Monday, November 22, 2004

11 19

Roloff 11 19

Why do employees resist change?

Individual Differences

Cynicism – looking every gift horse in the mouth – cynics were once considered astute critics who held everyone to a higher standard, now has negative connotations. Surveys of CEOs asked what was the biggest barrier to change, the #1 answer was cynical employees. Why is the American workforce so cynical, and becoming more so? (cynics don’t take things at face value, think people act lower than they’re capable) Cynicism is considered a personality variable. Personality cynicism does not correlate with resistance to change. More specifically, cynicism as related to organizations or business in general; one might think people are good but organizations are basically bad. Not a strong correlation either. Even more specifically, company cynics, who think their company is basically bad, but the rest of the world is OK. There is a strong correlation between this specific cynicism and resistance to change. If these people change companies, they are less resistant to change. Over time, one can become cynical regardless the company. Things that feed this cynicism are executive compensation and layoffs.
Dimensions of Resistance – People who like engaging in routines – “I like to do the same old things rather than new and different ones”, “I’d rather be bored than surprised”. Emotional Reaction – When change occurs, these people become stressed out. “When things don’t go according to plans, I get stressed out”. Short Term Thinking – “When someone pressures me to change something, I resist, even if it will benefit me in the long term”. Cognitive Rigidity – Unlikely to change their minds once they have made a decision. Resist changes to office environment; have hard time maintaining quality of work, social habits when change occurs.
Age and Tenure on the Job – The longer one has been on the job/the older, the more resistant to change. Promises of retraining, an assurance that salary and job is safe doesn’t reverse resistance to change. A possible explanation is that change is not as exciting to people who have been through a lot of change…this group can wait-out change.
Accept Change – “Resilient Personalities” – high self-esteem, score high in self-efficacy. These people don’t promote change, but don’t fear it, have been through changes and survived.

Situational Effects –

Stress – Job insecurity – if you know others even outside your company who has been laid off, it can cause stress. Students interning at companies that are laying off employees can experience stress. Role overload – Everyone has to do more work when some are laid off. Work Challenges – If I don’t have enough resources to do my work, I’ll experience stress (this is distinct from mentally stimulating work) Leads to emotional Exhaustion.
Burnout – Three Stages – 1) Emotional Exhaustion – Numbness at the end of the day “job overload” can lead to this. 2) Depersonalization – peers and clients become objects rather than people – correlated to non-contigent punishment…”regardless how well I do my job, everything goes wrong” 3) Feelings of Lack of Accomplishment – “Why am I doing this job?” correlated to non-contingent reward (Rewards do not seem related to work).
Violate the Psychological Contract – Transactional and Relational Components – breech of trust when change leads to violations of psychological contract is difficult to mend.
Fairness – Distributive Justice – Rewards and punishment distributed in a fair fashion. Procedural Justice – “Voice” - do people have input into what affects them. People are more willing to take a hit (accept change) if they felt their voice was heard. How do you make people feel their voice was heard? They can 1) talk to the decision maker, or 2) a representative of a group talk to decision makers. Why is voice valued so much? Three reasons, two of which are valid. 1) Notion of fairness, it’s a societal norm (not a lot of support for this) 2) Validation of respect – face saving process, asking for input indicates respect 3) Feeling of control – voice gives feeling of control. Three groups, 1) not consulted on a change 2) Those with voice with whom many agree 3) Those with voice with whom no one agreed. The angriest after change were those with voice in majority who were defied, even more so than those who weren’t consulted. Interactional Justice – couch decisions in a way that respects those who are impacted.

