Designing Organizational Change in IT: A Theory Nexus Jan Pries-Heje The IT University of Copenhagen Copenhagen, Denmark Phone: (+45) 7218 5000 Email:
[email protected] Richard Baskerville Georgia State University Atlanta, GA Phone: 404-651-3880 Email:
[email protected]
Abstract This paper presents an artifact to support the development of organizational change strategies. Based on a study of organizational change approaches we derived 10 alternative design theories. Each theory relates the conditions under which a specific change approach - such as reengineering - is prescriptive for an organization. Using these theories, we designed a theory nexus called the Strategic Change Nexus. This nexus is an artifact that binds together the 10 design theories into a cohesive recommendation specific to an organization’s unique strategic vision and context. The nexus leads to an analysis that produces a list-of-fit that reveals the degree to which each of the change design theories fits the organization’s setting. The Strategic Change Nexus was developed and evaluated within a field study research project involving three participating companies. Using action research, the IT organization in two of these companies collaborated with the researchers in providing promising evaluations of the version of the nexus described in this paper.
Introduction Design involves human productions of invention and innovation that may be analytical or generative. Analytical design is a rule-based, determinate form of reasoning that develops a design as a result of prepositional understanding (for example, database design through normalization). Generative design is a creative production that is indeterminate and subjective. Kant, in Critique of Judgment suggests that such aesthetic productions are within the realm of reason, but that they involve a momentum of ideas into a figural schema that is more complete than nature (Groat & Wang, 2002). That is, designs erupt from an accelerating flow of thought that might be described as superrational. Particularly in information technology (IT) designs, design processes intertwine both analytical and generative design productions.
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Design science is a form of “science of the artificial” (Simon, 1996) that involves the scientific adaptation of means-ends rationality to an environment. Designers, with ends in mind (a goal), search for the means by which artifacts will achieve those ends. Design science connects human aims to artifacts that achieve those aims. Design science is usually couched in scientism, a hypothetical-deductive view of research, developing artifacts that acknowledged subjects of natural law (Simon, p. 3), and complete with systems of hypotheses (Walls, Widmeyer, & El Sawy, 1992). Design science, while concerned with creating technological artifacts that have impacts on people and organizations, often takes a simplistic view of its human and organizational context (Hevner, March, Park, & Ram, 2004). Its focus is design, specification, and evaluation of artifacts. As in the architectural field, we will use the term design research as a broader and perhaps more inclusive representation of the study of design that incorporates not only design science (cf. Vaishnavi & Kuechler, 2004), but episodic research into designs of artifacts involving participative design, action research, ethnography, etc. (Groat & Wang, 2002). In this way, design research encompasses sociotechnical design (e.g., Mumford, 1983; Mumford & Weir, 1979), user-centered design (e.g., Ehn, 1988, 1989), work practices design (e.g., Mathiassen, 2002) and systems design in its broader, systems science sense (e.g., Churchman). In this paper, we are concerned about the design of an artifact to support work practices that are tightly dependent on IT. While the artifact is itself IT-based, its most interesting theoretical contribution is its employment of ten alternative theories of organizational change. The artifact provides a means for helping decision makers in choosing which of the theories are most suitable for their particular change goals and their particular change setting. The artifact is a theory nexus, a connection point at which theories bind with realities into a change strategy. The view of artifacts as a theory nexus is a rich view of the relationship between artifact and theory that developed in Human Computer Interaction (HCI) research because of the multiplicity of psychological theories inhabiting HCI research. HCI artifacts could become overdetermined by reference theories from psychology and elsewhere. In other words, using reference theories alone, and ignoring HCI theories, will diminish the success of new HCI artifacts. A theory nexus extends the deductive view of the relationship between theory and artifact to a reciprocal relation between the articulation and re-articulation of theoretical claims and iterations of design (Carroll and Kellogg, 1989). Stated in design science terms, a theory nexus interprets or re-articulates kernel or reference theories into design theories. The design artifact developed below is an example of a theory nexus that we call a “strategic change nexus”. Driven by these principles from design research, we operate with theory at two distinct levels. At one level, we provide an analysis of ten kinds of change theories that can be used to organize and manage organizational change. These provide our set of potential design theories for organizational change. At a second level, we use a meta-level construct, a nexus, as a design theory for an artifact that helps managers to apply these organizational change theories by evaluating each organizational change theory within the context of the exact organizational setting.
