Strategic Management, Leadership and Organizational change (HPI 4008)
Tutorial group 3 21-02-2020
Week 3: Organisational Change
Organizational change
Pragmatic definition of a change: a structured (planned) approach to shift organizations, people and
peoples’ behaviours from a current (undesired) state to a desired future state. The transition of the
organization from one state to another. Two dimensions of organizational change research:
1) The content of change/phycological based: differences in content of a State A (current state)
in comparison with State B (desired state). It considers change from the perspective of the
change recipient. The impact that organizational change has on the change recipient
(emotional) is addressed
2) The process of change/sociologically based: focuses on how (process) change occurs, incl. the
speed of change, the necessary sequence of activities, supporting internal changes, and
obstacles confronted. Involves costs (financial and psychological) to organizations and their
stakeholders. Aim: to uncover the evolution of change and the macro-level factors that shape
organizational change and its outcomes.
How organizational change
I. Evolutionary: incremental, small steps
II. Revolutionary: drastic, rapid and giant steps
Urgency and context determines which way you chose. E.g. if you were on the titanic you
would not chose the evolutionary approach, you need a drastic (revolutionary) change of
plans.
III. Entrepreneurism: new start-ups. E.g.: paper-centered company which want to go to digital-
company.
Elements for change
Diagnosis
How to better understand issues and organizations
Strategy
How to bring about change in the most effective way
Change agent
How to know our (in)abilities and develop ourselves
Communication
How to enable a collective competence for change
Views of change
Classic view (Lewin’s 3 stage model)
Mostly used in IT and healthcare world. Form current (undesired) state desired (future) state.
1. Unfreeze: creating awareness reducing resistance
2. Change: intro of new concepts, practices etc.
3. Refreeze: re-stabilizing the organization, securing
the change
Underlying assumptions:
- Change is shifting from one static state to another
- Change is an exception, stability is the rule
- Change is a rational, technical process, we have to plan change and then it occurs.
Disadvantage: over simplified, not realistic.
(Post-) Modern Views
Chaos, loops, quantum mechanics. More dynamic (not linear)
1. Present state
2. Flux (energy)
3. Next state
1
, Underlying assumptions:
- Change is dynamic (goes on)
- Change is permanent (Heraclitus)
- Change is complex (outcome not certain, learning process)
- Change is technical, social and political (willingness, ability, interests)
We are more and more going to the post-modern view.
Change and value: keep up with change to create greater value to gain CA.
Types of organizational change
1) Horizontal consolidation and integration of hospitals: mergers in which two or more separately
licensed hospitals consolidate under one owner and one license. Organizations need to pay
attention to their internal structures and relationships when implementing major change and that,
externally, hospitals need to face consistent pressure if they are implementing tough decisions.
Change can take time due to conflicting interest. Also networks
Benefits
- Strengthen financial performance
- Consolidate services
- Achieve operating efficiencies
- Greater financial predictability and lower peak load staffing
- Better operational efficiencies by strengthen administrative functions, eliminating service
duplication, and exploiting economics of scale.
Stronger financial position through efficiency-generating or revenue-enhancing activities.
2) Horizontal consolidation and integration of physicians: through three types of organizations:
group practices, IPA’s (independent practice associations), and physician practice management
companies (PPMCs). GP’s as network, creating advantage with insurance company. Change takes
time to ensure the development of stakeholder buy-in and organizational capabilities
Benefits:
- Clinical and administrative efficiencies through scale
- Greater cloud with insurers in negotiating contract
- The ability to pool risk from capitated contracts across physicians
- Better data systems and management expertise for risk contracts
- The availability of much needed capital to grow the practice or cover occasional revenue
shortfalls
3) Vertical integration between physicians and hospitals: linking together a variety of new
organizational arrangements to better integrate service delivery and financing.
Benefits:
- Improved financial performance
- Increased operational/financial stability
- Increased revenues through expanded market share
- For hospitals:
Greater physician loyalty
More secured referral base
Greater access to managed care contracts
- For physicians:
Access to management expertise,
Marketing
Information systems
Financial capital
Expanded role in hospital decision-making
These various physician-hospital arrangements vary in structure and legal form, but have two
common objectives:
To provide a platform for physician-hospital integration and collaboration
To acquire capitated contracts for associated physicians and hospitals
Change is not a linear and rational process!
