Organizational Change Theory

Organizational Change Theory Organizational change O'Reilly, Charles a. & Michael L. Tushman. (2004). The ambidextrous organization. The Harvard Business Review. It is often said that generals are always trying to win the last war, rather than look ahead to what they need to do to succeed in the future. This is also true of business organizations, according to Charles O'Reilly and Michael L.

Tushman's article "The ambidextrous organization" for The Harvard Business Review "Most successful enterprises are adept at refining their current offerings, but they falter when it comes to pioneering radically new products and services" (Reilly & Tushman 2004: 1). Some theorists state that radical innovation by established organizations is a virtual impossibility. However, Reilly and Tushman contend that innovation is possible, provided the organization remain sufficiently flexible. The company must sustain its innovation at several levels.

Incremental innovation (think Apple's continual 'retooling' of its music players and smartphone) is required on a consistent basis. But there must also be architectural innovations (such as the creation of iTunes, changing the way music was sold) in terms of company approaches and structures. Finally, there is a need for radical, ground-breaking discontinuous innovations that fundamentally create a 'break' with the existing product landscape (the iPhone). Maintaining all of these types of innovation is necessary to generate a truly creative corporate culture.

The most fruitful type of creative organizations, according to the authors, are designed along the lines of what they call ambidextrous organizations, "where the breakthrough efforts were organized as structurally independent units, each having its own processes, structures, and cultures but integrated into the existing senior management hierarchy" (Reilly & Tushman 2004: 2). One example of this is the U.S.A. Today organization, which shelters a wide array of newspapers and other news sources under its umbrella.

On one hand, all member newspapers are somewhat distinct, serving a regional or specialty audience or having a unique 'brand.' But by sharing information between the newspapers, a high level of quality is maintained that is mutually beneficial for all of the participants in the network. Companies that thrive must also know what type of change is required by the market environment.

While sometimes small, sustained changes can be beneficial, at other times companies must take radical efforts to outpace competitors, like the upstart contact lens company CIBA Vision, when it strove to challenge pharmaceutical behemoth Johnson & Johnson. It launched "six formal development projects, each focused on a revolutionary change. Four entailed new products, including daily disposables and extended-wear lenses, and two involved new manufacturing processes.

In a controversial but necessary move, he [the CEO] canceled dozens of small R&D initiatives for conventional lenses to free up cash for the breakthrough efforts" Reilly & Tushman 2004: 4). The CEO, even while he allowed R&D a great deal of leeway, also strove to integrate the management of the multinational company, to ensure a coherence.