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Since management became a discipline, the study of change has been an important aspect. Authors have written about organizational change from different perspectives including psychology, sociology and business. Academic and practitioner contributions to organizational change have been built on empirical work in a wide variety of organizations. Examples of this work include descriptive accounts of change, normative models that aim to guide the change process, theoretical models for understanding and analyzing change, typologies of different approaches to organizational change, and empirical studies of the success or failure of change. In terms of the descriptive accounts of change, three different schools of organizational thinking have provided metaphors of the nature of the organization. The first school and oldest approach to organizational design and change descends back to the end of the nineteenth century where Frederick Taylor, Henri Fayol and Max Weber were key figures. Taylor invented “Scientific Management” including the key belief that “it is possible and desirable to establish, through methodological study and the application of scientific principles, the one best way of carrying out any job.” (cited from Burnes 1996, p. 28). The metaphor in this perspective is that an organization is like a production system where it is possible to optimize the systems efficiency and effectiveness. Thus organizational change is about optimizing planning and optimizing through observation, experimentation, calculation and analysis. In the 1930s and 1940s the second school challenged the classical view of organizations to provide a new perspective. In relation to change this perspective is characterized by (Burnes 1996, Borum 1995) the belief that organizations are co-operative, social systems rather than mechanical ones, where people seek to meet their emotional needs. So the metaphor for an organization is a (large) group of people with an organizational culture and visible communication and interaction processes between them. The third school of thought has been called the political-emergent perspective (Burnes 1996, Borum 1995). It is characterized by the belief that organizations and change are shaped by the interests and commitments of individuals. It is also characterized by the belief that decisions often arise from power-struggles between special-interest groups or coalitions. “Organizations are not machines, even though some of those running them would dearly like them to be so. They are communities of people, and therefore behave just like other communities. They compete amongst themselves for power and resources; there are differences of opinion and of values, conflicts of priorities and of goals” (Handy 2005). As an example of a normative model, Kotter (1996) showed how it was possible to combine tools and techniques from the three different perspectives above. He recommended eight stages in leading a change process: (1) Establish a sense of urgency, (2) Build support, (3) Develop a change vision, (4) Communicate the change vision, (5) Empower and enable action, (6) Generate short-term wins, (7) Consolidate and re-vitalize change, and finally (8) Anchor new approach in culture. Stage 1, 3 and 4 is close to the view of an organization as a production system, whereas stages 2, 6 and 8 clearly show
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the organization as a social system. And then stage 2 and 5 are taking power and special interests into account (see also Kotter & Cohen 2002). Other normative models accept that management of organization change is a complex problem that also can include the orchestration of cultural shifts and norms determination (Phelan, 2005). In practice, organization change is a strategic arena that often takes on differing perspectives such as quality improvement, process innovation, diffusion of innovations, etc. Organizational change has become associated with IT change in a long standing co-relationship (Keen, 1981). An example of a theoretical meta-model of change is Dunphy (1996) who studied organizational change in corporate settings and found that any theory of change should incorporate at least five components: 1. A basic metaphor of the nature of the organization 2. An analytic framework or diagnostic model to understand the organizational change process 3. An ideal model of an effectively functioning organization that specifies both the direction of change and values used in assessing the success of a change intervention 4. An intervention theory that specifies when, where, and how to intervene to move the organization closer to the ideal 5. A definition of the role of change agents There are also various typologies of organizational change. For example, organizational change has been defined along variance lines and process lines. Along variance lines, change is the differences over time that may be observed in an organization. Along process lines, change is a sequence of events through which an organization develops (Van de Ven & Poole, 2005). Such organizational changes may be linear or non-linear. Linear change is adaptive change: gradual and incremental changes that lead to continuous alignment between the organization and its environment. Non-linear change is episodic, catastrophic change: precipitous and drastic changes that lead to a dramatic re-alignment between the organization and its environment (Styhre, 2002 Beer & Nohria (2000) analyzed change literature and found two schools of thinking that he called theory E and theory O. Theory E focuses on changing tangible structures and work processes (hardware) first, while theory O seeks to revitalize culture, beliefs and social relations (software) first. These taxonomies of organizational change are used by Huy (2001) to identify four ideal types of interventions. He distinguishes between episodic and continuous change. Changing formal structures is an episodic change involving something tangible. Thus the ideal type of change will be “commanding”. When is which type of intervention best? Huy’s suggests that every ideal type is relatively more effective than the other ideal types in changing certain specific organizational elements. For example, the “engineering” intervention is relatively best at changing work processes.
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This large body of organizational change management thought has now developed so many approaches to change that no one approach can claim that it is suitable for all organizational goals and settings. There is a need for analysis of available approaches in developing a particular organizational change strategy. However, few (if any) comprehensive analytical tools are available to support this analysis. The contingency approach exemplified by Huy (2001) provides the right direction, but its two-by-two analytical structure is very simplistic compared to the complexity of most real organization settings. Because our search discovered no tools available for, and capable of, handling the complexity in actual organizational settings, we determined to design and implement such a tool.