Workplace Aggression – Homicide is the #1 cause of death among women at work. Within the U.S. Post Office, 500 recorded cases of employees trying to take out supervisors, 200 cases of supervisors trying to take out subordinates. What types of workplace aggression occur? 3 Dimensions of aggression – 1) The degree to which it is verbal vs. physical assaultsm – most aggression on the job is verbal, but there is a lot of it “Incivility on the Job” is a current topic of study, highly correlated with stress and physiological health problems. Research indicates it’s getting worse 2) Active vs. Passive – Active = do something to someone, Passive = withholding support. Most workplace aggression is passive 3) Direct vs. Indirect – confrontation vs. hurting them by damaging their possessions, computer, et al. Most aggression is indirect. What kind of person becomes aggressive? Type A personalities - those who are driven and hostile show the most stress reactions on the job, they are prone to attacks of all varieties. Attributional style – people prone to aggression attribute their problems to others. Revenge Motivation – Those who are prone to revenge will be aggressive on the job Maleness – on the job aggression is a male thing, women studied haven’t gotten angry enough to be aggressive; recent studies show female aggression is verbal and indirect

Workplace situations that lead to aggression – downsizing, budget and pay cuts, reengineering, pay freezes, the greater the use of part-timers and temps, the greater the amount of job-sharing, employee monitoring (computer or otherwise), the greater diversity on the job.

Organizational Deviancy

Four types of deviancy can be arranged in coordinates, organizational vs. individual in direction, and minor to serious in severity.

Production Deviancy – directed at organization – 1) leaving early; minor 2) taking excessive breaks 3) working slow

Property Deviancy - 1) Sabotage equipment 2) Accepting kickbacks (to accept sub-standard equipment purchases 3) Lying about number of hours worked 4) Stealing from the company

Personal Aggression – Verbal abuse, endangering and stealing from coworkers, sexually harassing coworkers

Political Deviancy – showing favoritism, gossiping, blaming coworkers, competing non-beneficially (e.g. sabotaging another’s career rather than competing with job performance for promotions).

Why do people engage in organizational deviancy? Fairness motivates it. If resources are unfairly allocated, or if announcements are made in an unfair fashion. “Psychology of the Leger” – if I am unfairly compensated for my effort, I will cyberloaf. Employee theft correlate to salary cuts and downsizing; those who survive steal like mad! “Getting even”. New people are likelier to engage in organizational deviance when this activity is “normative”, existing employees do it.

What can companies do to discourage organizational deviancy?

1) Establish codes of ethics – makes no difference, they are not read, they are written with a high level of abstraction and they are technical, no time to consider ethics. Most were written for PR or litigation purposes, or to include a snitch clause and to cover whistleblower laws.Fire offenders – 1995 study, none since – interviewed managers, asked them about firing organizational deviants. Most managers hate to fire people; when asked why, they answered (in order of frequency): 1) General dislike for firing; 2) Want to give employee a second chance; 3) Would rather rehabilitate the employee; 4) Too much invested in the employee; 5) Trying to accommodate the employee’s unique needs; 6) I hired them. What finally led to firing? 1) They’ve been given too many chances; 2) I finally have enough documentation to fire; 3) Employee violated the final warning. What happens at the meeting at which the firing happens? 1) The manager asks about the employees performance or conduct (resignation often comes at that time); 2) Manager provides documentation; 3) Employee responds by agreeing, disagreeing, or making excuses; 4) Immediately followed by firing; 5) Employee asks follow-up procedural questions (what do I do next?); 6) The boss offers advice or assistance. Have you ever tried to convince someone to quit instead of firing them? 80% had. What had these supervisors done to convince people to quit? 1) Create an unpleasant work environment; 2) Talk them into it; 3) Give them routine verbal or written warnings; 4) Subtle encouragement to quit (show them alternatives to current job); 5) Encourage their peer group/coworkers to convince them to leave, or ostracize them. “Bullying” at work happens to members of the out-group in public rather than in private by a low self-moniror; others do nothing or encourage it…peers don’t stand up for the bullied out of fear that they will be in the out-group if they do. Bullying happens because of a lack of fit with in-group rather than poor performance.

