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The mice, being relatively simple creatures, !gure “No cheese here? Let’s go look somewhere else.” Sniff is very good at snif!ng out new supplies, and Scurry excels in scurrying after them once they’re found. Before long, they’re both back in cheese heaven.

But Hem and Haw, being human, are reluctant to abandon old ways. They !gure someone has made a mistake because they’re entitled to get cheese where they always have. They’re con!dent that, if they wait, the cheese will return. It doesn’t. As they get hungrier, Hem and Haw gripe and complain about the unfairness of it all. Eventually, Haw decides it’s time to explore and look for something better. Hem, however, insists on staying where he is until the cheese comes back.

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As he searches, Haw develops a new outlook. He posts signs on the walls to express his new thinking, with messages such as “Old beliefs do not lead you to new cheese.” Haw’s explorations eventually reunite him with Sniff, Scurry, and the new cache of cheese. Hem continues to starve.

Cheese, as the book points out, is a metaphor for whatever you might want in life. The maze represents the context in which you work and live; it could be your family, your workplace, or your life. The basic message is simple and clear: clinging to old beliefs and habits when the world around you has changed is self-defeating. Flexibility, experimentation, and the willingness to try on new beliefs are critical to success in a fast-changing world.

The book certainly has critics, including many who believe that the story downplays the possibility that some change is wrongheaded and deserves to be resisted. But Cheese has far more fans, for whom its simplicity is a virtue. The parable often enables its ardent readers to see aspects of themselves and their own experience—times when, like Hem, they have hurt themselves by refusing to adapt to new circumstances.

Amore favorable experience unfolded in a large hospital that invested millions of dollars in a new integrated information system. The goal was to improve patient care by making updates in clinical care and technology quickly available to everyone involved in treatment plans. Widespread involvement ensured that relevant ideas and concerns made their way into the innovative system. Terminals linked patients’ bedsides to nursing stations, attending physicians, pharmacy, and other services.

To ensure that the new system would work, hospital administrators created a simulation lab. Individual representatives from all affected groups came into a room and sat at

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terminals. Hypothetical scenarios gave them a chance to practice and work out the kinks. Many staff members, particularly physicians, needed to improve their computer skills. Coaches were there to help. Each group became its own self-help support system. Skills and con!dence improved in the training session. Relationships that formed because of extensive involvement and participation were invaluable as the new technology went into operation.

From a human resource perspective, people often have good reason to resist change. Very often, resistance is sensible because the newmethods embody amanagement infatuation that might take the organization in the wrong direction. Even if changes are for the good, people don’t like feeling anxious, voiceless, or incompetent. Changes in routine practice and protocol typically undermine existing knowledge and skills and undercut people’s ability to perform with con!dence and success.When asked to do something they don’t understand, haven’t had a voice in developing, don’t know how to do, or don’t believe in, people feel puzzled, anxious, and insecure. Lacking skills and con!dence to implement the new ways, they resist or even engage in sabotage, awaiting the return of the status quo. Alternatively, they may comply outwardly while covertly dragging their feet. Even if they try to carry out the new ways, the results are predictably elusive. Training, psychological support, and participation increase the likelihood that people will understand and feel comfortable with the new methods.

Often overlooked in the training loop are the change agents responsible for promoting and guiding the change. Kotter and Cohen (2002) present a vivid example of how training can prepare people to communicate the rationale for a new order of things. A company moving to a team-based structure developed at the top was concerned about how workers and trade unions would react. To make sure people would understand and accept the changes, the managers went through an intensive training regimen: “Our twenty ‘commu- nicators’ practiced and practiced. They learned the responses, tried them out, and did more role-plays until they felt comfortable with nearly anything that might come at them. Handling 200 issues well may sound like too much, but we did it . . . I can’t believe that what we did is not applicable nearly everywhere. I think too many people wing it” (Kotter and Cohen, 2002, p. 86). Taking the time to hear people’s ideas and concerns and to make sure that those involved have the talent, con!dence, and expertise to carry out their new responsibilities is a requisite of successful innovation.

CHANGE AND STRUCTURAL REALIGNMENT Involvement and training will not ensure success unless existing roles and relationships are realigned to !t the new initiative. As an example, a school system created a policy requiring principals to assume amore active role in supervising classroom instruction. Principals were

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trained in how to observe and counsel teachers. When they set out to apply their new skills, morale problems and complaints soon began to surface. Failure to anticipate how changes in principals’ duties might affect teachers and impinge on existing agreements about authority produced pushback. Not all teachers welcomed principals’ spending time in classrooms observing and suggesting ways to improve teaching. Most important, no one had asked who would handle administrative duties for which principals no longer had time. As a result, supplies were delayed and relationships between principals and parents deteriorated. By midyear, most principals returned to their administrative duties and teachers were again left with little formal feedback.

