Saturday, January 31, 2009

The Organizational Change Spectrum

The spectrum of organizational change is composed of four parts, arranged from lowest to highest in terms of both risks and rewards: automation, rationalization of procedures, business re-engineering, and paradigm shift. Meanwhile, the term radical is synonymous with essential, major, thorough, sweeping, and drastic. So when we say radical organizational change, we are referring to a type of organizational change that will bring about largely significant and drastic changes.

The lowest in both risk and reward is automation, which entails that even though there is lesser risk in this type of change, the rewards that you get are also directly proportional to the risk and therefore are also small. However, if we look at the very top of the spectrum, we can find paradigm shift, which has both high risks and high rewards. From this and from the definition of radical alone, I can deduce that paradigm shift is the most radical organizational change. Why? First of all, paradigm shift involves rethinking the whole nature of the business, a complete re-conception of how the system should function. In other words, it offers companies a whole new perspective about their business processes and allows them to rework everything from top to bottom. It brings about a "radical" change in the organization's way of thinking and replaces the old way of thinking with a newer, more insightful idea.

Now, if we compare paradigm shift to business re-engineering, which is the third highest in risk and reward, business re-engineering [and even the other two] focuses only on a particular area of the business organization. While they are coupled with lower risks, the rewards you get are also lower. I think this is a major difference with paradigm shift where you have to be willing to take higher risks in order to attain higher rewards. This alone brings to mind the word drastic, a synonym of radical. It is in fact risky, however, if you can avoid or be prepared for the risks, then you will surely achieve the highest rewards and overcome the highest risks.


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