Design Theories for Organizational Change Design involves planning for the construction of artifacts. While it is often contextualized in the fields of the humanities (such as art, architecture, theater, etc.), its prominence in fields such as economics, science and engineering is growing (Simon, 1996). With this growing prominence, design for the purpose of creating scientific and technical artifacts is attracting increasing interest in the study of IT artifacts, an interest simultaneously fueled by the need for more relevance for economic studies of information technology (Orlikowski & Iacono, 2001). Design theories provide the rational foundations for design characteristics. These theories differ from theories in other natural and social sciences because design theories tend to be prescriptive rather than descriptive. Design theories are anchored in the goals of the design, and in reference theories usually taken from the natural or social sciences-known as kernel theories (Walls et al., 1992) or external theories (Goldkuhl, 2004). Design theories explain why artifacts should have certain features or characteristics in a functional or teleological way. Design theories are the prescriptive basis for explaining means by which artifacts will achieve the intended ends (Simon, 1996). There are differing opinions about what constitutes design theories for IT artifacts. Walls (1992) specify two major components of IT design theories: a product component and a development process component. Each draws upon kernel theories in specifying prescriptive hypotheses that enable designers to evaluate whether the product and its development process satisfy the design theory. Goldkuhl (2004) specifies a need for multiple grounding of design theories in external theories, reference theories, value theories, etc. Markus (2002) takes a more practical view of design theories, using these theories to explain the means-ends relationship as a practical, prescriptively causal mechanism to justify design components. With the increasing interdependence of IT and organizational structure, behavior and strategy, change in organizations inevitably involves correlated change in organizational IT. Regardless of the causal direction of organizational change and IT change (Markus & Robey, 1988), organizational change almost necessarily engages design artifacts related to IT. From the early days of sociotechnical systems design, the benefits of the
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coordinated design of both work practices and related IT artifacts have been recognized (Ehn, 1988; Mumford, 1983). As a consequence, theories of organizational change can be used as external, value, or kernel theories in IT artifact design for the purpose of insuring that work practices and IT remain correlated and synergistic. However, there are many different foundational theories for organizational change. The process by which an organization selects the appropriate approach to organizational change is often ad hoc. Each approach has its advocates and adherents, and there is little comparative research for choosing among such approaches. These approaches are so varied that comparisons are usually drawn between only two or three alternatives (e.g., Tingey, 1997). Our research focuses on this selection issue, the lack of formulated tools to help organizational change managers to select from change approaches. Our research question is: “How do we prescribe which of the myriad change approaches to recommend in an organizational setting?” In order to improve the ability for organizational change managers to rationally select the most appropriate charge methods, we researched popular approaches in the literature in anticipation of designing an analytical tool to help in this selection. An exhaustive search of all work in this area is made impossible by the sheer volume of interest (e.g., a Google search of organizational change yields 53 million links). Instead we focused on an extensive (not exhaustive) survey of the organizational change literature. To choose a set of popular approaches from this survey, we conducted a simple search conference. The search conference approach was made necessary by the limited time available from practitioners involved in the study. Based on action research and similar to a focus group, search conference participants “bring the whole system in the room” to exchange views and learn from one another. Participants share observations, engage in collaborative analysis, and logically test discoveries in an interactive debate. Search conferences produce data and findings coincidently (Baskerville, Levine, PriesHeje, Ramesh, & Slaughter, 2003). Like other forms of action research, search conferences are expedient, providing rapid and useful outcomes, while sacrificing the more scientific goals of replicability and proven validity. The demonstration of external validity, in this case, is deferred to the outcome of the design research experiences. The conference led to the identification of ten prominent approaches. We analyzed each approach in order to determine the distinguishing characteristics of each method. In particular we focused on the essential goals of each change approach (the ends), and on the essential processes of each approach (the means). In this way, we developed a design theory for each of the change approaches. Table 1 summarizes the ten change approaches.
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Name of Approach Commanding
Approach definition Change is driven and dictated by (top) management. Management takes on the roles as owner, sponsor and change agents.
Conditions Where formal structures needs change. Where change is needed fast.
Literature Huy (2001), specifically the approach is called Commanding.
Employee driven
Change is driven from the bottom of the organizational hierarchy when needs for change arise among employees.
Where the need for change arises among the employees. Where there is no need for a standardized approach; the result is more important than the process. Where an open management style that will allow change to arise from the bottom.