Monday, November 15, 2004

11 13

Two other perspectives on innovation:

1) What makes an Organization innovative?
A) Specialization – people who know their jobs well will innovate, few generalist-innovators.
B) Functional Differentiation – the greater the division of labor, the greater the likelihood of innovation.
C) Professionalism – the more professional the roles, the likelier they will find innovative ways to do them.
D) Formalization – the more formalized the organization, the less likely it will innovate.
E) Centralization – the more centralized and top-down the firm, the less likely it will innovate.
F) Tenure – the longer the tenure of the manager, the likelier innovation will occur. (New arrivals are less likely to innovate, longer tenured managers may be more secure)
G) Slack resources – enable a firm to innovate
H) Internal Communication – more communication, the greater the probability of innovation. (Top-down is mostly orders, bottom-up is overwhelmingly positive, “the mum effect” of bad news. Peer-to-peer is where innovation happens, though much of the communication is gossip)
I) External Communication –The more permeable the firm, (hiring is one way) the likelier innovation – hire “cosmopolits” or “boundary spanners” have many outside contacts – most want to leave or find a job in the organization that doesn’t involve boundary role conflict because these people have conflicting roles, sometimes have to deliver bad news.

2) What makes Individuals innovate?
A) Individual Difference Characteristics – Personality traits – thinking style (2 types are systematic thinkers, who approach problems in a structured way, the consider costs and benefits or decisions, try to be rational, and intuitive thinkers, who relies on gut feelings about what should be done, they will go on hunches – the more systematic a thinker, the less innovative, the more intuitive a thinker, the more innovative) The more controlling and coercive parents are, the less innovative their children are (though the kids tend to achieve in academics, professionally) Supportive, undifferentiating parents raise the most innovative kids. Conscientiousness is another factor; the more conscientious a person, the less innovative they are. Creative personalities – tend to describe themselves as clever, confident, egotistical, humorous, informal, individualistic, insightful, wide-ranging interests, reflective, resourceful, self-confident, sexy, unconventional, snobbish – will innovate more than non-creative people.
B) Organizational Setting – Workplace rather than personality traits – how much supervisor support a person gets (immediate supervisor) a supportive supervisor leads a person to innovate. LMX – leader member exchange – makes the argument that in any work setting, there will be an in- and out- group. People will be marginalized, that is acceptable; for those who are in the in-group, employee wants to work hard, be productive for the boss, has personal loyalty to boss, likes the boss. But what allows one into the in-group? Similarity – interests and values are similar to bosses. Extroverted – extroverts get into the in-group. Competence – competent people get into the in-group. Impression management techniques – most common is to try to pretend to be interested in the boss as a person. What’s in it for the employee in the in-group? Access to information before others, they aren’t supervised as closely as others, they get more interesting and challenging jobs than others, the boss will delegate more to in-group members than others. Older employees in the in-group are over-rewarded, get more than they deserve; older employees in the out-group also get more, but because of competence. New employees in the in-group get more than they deserve, but new employees in the out-group get just what they deserve, no more no less. The organization benefits from this arrangement; in-group members work harder, are more committed to the organization, and are more innovative. Psychological Safety – if there is no retaliation for a failed idea, innovation will occur.

