising, public relations, sales aids; and even your store front and messaging to employees.

​Types of Competitive Advantage
Competitive advantage can be of two (2) types:

1. Comparative advantages - A firm's capability to produce a good or service more efficiently than its competitors, which leads to greater profit margins, creates competitive advantage. Economies of scale, efficient internal systems, and geographic location can also create a comparative advantage. Comparative advantage does not imply a better product (good/service), though, it shows the firm can offer a product of the value at a lower cost.
2. Differential advantages - A differential advantage is when a firm's products differ from its competitors' offering and are seen as superior. Advanced technology, patent-protected products or processes, superior personnel, and strong brand identity are all drivers of differential advantage. These factors support wide margins and large market shares.

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These elements are comprised of factors that allow the productive organization to generate more sales or superior margins compared to its market rivals leading to sustained profitable organization growth. 
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An organization can be defined as a 4-tuple, composed by a set of goals and objectives, a set of (direct internal) sub-organizations, a set of institutional relationships, and a set of external organizations.

1. The internal sub-organizations are the organizational units linked by finite chain of direct internal sub-organization relations, and the people that are members of these sub-organizations.
2. The external organizations are the organizations that have institutional relations with the organization of interest, but are not directly controlled by it.
3. The goals of the organization are derived from its stated purpose for existence; this is refined and assigned to its sub-organizations so these sub-organization units become jointly responsible for attaining the goals of the whole organization (organization-as-system).
4. Institutional Relationships - These define the norms, policies and rules of an organization.

Organization System Structures
The organization structure defines the arrangement of accountability, authority and responsibility of a group of people in a hierarchy, and network of functional and business units, and the governance relations between these units. The organization structure is designed to enhance communication and information flow among organization system elements (people or groups of people) that comprise the organization social system. Within the structure, rules, policies, and procedures are uniformly and impersonally applied to exert control over members’ behaviors.

Organizational structures are the manifestation of strategic orientations and regulate information flows, decision making, and patterns of behavior, that is, the “internal allocation of tasks, decisions, rules, and procedures for appraisal and reward, selected for the best pursuit of a strategy. Structures develop due to the need to organize behavior in a meaningful way and provide orientation for organizational members to set actions that comply with organizational strategy, organizational culture, and, as a result, accepted patterns of behavior. The structure is comprised of organization units that organize activity within these units (business units, bureaus, teams, or departments) in which people perform specialized functions such as manufacturing, sales, IT, human resource management, accounting/finance, etc. People who perform similar functions (tasks) are clustered together.

Organizations as Systems
An organization as a system is a set of interacting or interdependent functional entities and individuals/groups of individuals forming an integrated whole. It can be one organization, a set of organizations, population groups or individuals. Organization as systems are “open”, social systems.

• Open systems are systems that continuously interact with their environments through acquisition of input, production of output, and exchange of information; they survive and grow by continuously adapting to their environment. 
• Organizations as social systems are configurations of "actors" (human systems or people) connected to each other to compose a system with a common purpose and a set of objectives. The central conceptual modeling construct in modeling social systems in real world situations is the "actor". It is an abstraction which is used to refer to people (the active elements/entity) that is capable of independent action. In creating social network models of real world situations, we adopt as a premise that the social world is unknowable and uncontrollable with respect to the behavior of "actors" (human agents, individual or groups of individuals). Social systems are essentially goal-seeking, information feedback systems. Organizations are social systems depend on norms and rules - policies. Policies are recognized descriptions which act as enforcement mechanisms to restrain individual behavior and regulate all sorts of organizational interactions such as delegation, dependency relationships with internal/external organizational entities as well as defining concepts within the organizational setting.

An organization is a system in that it is greater than the sum of its parts. How it performs cannot be calculated by adding up all the work arrangements - like departments - with the resources and processes that connect it all together.

Actors
Actors represent the perspectives and objectives of the individuals themselves responsible and accountable for implementing the organization design and strategy through their behavior. Actors are taken to be inherently autonomous, i.e., their behaviors are not fully controllable, or are they perfectly knowable. Although the behavior of actors is not perfectly knowable or fully controllable, they are nonetheless not completely random. The behavior of actors can be explained and rationalized through the motivations and intentions attributed to actors.

​Organization System Behavior
The behavior of an organization is usually guided by its strategic and tactical goals. The performance of the organization can be expressed through goal-based performance indicators and measures. Behavior and performance unfolds as observable manifestations (phenomena) of predefined strategies as regulated by organizational structures. This domain puts into effect patterns of behavior, derived from strategies and structures. It makes an organization’s existence as a market player visible.

Organizational System Dynamics
Organizations are dynamic social systems which are a collection of people with a common purpose. The dynamics of social systems are expressed in terms of the intentional properties of the actors that comprise the system, and the interaction relationships between these actors rather than the actual behavior of the actors. An intentional description of actors' behavior offers a way of characterizing actors that respects the autonomy premise underlying the actor concept.

Organization System Interactions
Interactions between actors can occur to satisfy goals that are either common to actors or global goals which pertain to the society (organization) as a whole and lay outside the scope of any one individual actor. Considering sub-organizations as a kind of structured logical actor, interactions among the sub-organization units can be viewed as a way of realizing society goals.