Andersen et al. (2001) on the grassroots approach.
Change is driven by the need for flexibility, agility, or a need to explore new markets, technology or customer groups. Change is driven by a focus on organizational learning, individual learning and what creates new attitudes and behavior.
Where dynamic and complex surroundings makes it important to explore
Benner & Tushman (2003), Mintzberg (1983)
Where there is a need for change in attitudes and/or behavior. Where the organization is talented in learning. Where relationships between means and goals are unclear.
Huy (2001), specifically the approach called Teaching
Change is driven by metrics and measurements.
Where there are relatively stable surroundings so measurements from the past can be used to decide the future. Where the result of change is measurable.
Total Quality Management thinking, cf. Oakland (2003).
Where target group is very diverse and has large individual
Rogers (2003) studied groups that took innovations into use
Exploration
Learning driven
Metrics driven
Optionality
Change is driven by the motivation and need of the individual.
Kensing (2003) and Kensing & Blomberg (1998) on participatory design.
Six Sigma thinking, cf. Pande et al. (2000)
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Name of Approach
Approach definition It is to a large degree optional whether the individual takes the innovation into use
Conditions differences. Where individuals that should (could) change are highly educated, very knowledgeable and self-aware.
Literature voluntarily. Quite many of the models and techniques in Rogers (2003) are valid for this change approach.
Production organized
Change is driven by the need for optimization and/or cost reduction.
Where you have relatively stable surroundings. Where you have many homogeneous resources and workflows.
Scientific Management, Benner & Tushman (2003), Huy (2001), specifically the approach called Engineering.
Reengineering
Change is driven by fundamentally rethinking and redesigning business processes to achieve dramatic improvements in critical, contemporary measures of performance, such as cost, quality, service and speed
Where a need exists for major change. For example when organization has ground to a halt. Where nothing new happens. Where decisions are made but not carried out. Where a crisis is eminent.
Bashein et al. (1994), Boudreau & Robey (1996), Davenport (1993), Hammer (1990, Hammer & Champy (1993), King (1994), Malhotra (1998), Willcocks et al. (1997)
Socializing
Change in organizational capabilities is driven by working with social relationships. Diffusion of innovations happens through personal contacts rather than through plans and dictates. Change is driven by specialists, either with professional, technical, or domain knowledge. Examples are a Method or Architecture function
Where organizational skills and capabilities needs to be developed. Where no unhealthy power struggles occur (so people can talk). Where employees that can be exemplars are available.
Huy (2001), specifically the approach called Socializing.
Where work has vast complexity and variety so there really is a need for special knowledge. Where there is access to necessary specialists, eventually by in- sourcing them.
Ciborra (2000), Mintzberg (1983) especially adhocracy, Simon (1973, 1983), Woods & Hollnagel (1987), Woods (1988)
Specialist driven
Table 1: An overview of the 10 Design Theories
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Following this analysis, we set out to create an artifact that would guide designers in evaluating and choosing which of the ten design theories, or what combinations of the ten design theories, would be most appropriate. As mentioned earlier, we called this artifact a theory nexus because it provided the analytical tool to bind the various organizational change theories to actual organizational settings.
Artifact Construction: Strategic Change Nexus For each of the 10 design theories in Table 1 we formulated a number of assertions that would reveal in a given context whether the conditions were present. These assertions were based on the prominent characteristics of each design theory as expressed in the literature referenced above. For example for the change approach called “Commanding,” we formulated the following assertions (based on Huy, 2001): 1. Right now we need change to happen fast 2. It is primarily organizational structures that need to be changed 3. In the past we have had successes in requiring or dictating change As another example, for the change approach called “Optionality,” we formulated the assertions (based on Rogers, 2003): 1. Our employees are self-aware and always have an opinion 2. We have very knowledgeable employees that know their areas well 3. There are vast differences between the tasks of different employees All of the assertions were assembled into a query form. The query form was implemented as a simple application in a common spreadsheet package. While this was a technologically unsophisticated prototype, the form provided a completely adequate means to operationalize the design and support its use in practice. The complete form is shown below in Figure 1.