Kipnis – How people get their way in an organization

1) Ingratiation – used against coworkers and subordinates more often than boss. The transparency problem of ingratiating oneself to the boss means that it can be obvious, look sycophantic. Ingratiators are better liked by boss, but don’t get better rewards. Why do we ingratiate ourselves to coworkers and subordinates? Because we need their help.
2) Rationality – data driven, facts and figures used to target the boss.
3) Assertiveness – telling people what to do, used against subordinates.
4) Sanctions – bring forth organizational rules to punish someone – used against subordinates
5) Exchange – Let’s make a deal – used against coworkers.
6) Upward Appeal – go straight to the top, complain about subordinates or coworkers. “The Nun Story” – Sister Mary Hanorah, didn’t like new nun fashions the bishop wanted, wanted to maintain the old habits, Mary was selected to lead the group who wanted to maintain the old. Mary got a meeting with the pope to discuss the problem. Pope offered mediation between nun’s order and bishop. Mary Hanorah’s last name was Kroger. If one uses upward appeal on boss, one must have clout. Typically, an end-run around the boss is whistle blowing, and a last resort.
7) Blocking – extortion, preventing them from getting what they want until you get what you want – used on coworkers. Surgeons and their nurses were alienating maintenance workers and diagnostic service pros, a slow down took place. The surgeons would stay late, risked not making quotas…patients would suffer, so this was only done during elective, non-life threatening surgeries.
8) Use of Coalitions – a coalition is formed to exert influence in an organization – infrequently done. Used against subordinates, coworkers, and bosses. It is a hassle to form a coalition; they are only as strong as their weakest links. Unreliable members are worse than enemies, can weaken a coalition. There are a set of ideas that can predict the success of coalitions. One theory says that only a winning coalition will ever be formed; but why form a coalition if you are already going to win, and if one wins with a coalition, one must share the rewards. Another theory form to reach an adequate size to win, but not larger. The spoils of victory are shared among fewer, and a larger coalition is harder to manage. Another theory is that ideological similarity brings coalitions together, regardless the prospects of victory. Sometimes, a coalition has counter-cultural elements.

9) Consultations – tell people what you are doing, ask their advice but not share decision-making.

10) Inspirational Appeals – meant to inspire people to do what you want. Used against everyone.

11) Legitimatising – Blame the government, rules, or other uncontrollables to justify the action – used against everyone.

Which are likeliest to be effective? Ingratiation is a contingent strategy, doesn’t work against boss. Rationality works well, only approach that works against the boss. Assertiveness, sanctions, upward appeal, coalitions don’t work well. Inspirational Appeals seem to work, at least in the short term. Legitimatising doesn’t work well, people comply with letter not spirit of the law.

An alternative to Kipnis – How do organizations implement change? – Nutt identified 4 sets of tactics for change implementation.

1) Intervention tactics – Change agents are very hands-on in their approach. Steps to the intervention approach 1) Change agents must acquire authority to make change 2) Apply norms to identify performance inadequacies 3) Point out feasibility of improving practices 4) Develop concrete plans for closing the gap 5) demonstrate improvement after which performance is monitored. – 19% relied on intervention.
2) Participation – 1) Change agents identify needs to be met 2) Change agent sets objectives 3) Change agent creates task force(s) 3) Taks forces develop alternatives 4) Task forces make recommendations to change agent 5) Change agent accepts changes 6) Change agents monitor performance – 17% relied on participation
3) Persuasion – 1) Change agent stipulates needs or hires experts to stipulate needs 2) Develop solutions 3) Have individuals try to persuade everyone to accept them. External consultants are often used, or internal staff persuade others to accept the changes. – 30% relied on persuasion, but only in 30% of the cases were external consultants used.
4) Edict – Telling people what to do. 1) Change agent determines needs 2) Selects solution 3) Tells employees to implement the solution. 34% relied on edict.

100% of intervention-driven changes were successful. 84% of participation-driven changes were successful. 73% of persuasion-driven changes were successful. 43% of Edict-driven changes were successful.

Monday, November 08, 2004

11 5

Roloff 11 05

More Macro theories

Dialetical – Roloff believes in this one -Thesis + Antithesis = Conflict, which leads to synthesis. If nothing is hidden there is high conflict, but the best solution comes from the process. Downs believes that there are forces for change and inertia in every organization:

Forces for Inertia:

1) Sunk Cost bias – people have a tendency to keep investing in a losing course of action, gamblers keep losing but keep gambling, bad marriages last. Why does this happen? Hope springs eternal, things have to get better is the assumption; another reason is that quitting is an admission of weakness. Losses aren’t often quatified, and considering losses is terrifying.
2) Self Interest – like Downs’ conservers, change will only lead to loss.
3) Real Cost – the cost of change will be high

Forces for Change –
1) We have the desire to do a good job
2) The desire to increase power – “Empire Building” – climbers want gains the changes will bring
3) Self defense – fear appeal, change or die.