2
Tutorial group 3 21-02-2020
Week 3: Organisational Change
Organizational change
Pragmatic definition of a change: a structured (planned) approach to shift organizations, people and
peoples’ behaviours from a current (undesired) state to a desired future state. The transition of the
organization from one state to another. Two dimensions of organizational change research:
1) The content of change/phycological based: differences in content of a State A (current state)
in comparison with State B (desired state). It considers change from the perspective of the
change recipient. The impact that organizational change has on the change recipient
(emotional) is addressed
2) The process of change/sociologically based: focuses on how (process) change occurs, incl. the
speed of change, the necessary sequence of activities, supporting internal changes, and
obstacles confronted. Involves costs (financial and psychological) to organizations and their
stakeholders. Aim: to uncover the evolution of change and the macro-level factors that shape
organizational change and its outcomes.
How organizational change
I. Evolutionary: incremental, small steps
II. Revolutionary: drastic, rapid and giant steps
Urgency and context determines which way you chose. E.g. if you were on the titanic you
would not chose the evolutionary approach, you need a drastic (revolutionary) change of
plans.
III. Entrepreneurism: new start-ups. E.g.: paper-centered company which want to go to digital-
company.
Elements for change
Diagnosis
How to better understand issues and organizations
Strategy
How to bring about change in the most effective way
Change agent
How to know our (in)abilities and develop ourselves
Communication
How to enable a collective competence for change
Views of change
Classic view (Lewin’s 3 stage model)
Mostly used in IT and healthcare world. Form current (undesired) state desired (future) state.
1. Unfreeze: creating awareness reducing resistance
2. Change: intro of new concepts, practices etc.
3. Refreeze: re-stabilizing the organization, securing
the change
Underlying assumptions:
- Change is shifting from one static state to another
- Change is an exception, stability is the rule
- Change is a rational, technical process, we have to plan change and then it occurs.
Disadvantage: over simplified, not realistic.
(Post-) Modern Views
Chaos, loops, quantum mechanics. More dynamic (not linear)
1. Present state
2. Flux (energy)
3. Next state
1
, Underlying assumptions:
- Change is dynamic (goes on)
- Change is permanent (Heraclitus)
- Change is complex (outcome not certain, learning process)
- Change is technical, social and political (willingness, ability, interests)
We are more and more going to the post-modern view.
Change and value: keep up with change to create greater value to gain CA.
Types of organizational change
1) Horizontal consolidation and integration of hospitals: mergers in which two or more separately
licensed hospitals consolidate under one owner and one license. Organizations need to pay
attention to their internal structures and relationships when implementing major change and that,
externally, hospitals need to face consistent pressure if they are implementing tough decisions.
Change can take time due to conflicting interest. Also networks
Benefits
- Strengthen financial performance
- Consolidate services
- Achieve operating efficiencies
- Greater financial predictability and lower peak load staffing
- Better operational efficiencies by strengthen administrative functions, eliminating service
duplication, and exploiting economics of scale.
Stronger financial position through efficiency-generating or revenue-enhancing activities.
2) Horizontal consolidation and integration of physicians: through three types of organizations:
group practices, IPA’s (independent practice associations), and physician practice management
companies (PPMCs). GP’s as network, creating advantage with insurance company. Change takes
time to ensure the development of stakeholder buy-in and organizational capabilities
Benefits:
- Clinical and administrative efficiencies through scale
- Greater cloud with insurers in negotiating contract
- The ability to pool risk from capitated contracts across physicians
- Better data systems and management expertise for risk contracts
- The availability of much needed capital to grow the practice or cover occasional revenue
shortfalls
3) Vertical integration between physicians and hospitals: linking together a variety of new
organizational arrangements to better integrate service delivery and financing.
Benefits:
- Improved financial performance
- Increased operational/financial stability
- Increased revenues through expanded market share
- For hospitals:
Greater physician loyalty
More secured referral base
Greater access to managed care contracts
- For physicians:
Access to management expertise,
Marketing
Information systems
Financial capital
Expanded role in hospital decision-making
These various physician-hospital arrangements vary in structure and legal form, but have two
common objectives:
To provide a platform for physician-hospital integration and collaboration
To acquire capitated contracts for associated physicians and hospitals
Change is not a linear and rational process!
2