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Assertions / Statements
Agree
Partly agree
Neither nor
Partly Disagree disagree
The Organization and Context The organizational context is very dynamic and demands frequent changes
1
Too little is happening here - we have grounded to a halt
1
The organisation is doing well and earning a lot of money
1
There is need for coordiantion across the organisation
1
The work here is quite complex and dependent on specialised knowledge
1
We have knowledge and skill that could be used in a more optimal way thorugh economics-of-scale and uniform processes
1
The Employees The best ideas for changes comes from the bottom of the organisation
1
Our employees are self aware and always have an opinion
1
We have very knowledgeable employees that knows their area well
1
There are vast differences between what one and another employee do
1
We are dependent on knowledge and specialists from outside
1
Organisational changes often happens without our (managements) contribution but wioth our accept
1
We have unhealthy power struggles and signs of bad chemistry between people
1
Change in the Organization We often makes changes
1
The changes we initiate always succeed
1
Right now we need change to happen fast
1
Right now there is a lot of disagreement about what needs to be changed and what direction we should take
1
It is primarily organizational structures that needs to be changed
1
It is primarily complex workflows that needs to be changed
1
It is primarily attitudes and social relations that needs to be changed in the future
1
Until now it is the work with social relations that has created change
1
In the past we have had success in requiring or dictating change
1
The results of change is much more important than the change process
1
We have a specific (and separate) part of the organisation that takes care of exploring new things
1
We always gets experience and ”best practices” diffused to new employees and new projects
1
Metrics We have a metrics program today - and we use the results
1
It is completely possible to measure the outcome or result of change
1
Figure 1: The form used to measure actual conditions in an organization
The design theory represented in this form is that the statements represent an expression of the conditions of the organization, the employees, the change ahead and the current use of metrics. These conditions can be compared to the conditions for each of the 10 change approaches (Table 1) and the “fit” can be defined on a scale from 0 to 100%. For example, if we take “Commanding,” the conditions are:
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1. Right now we need change to happen fast 2. It is primarily organizational structures that need to be changed 3. In the past we have had successes in requiring or dictating change The “fit” of these conditions can then be measured by the degree to which these conditions are present in the organization based on the assertions in the form. The analysis depends on the exact wording of the conditions represented in the form. Some items fit with agreement (the more they agree the better the fit) while others fit with disagreement (the more disagreement, the better the fit). Following this scoring method the fit for each of the 10 change approaches can be determined. We let 50% represent an indeterminate item. Thus a fit calculated at 30% means that the related approach doesn’t fit at all (it is unfit). We let 100% indicate a complete fit of all conditions. (It is unlikely that any approach will achieve 100% in any actual situation). An example may be illustrative. Imagine a company where we let a management group of 5 people complete the form in figure 1. One person agrees that “Right now we need change to happen fast” and four persons partly agree. The clear majority is partly agree leading to a spreadsheet calculation of 75% (with agree being 100%). Assume for the second question relevant for Commanding -- “It is primarily organizational structures that need to be changed” -- two people answer “agree” and three people answer “partly disagree”. We follow a rule of thumb that when there was more than one field (in figure 1) between the answers we should initiate a facilitated discussion. We ask the managers to explain to each other why they answered as they did. In the discussions that follow, their reasoning will lead to agreement. In this example, there is some underlying disagreement about organizational structure. But after that disagreement is removed they all five decide on “partly agree”. This result is then used to calculate the fit as being 75% for this question in relation to “Commanding”. The third question “In the past we have had successes in requiring or dictating change” is unanimously answered “disagree”. Disagree equals 0% fit. Finally we sum up the fit for “Commanding” as 75% + 75% + 0% divided by 3 = 50% fit. The goal in this process is to determine a degree of fit of all 10 change approaches rather than to calculate a single ideal approach. Because real settings are complex, we allow the possibility (indeed the likelihood) that the ideal approach will involve a combination of features from two or more of the best fitting approaches. The exact set of features to be included in this combination must be deferred to the change managers in the setting.