Opposing forces probably lead to compromise.

The paradox of decision-making: Anything that leads to a better quality decision makes implementation of the decision less likely.

The number of different solution increases when more people partipate; cognitive conflict leads to emotional or affective conflict, consensus is harder to get because people’s ideas are hacked away. Face is lost by people whose ideas are trashed. Friendships and alliances are also part of the process. The process of deliberation will not lead to synthesis.

The Lifecycle Approach – Different approaches apply at different stages of life. Changes occur even in stable organizations. Two organizational perspectives:

1) Greiner – not a lot of data, mostly theoretical – Change can be charted on based on age and size of change. There are two types of changes, Revolutionary and Evolutionary changes. Evolutionary changes are tweaking, but Revolutionary changes are dramatic. Most organizations go through “Growth through Creativity” early in their lifecycle (evolutionary); the problem is that there is a wall, and the first crisis, the “Crisis of Leadership”, leads to a break in a positively-angled curve. It becomes Revolution time, the dominant personality rises to the forefront. Then there is smooth evolutionary change, “Growth through Direction”. Crisis #2, “Crisis of Autonomy”, people are dissatisfied with the leader. Others are given control, “Growth through Delegation” then there is a “”Crisis of Control”; decentralization leads to autonomy, which takes the organization in different directions. Leads to “Growth through Cooordination”, when processes are standardized. This leads to the “Crisis of Red Tape” bureaucracy slows the oganization. “Growth Through Collaboration”, characterized by teamwork and limiting bureaucracy through collaborative processes, will take care of the red tape crisis…but other crises are sure to follow.
2) Gersik – Thinks the key is to understand evolution vs. revolution, and admits that there is change even during periods of stability. Revolutionoary changes occur when the deep structure of the organization is modified; two elements are differentiation and how work is performed. Organizations reach and equilibrium state, in which they are satisfied with culture, don’t have to make drastic changes, and want to maintain the status quo, make superficial adjustments only. Gersik thinks that there are 3 forces that maintain equilibrium: 1) cognitive forces – everyone in the company is thinking inside the box, there is no encouragement to think outside; 2) Motivation – change is disruptive, which is unpleasant, and so is opposed; 3) Relationships and Obligations to Stakeholders – changes may not allow the organization to meet the needs of its stakeholders, who may abandon the organization; organization may not have another stakeholder group to replace the old. Eventually, an organization will be forced into revolutionary change: 1) internal operation of the organization – groups don’t get along, groups aren’t cohesive 2) External influences. There are a number of manifestations of revolutionary change 1) optimism and enthusiasm 2) They rely on outsiders for what they should do 3) They disperse new ideas throughout the organization. Not all radical changes produce good outcomes (though she has no data to back it up). A study that analyzed revolutionary change discovered 1) it takes time, tipping points are a myth; 2) it isn’t a linear process, it goes through start/stop cycles; 3) it starts at the core of the organization, rather than at the margins, changes can’t happen simultaneously in all areas of the organization; change at the core can also meet with powerful resistance.

The Teleological Approach

The key variable for understanding why organizational change occurs is a Performance Gap. Downs attributes performance gaps to personnel changes, changes in technology, and external factors like crises. When there is a performance gap, only pressure from a significant stakeholder will lead an organization to close the gap, but not everyone will respond; organizations can lie about having made a change or reorganize around a different goal, rather than actually confront the gap. Stakeholder groups are convinced that their interests are being served. Organizations can also find another stakeholder group.