Change undermines existing structural arrangements, creating ambiguity, confusion, and distrust. People no longer know what is expected of them or what they can expect from others. Everyone may think someone else is in charge when in fact no one is. A hospital, facing rapid changes in health care, struggledwith employee turnover and absenteeism, a shortage of nurses, poor communication, low staff morale, and rumors of an impending effort to organize a union. A consultant’s report identi!ed several structural problems: The members of the executive committee were confused about their roles and authority. They suspected the new hospital administrator was making key decisions behind closed doors prior to meetings. Individuals believed the administratorwasmaking “side deals” in return for support at committeemeetings. Members of the executive committee felt manipulated, baf”ed, and dissatis!ed.

The consultant noted similar structural troubles at the nursing level. The director of nursing seemed to be taking her management cues from the new hospital administrator— with unhappy results. Nursing supervisors and head nurses bemoaned their lack of authority. Staff nurses complained about a lack of direction and openness on the part of their superiors. “Nurses were unaware of what their jobs were, whom they should report to, and how decisions were made” (McLennan, 1989, p. 211). Labor disputes, loss of accreditation, and other problems loomed until the consultant’s report brought to light the structural de!ciencies and helped the participants work them out.

As the school and hospital examples illustrate, when things start to shift, people become unsure of what their new duties are, how to relate to others, and who has authority to decide what. Clarity, predictability, and rationality give way to confusion, loss of control, pervasive, and a sense that politics trumps policy. To minimize such dif!culties, innovators need to anticipate structural issues and work to redesign the existing architecture of roles and relationships. In some situations, reworking the structure can be done informally. In others, structural arrangements require renegotiations in a more formal setting.

In Exhibit 18.1, Reframing Organizational Change, think of the line separating Human Resource/Structural from Political/Symbolic as a “waterline.” Innovation in organizations

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often deals only with what is above the surface. Below the waterline lurk the issues we shy away from because we consider them “distasteful” or overlook because they are too opaque to comprehend: politics and symbols. In the next sections, we delve into the depths of change that tend to torpedo even the noblest efforts to improve organizations.

Greatest Hits from Organization Studies Hit Number 9: Richard R. Nelson and Sidney G. Winter, An Evolutionary Theory of Economic Change (Cambridge, MA: Harvard University Press, 1982)

How do economists think about change in organizations? Nelson and Winter argue against the neoclassical view that has dominated among economists. At its core, the neoclassical view sees both humans and organizations as rational decision makers who maximize their own interests (utility) in the face of available options and incentives. In this view, the problem of change is simple: rational maximizers will alter their behavior if their preferences change or if the environment changes the options and incentives they face. This view assumes that decision makers have complete information about themselves and their world and that they can turn on a dime.

An example of the neoclassical approach is Jensen and Meckling’s paper on agency theory, discussed in Chapter 4 as Greatest Hit Number 7. Nelson and Winter are dissenters. (So are the authors of two other works on our hit list: Number 3, Cyert and March, discussed in Chapter 9, and Number 8, March and Simon, discussed in Chapter 2.) Nelson and Winter criticize maximization on the grounds that decision makers !nd it hard to know their options and hard to evaluate the alternatives they see. Borrowing from Darwinian concepts of evolution, Nelson and Winter develop a theory that is intended to conform more closely to how change works in practice. Three concepts are central:

• Routine: A regular and predictable pattern of behavior; a way of doing something that a !rm uses repeatedly. This is akin to what March and Simon (1958) refer to as “programmed activity.”

• Search: The process of assessing current options, acquiring new information, and altering routines. “Routines play the role of genes in our evolutionary theory. Search routines stochastically generate mutations” (p. 400).

• Selection environment: The set of considerations determining whether an organization adopts an innovation and how an organization learns about an innovation from others.

In other words, Nelson and Winter see organizations as combining ongoing routines, which produce stability and continuity, with activities for scouting new options. When an organization !nds promising new alternatives, it tries them out. As with natural selection, mutations that work are kept; others are discarded. Nelson and Winter’s view is distinct from the “population ecology” perspective in organization theory, even though both borrow from Darwin. Nelson and Winter see selection affecting the routines that live or die within organizations; population ecologists see selection determining which organizations survive or fail.

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CHANGE AND CONFLICT Change invariably generates con”ict, a supercharged tug-of-war between innovators and traditionalists to determine winners and losers. Changes usually bene!t some while neglecting or harming others. This ensures that some individuals and groups support the innovations while others oppose, sit on the fence, or become isolated. Clashes often go underground and smolder beneath the surface. Occasionally they erupt into unregulated warfare. What began with enthusiasm and an expectation of wide support is lost. A classic case in point comes from a U.S. government initiative to improve America’s rural schools. Public cries for innovation consistently grab their share of media exposure. The following was one U.S. government response.

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