Implementation and Evaluation In order to evaluate the Strategic Change Nexus empirically, we planned action research that would allow us to use the tool in analyzing two real organizations that were confronting change projects. Action research is one of several methods commonly used in design research (Groat & Wang, 2002) and provides one of the most effective means for establishing the practical value and relevance of processes and methods (Baskerville
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& Wood-Harper, 1996). When used within a design research framework, action research is most familiar in its close relationship with prototyping (Baskerville & Wood-Harper, 2002). It enables a rapid build-test-evaluate cycle to provide a means to evolve an implementation artifact or provide a proof of concept. Working through a research consortium (Talent@IT), we asked four companies involved in the consortium to participate in the research collaboration by piloting the approach. We first tested the Strategic Change Nexus in Danske Bank in April-May 2004. This first project used an early form of the nexus approach in which we first attempted to identify contingencies and thereby discover the best organizational change approach. That early attempt failed because it was too complicated to establish causal relationships directly between contingencies and change approaches. As a result of this experience, we turned the solution upside down by developing the set of ten change approaches using the search conference described earlier. For each change approach, we asked, “Where would we recommend this approach?” This question was answered by identification of the ten change theories presented in Table 1. In February 2005 we were ready to evaluate the first version of the design theory nexus presented in this paper. The evaluation took place in PBS – Payment Business Services, a company that specializes in electronic payment services. They employ 750 people of which half are working within the IT Division. They develop and operate solutions for payment systems and are a leading supplier of such solutions and related services to banks, private associations and public institutions. During the last year 1.3 billion transactions were processed via PBS. We asked the management group in the IT Division of PBS to fill out the form shown in Figure 1. First they worked individually and afterwards we facilitated a discussion of any major differences in the individual assessments. For example, if one manager said “agree” to the assertion “In the past we have had successes in requiring or dictating change” while another manager said “partly disagree”, then we brought out the difference in the discussion and facilitated the attainment of an agreement within the IT management group. This discussion dealt eventually with all the statements in Figure 1. Only if a clear majority (e.g., 5 out of 6) gave the same answer to an assertion would we then just accept the majority meaning. In all other cases we took the time to facilitate a discussion and reach agreement in the management group. As a result of the evaluation we obtained the following “list-of-fit” detailing the degree of fit for each of the ten change approaches to the organization vision and setting: 60% 60% 56% 55% 54% 42%
Socialization Learning driven Production organized Employee driven Optionality Metrics driven
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37.5% 35% 34,5% 31%
Specialist driven Exploration Commanding Reengineering
With such list of fit for the ten approaches one could say that any approach with a fit over 50% would qualify as useful in the organization. The closer to 100% the better, of course. But in this case we had two top scorers at 60%. Thus we decided to make a recommendation combining the two approaches with the best fit. We could have recommended three or four approaches but we believe the complexity of combining more than two approaches would confuse rather than help the organization. In this way, the Strategic Change Nexus guided PBS to a recommendation for a combination of the change approaches “Socialization” and “Learning driven”. The nexus helped the managers analyze the change approaches in relation to their organizational vision and setting. The CIO - manager of the IT Division - evaluated the results positively and enthusiastically. He called the results a major “Aha!” experience, and compared it to the wearisome exchanges with previous consultants who asked him to “run around with a box of matches” to establish a burning platform (as referred to in phase 1 of Kotter, 1996). At the end of the evaluation management from PBS committed to following the recommendations developed with the Strategic Change Nexus – not in detail but in principle. We believe this is the most positive assessment of the nexus possible, since managers should be circumspect about blindly following the recommendations of an analytical artifact. By October 2005, PBS began implementation of the change strategy - developed with its basis on the Strategic Change Nexus,- seeking to achieve their strategic vision over the next two-to-three years. In terms of the development of a useful change strategy, this second application of the Strategic Change Nexus evaluates to an entire success. Finally we carried out the third and most recent evaluation in ATP in September 2005. ATP provides solutions for pension and insurance applications for organizations and individuals in the labor market. ATP is Denmark’s largest pension scheme and most of the country’s workforce has accrued rights to one of ATP’s Pensions. Since the beginning of 1964, ATP’s average annual return on its investment portfolio has been around 11%. With extremely low annual administration costs, ATP is by far the most efficient pension administrator in Denmark. ATP has more than a 1000 employees, 350 of whom work with IT. In the ATP case, we applied the Strategic Change Nexus in much the same manner as in the PBS study described above. As a result of the evaluation we obtained the following list-of-fit for each of the ten change approaches:
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71 % 65 % 59 % 58 % 56 % 40 % 34 % 29 % 28 % 18 %
Optionality Commanding Socialisation Production organized Specialist driven Metrics driven Learning driven Exploration Reengineering Employee driven
The results from the nexus application lead to a recommendation that combined the two best-fitting change approaches. We discussed whether we should just recommend one approach - the best at 65% of course. But after the success at PBS where we recommended two, we decided to do the same at ATP. The combination of Optionality and Commanding approaches was surprising and led to a discussion about whether these two approaches can fit together. Ultimately, ATP managers agreed that these could be combined by enabling managers to choose multiple change projects and driving each initiative separately, using the Optionality approach in some and the Commanding approach in others. In other words, management chooses a few (2-3) initiatives where they drive the change (Commanding) while at the same time make it clear that other (there were many) initiatives must be driven by the individual's or group's need and motivation (Optionality). In this final evaluation by ATP, the Strategic Change Nexus was also considered a success, in that it enabled ATP managers to analyze and understand complicated and alternative approaches to strategic change. They were able to develop decisions about organizational change strategies relative to the vision and setting at ATP. However, ATP had formulated a rather bold strategic vision, so this study of change approaches and its evaluation is too recent to provide indications about the actual impact of the results in driving this strategic change to success.