Innovations in Organizations

Literature has its origin in rural innovation, how to get innovations to farmers. The literature has a pro-innovation bias…a new way must be better than the old way. What are the key elements of innovation?

1) Relative advantage – how much better the innovation is compared to the status quo.
2) Complexity – the more complex the idea, the less likely people are to adopt it.
3) Compatibility – change has to be compatible with current practices.
4) Trialability – when people can try a change first, they are more likely to agree to a change.
5) Observability – The sooner improvement can be observed, the likelier they are to adopt a change…people like fast outcomes.

The characteristics of people who innovate: groups derived from rural sociology.

1) The innovators – frist 2 ½ percent to adopt a new idea. Attached to a particular product or idea, innovators use highly specialized media. They are willing to risk resources to make the innovation.
2) The early adopters – next 13 ½ % to adopt a new idea. These people are interested in new ideas, but aren’t as specialized, read summaries of technical reports rather than original research. Early adopters are seen as opinion leaders in their peer groups, are sought for advice.
3) Early Majority – Next 34% to adopt. People who hear about change from the popular press or from early adopters.
4) The Late Majority – Next 34% to adopt. These people adopt because they have to.
5) Laggerts – Last 16%, will never adopt. These people are principled, and isolates.

As people adopted change, there was an s-curve in a graph of the diffusion of change, with axes time and adoption. There will be resistance to change, then acceptance, then a plateau. The influence of interpersonal contacts grows as the diffusion of the new idea grows.

What factors determine whether a company will innovate?

1) Slack resources – this is counterintuitive, but resources used inefficiently that can be shuffled must be there for innovation to occur. Structure – two aspects – degree of formalization (rules and routines) degree of centralization. Companies that rely on rules and routines reduce innovation (but makes a change adoption likelier). The same is true of centralization. Organizations that make innovation likelier make it tougher to implement change, and vice versa.

Monday, November 01, 2004

10 30

Roloff 10 30

This week, we begin to look at macro-approaches to persuasion and resistance.

Organizational change still involved individuals.

In Organizational Change, Burke begins by talking about traditional approaches.

Frederick Taylor – Scientific Management – Early 20th Century – wrote about early industrial problems. Wanted to solve 3 industrial problems:

1) Uneven Quality – variance in the quality of what each employee produces.
2) Systematic Soldiering – People only work as hard as their troop or team works.
3) Health and Safety issues

Taylor’s first principle: There is one best way to do everything. The way to discover the one best way is through the scientific method. Developed time and motion studies to find the one best way. Deleting unnecessary steps through the study eventually distills a process, and then everyone is trained in the one most efficient way to do the job.

Taylor’s second principle: Everyone is paid according to effort. This discriminates against the physically challenged, women. According to Taylor, this would eliminate the need for labor negotiation, because pay would be commensurate with effort, quantified and objective. Job, rather than individual, factors are the reason for pay discrepancies. Companies are absolute meritocracies; only competency is a measurer of a worker’s worth. The most trainable and obedient worker is the most desirable, since there is one best way to do any job. There is a strict difference between management and labor; labor doesn’t think, they are only responsible for performing labor, but management is responsible for planning, coordination, and supervision (Management is the elite, workers have strong backs and weak minds). Individuals can be identified as labor or management candidates, promotion from labor to management wouldn’t happen (In Taylor’s time, people couldn’t easily seek more education in order to advance).

Taylor viewed himself as a reformer; he adjusted the size of shovelheads to reduce workers’ back problems, and credited his adherence to the scientific method for saving workers’ health. He was discredited shortly before his death, and his name now represents outdated, impersonal management practices. Unions didn’t believe there was a one-to-one ratio between movements and effort, and resisted his practices. His practices were demeaning to workers; it treated workers as children, incapable of grasping complex ideas.