Discussion The strategic change nexus is an artifact that provides an analytical tool to help organizational change managers formulate organizational change strategy. The design theory used in designing this analytical tool is an example of a theory nexus. It draws from multiple sources of external or kernel theories, including those taken from ten distinctly different change approaches. Analyzed together with the organizational environment and vision, these theories are re-articulated into specific change strategies for the setting as shown in figure 2.
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Goals / Strategic vision
Design theories of specific change approaches
Strategic Change Nexus
Change Strategy
Organizational environment
Figure 2: The Strategic Change Nexus design theory.
What constitutes success in using the strategic change nexus? We operationalized this measure based on user retrospection and the binary decision by the organization to implement the results (or not). These are simple measures of user satisfaction and impact. Overall, the nexus is a decision-making aid. Like any other information tool, there can be several alternative fundamental measures of success, such as quality, use, user satisfaction and impact (DeLone and McLean, 1992, 2003, Garrity and Sanders, 1998). We could operationalize these in our case as increased speed of decision making, increased agreement on decisions, lower or higher satisfaction with the decision, or even the ability to arrive at a decision at all, and ultimately better decisions – for example measured by better outcomes from implementing the decision. Measuring better outcome would require a longitudinal study. Both PBS and ATP, for example, had strategic visions reaching 2-3 years ahead in time. And real world situations typically have complexity too high for unequivocal measures of that type of success. Measuring increased speed would require that the decision, the horizon, and the scope of the decision are exactly the same to enable us to compare hours and calendar time used. However, organizational change is seldom discussed alone. In practice it is typically discussed together with a number of other issues on the agenda in the particular organization. Therefore this measure of success would quickly become distorted.
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We settled for a simple, straightforward measure of success that combined the subjective satisfaction of the involved managers with a measure of whether the actions undertaken in the organization were in fact influenced by the evaluation. And in both cases - PBS and ATP - this turned out in favor of the Strategic Change Nexus. In terms of the degree to which the research underlying the theory nexus is valid, there are several criteria that we could choose to draw upon. Aside from design research, examples include interpretive research (Klein and Myers, 1999) and action research (Davison, et al., 2004). These criteria, however, are not mutually exclusive, as Cole, et al. (2005) show how research designs from both action research and design research can satisfy criteria from both genres. While such definitions of criteria inevitably lead to controversy, Hevner, et al. (2004) recommend seven design science research guidelines that are useful in understanding, executing and evaluating design science and design research.
1 2 3 4 5 6 7
Design Science Research Guideline (Hevner, et al., 2004) Must produce a viable artifact. Produces technology-based solutions to relevant business problems. Evaluation that demonstrates of utility, quality, and efficacy. Research contribution of the design artifact, foundations, or methodologies. Rigor in construction and evaluation method. A problem-situated means-ends search for an effective artifact. Communication to both technical and managerial audiences.
In relation to these particular guidelines, the strategic change nexus is a designed artifact instantiated as both a model and a tool (guideline 1). It provides relevance to an important business problem (strategic change) by helping resolve a multiplicity of alternative approaches into a more cohesive direction (guideline 2). The utility and efficacy of the strategic change nexus was evaluated in two action research studies in which the nexus was applied. These provided observational evidence from field studies to indicate that the nexus was operational and valued in practice (guideline 3). The strategic change nexus provides practical contributions as an artifact in helping to solve a complex problem common to many organizations, and it provides research contributions by extending the concept of a theory nexus beyond the HCI discipline and into the organizational change discipline (guideline 4). Our study did not adopt a strictly scientistic form of design science, and does not adopt tightly structured deductive design theory and hypotheses. However, the analysis of change approaches underlying the design of the artifact applied search conference methodology, and the evaluation field study followed action research methodology. While these approaches adopt an interpretive social research stance, they are widely accepted as rigorous forms of research (guideline 5). In particular, the search conference approach provided the basis for the analytical nature of the theory nexus, a mechanism for searching and utilizing the available means to reach the desired ends (guideline 6). Finally the action research studies provided evidence that the strategic change nexus can be presented to both a technology- and management-oriented audience (guideline 7). For example a number of change agents were present in both the PBS and the ATP case. They were quite interested