Human Relations Approach

In the famous Hawthorne Lighting studies, lighting in a factory didn’t matter to productivity as much as the worker’s thought that he or she was being watched. Elton Mayo believes that the meaning has been taken out of work, nothing personal about one’s contribution to work. Work fulfills a need for social interaction. Mayo suggests that people are more responsive to their workgroups than to management.
1. Supervisors should not act like supervisors - they should be friends, counselors to the workers2. Managers should not try to micro-manage the organization by an overriding concern for product or job quality at the expense of the macro-social, or humanistic, characteristics of work3. People should be periodically asked how they feel about the work, their supervisors, and co-workers4. Humanistic supervision plus morale equals productivity5. Those who don't respond to group influence should be treated with sarcasm6. Workers should be involved or at least consulted before any change in the organization7. Employees who leave should be exit-interviewed - turnover should be kept to a minimum

The Scanlon Plan creates cross-functional teams that can make decisions without consulting management. The limitations are:

1) Monetary cap;
2) Must have permission of another unit if changes will affect that unit.

According to the Scanlon Plan, if you do something that increases profits, part of the profits go to your group and not the company as a whole. This puts teams in competition, but creates a group incentive, rather than an individual incentive. This gives individuals an incentive to be members of more than one group.

Like Scientific Management, the goal of Human Relations is to make a worker more productive, not the self-actualization of the worker. In studies of what made an effective WWII combat unit, camaraderie was the most important factor; unfortunately, not all work teams are buddies. Management never thought the Human Relations approach would work; the model was never adopted, decision-making authority was given on matters of little importance to workers. Some jobs, done only for the money, don’t lead to self-actualization of workers, and the Human Relations Approach is meaningless to people whose only interest in their job is money.

Industrial Relations Approach

Fleishman’s study at Westinghouse - front line supervisors were trained to treat workers with respect, but after the study, they reverted back to inconsiderate ways of interacting. Fleishman found that the front line supervisor’s own supervisors were not part of the study treated them poorly. Fleishman believed that changing both the system and the individual was needed.

Evolutionary Approach to studying Organizational Change

Evolution suggests adaptation that results in progress. The process is cyclical. When you look at a market, you’ll find many competitors; over time, selectivity shrinks variety, and remaining competitors will resemble each other. Is an evolutionary model that leads to less competition good for customers?

Variation ------à Selection -------à

One way to discover why a company survives is to examine its culture. In Leading Change, Kotter observed three cultural approaches:

1) Strong Culture – the founder is still running the company, there is a consensus about what culture should be, there is a strong mission statement and values, and only people who fit the culture are hired. IBM was the epitome of strong culture. Often, strong culture is successful but only for a short period of time, because the founder started the business at an opportune time; the downside of the strong culture is that it is not adaptable or innovative (IBM was slow to respond to changes in the market).
2) Strategically Appropriate Culture – there isn’t one best type of culture, it depends on the market a company is in at the time. This approach was popular during the dot-com era. Old cultures weren’t appropriate for new companies; a fast approach was better for new companies. Studies showed that these cultures were as likely to fail as old cultures in the long-term, because the assumption is that the market in which the culture exists is static. There was less consideration, and a trail-blazing hubris that was maintained because of past success.
3) Adaptive Culture – People value change, and accept the fact that what is done today may not be sustainable in the future. This is a market-driven culture; a company should do what the market requires. This requires expert analysts, who are less reliable than horse-handicappers. Constant retooling is required to meet new demands of the market.

How to create an Adaptive Culture? Kotter divided people who advocated change into three types:

1) Externals – advocates of culture change from outside – ineffective because externals don’t understand existing politics, inspire resistance and alienation because of “arrogance”. External have two biases: the current culture is bad; there is not enough internal communication.
2) Internals – promote culture-changers – ineffective because they make small internal changes rather than sweeping changes. Negative frames are brought from past experiences with coworkers. External who has internal resources/internal who has an outsider’s view – these are the most successful culture changers because they have an outsider’s view and can influence and mobilize internals without alienating them