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in the details of the change technology as shown in Table 1. At the same time management within PBS and ATP were more interested in the overall change strategy (the nexus). The origins of design research in Simon’s (1996) conceptions of design science provide a positivistic or scientistic shape for design research. In one sense, Simon advocates positioning design studies in fields like engineering, sociology, and economics on the same plane as natural sciences such as chemistry, biology, and physics. This affinity for natural science is concordant with views that similarly relate the position of computing science (Denning, et al., 1989) with other experimental sciences. In this sense, and as we suggested earlier in the paper, it might be useful to distinguish design science, with its inbuilt affinity for natural science, from design research, which might be a broader, more encompassing, and more generic term in the same sense as the distinction between action science and action research. This distinction becomes important in the conceptualization of what constitutes a design theory. From a design science viewpoint, the deductive science hypothesis-testing model is essential for well formulated theories in design science (Walls, et al., 1992), and indeed, design practice creates artifacts that satisfy practical needs while design science creates theories for design practice (Walls, et al., 2004). Simple definitions of what constitutes “a theory” are controversial, and have led management authorities settle for the notion of excluding non-theory as a more satisfying exercise (Sutton and Staw, 1995). Our mode of design research, with its action research orientation, fails to respond to the hypothetico-deductive models. Likewise, our use of design theory fails to match the scientific requirement for hypotheses formulation and testing. We use the term design theory in the broader sense of management theory because this is the context of most organizational change research, and our research methods are interpretive, qualitative, and interventionalist. Thus organizational change theories provide a basis for action, and the pragmatic outcomes of these actions neither prove nor disprove these theories in any universal way, but anchor the truth value of the theories in the pragmatic outcomes of their use in real, human settings. In this sense, the research contributes to the ideas of the constitution of design theories. These are complex constructions that must be evaluated in the context of the way the research has been designed and executed. In design science, this relationship of the nature of the theory to the nature of the research is further complicated by the underlying social phenomena, which itself involves design artifacts and design instantiations. Design theories are, to some extent, meta-designs at play in the study of design.
Future Research The theory nexus as a genre of design solutions provides many avenues for future research. From a practical perspective, future work could explore its suitability as a basis for design solutions in application areas beyond organizational change or HCI. Our research suggests that design work in any setting that is rich with competing design theories might operate with a theory nexus. From a theory perspective, the use of artifacts based on such nexus should produce knowledge that informs the original theory
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bases. In our empirical work, we combined change approaches. Is there a pattern to be discovered in common combinations of organizational change theories that reveals a smaller set of alternative social “covering laws” (to the degree that there could be such things) that govern these varied organizational change approaches? Are there theoretical relationships between certain characteristics in organizational settings and the characteristics of operable change theories? We have used the theory nexus in a mode with input theories and output design (theories-in, design-out). A proper nexus informs the theory base (theories-in, theories-out). In addition, our design evaluation used measures of user satisfaction and organizational impact. Such simple measures of success are both problematic and deeply studied in information systems. The evaluation of designs is one of the central topics in design science (Simon, 1996, p. 134). For designs related to information technology, the relationship between the well-studied measures of success (DeLone and McLean, 1992, 2003, Garrity and Sanders, 1998) and the importance of evaluation bears further study and elaboration.
Conclusion Organizational change strategy making usually means selecting a change strategy (or strategies) from among myriad available change approaches. These change approaches differ in essential ways. In this paper we presented an IT-based artifact to support the design of organizational change. Based on a study of organizational change approaches, we derived 10 design theories on change. Each change theory stated under which conditions a specific change approach — such as Reengineering or Commanding – led to prescriptive decisions about the suitability of the approach to a particular organizational setting. One contribution of this research has been the identification of these 10 change approaches and their articulation as design theories for an analytical artifact. We designed a theory nexus - called the Strategic Change Nexus - that binds together the 10 design theories into a prescriptive recommendation for a cohesive and suitable change strategy for a particular organization’s unique situation. Given a strategic vision and an organizational context the Strategic Change Nexus can determine the degree of fit for each of the 10 change approaches. The change approaches to be prescribed develops from a list-of-fit that indicates the relative suitability of each approach to the organizations vision and context. We designed and implemented the Strategic Change Nexus as an artifact and evaluated it within a research project involving three participating companies. The IT organization in two of these companies was particularly involved in evaluating the nexus in an action research field study. In one of the evaluated organizations - PBS - the management group committed to the prescribed change strategy – not in detail but in principle. This result is nearly ideal in relation to the prescriptions from the nexus. In ATP, the other organization evaluated, the results were also quite positive and the nexus was evaluated as very useful. Whether the visions for strategic change in the two organizations will be achieved will take two to three years to develop. At the moment, however, the Strategic Change Nexus clearly leads to operational management decisions about change strategy. This artifact is
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the second and probably most important contribution of the research above: the design and evaluation of an artifact that proves useful in making strategic decisions on organizational change.
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