Cracking the Code of. Change by Michael Beer and Nitin Nohria. Included with this full-text Harvard Business Review article: The Idea in Brief—the core idea. Citation: Beer, Michael, and Nitin Nohria. “Cracking the Code of Change.” Harvard Business Review 78, no. 3 (May–June ): – In this article, authors Michael Beer and Nitin Nohria describe two archetypes–or theories–of corporate transformation that may help executives crack the code.

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Rather than only pay managers when they meet financial goals, the company should pay managers when they meet performance goals as well. Because the theories are so different, managers cannot juggle them simultaneously and the resulting nohfia leaves the company no better off.

In this article, authors Michael Beer and Nitin Nohria describe two archetypes–or theories–of corporate transformation that may help executives crack the code of change.

Cracking the Code of Change

Finance Globalization Health Care. The writers recommend the use of the combined theories to other organizations to achieve lasting change. To date, Porter and Nohria have gathered 60, hours’ worth of data on 27 executives, interviewing them—and hundreds of other CEOs—about their schedules. It is a good starting point for scholars including myself to build upon and expand the knowledge on theory E and O using other key dimensions of change. In a summary, this empirical article by Beer and Nohria was interesting to read.

The idea should be having the company use what it learns in order to remove the dead weight from the company. A normative view of the role of middle management in the implementation of strategic change Rosalie KuyvenhovenTurner ConsultingWolfgang Buss Finally, consultants should get managers to think and not just blindly act on a set of procedures. Worse, the employees lose any trust for the company and management whatsoever. Theory E is change based on economic value: The company should use a variety of incentives to encourage good work within the corporate structure.


The authors therefore set to bridge this academic gap.

According to Jensen an organization should have a single valued objective function that calls for purposeful behavior, which may not be possible when there are multiple dimensions which may potentially lead to confusion and complexity. Cracking the code of change. This article explores each theory and how it has been implemented on its own. Click here to sign up.

Cracking the code of change.

Topics Discussed in This Paper. The lesson from ASDA?

Today’s fast-paced economy demands that businesses change or die. These archetypes are crackimg on different and unconscious assumptions by senior executives and the consultants and academics advising them. Help Center Find new research papers in: Why major change programs fail: But few companies manage corporate transformations as well as they would like.

They studied two companies, both in the paper production, and looked at how each executive of the companies approached change. For example, a company can first lay-off employees Theory E and then cut down organizational hierarchy and improve crackinng Theory O. Journal of Cost Management Summer: References BeerM.

Finally, if the entire strategy is not well thought out it may cause more trouble than it is worth. Managers should be encouraged to use consultants as a tool and nothing else.

Cracking the code of change.

Nohria, Nitin, Sandra J. Theory E is change based on economic value. Cite View Details Educators Purchase. The simultaneous use of both theories is more likely to be the source of sustainable competitive advantage. Additionally, if there is a change in senior management during the process the program of sequencing may lose momentum and direction. The reason for these failures is that in their rush to change their organizations, managers end up immersing themselves in an alphabet soup of initiatives.


CEOs need to learn to simultaneously manage the seemingly contradictory dualities of the job: Cracking the code of change. Additionally, the company enacting Theory O gains productivity but does not gain economic value beyond the gains in performance measures.

The goal should be to make the company a sound financially tje a great place to work.

Cracking the Code of Change

Remember me on this computer. Editorial Washington Post May codee, The result is that most change efforts exert a heavy toll, both human and economic. To do so, requires great skill and will to achieve adequate results.

To thrive and adapt in the new economy, companies must make sure the E and O theories of business change are in sync at their own organizations. This is a losing situation because however high the gain in productivity a company experiences cannot overcome losing market share and consumers.

Beer, Michael, and Nitin Nohria. Contributing Knowledge to Electronic Knowledge Repositories: They accomplished this by compiling a list of key dimensions of change. Harvard Business Review May-June: The two theories are Theory E and Theory O. This note summarizes the recent research, shows its implications for the basic steps in ethical decision making, and provides a basis for in-depth discussion of the character-versus-situation question. Theory E is a hard approach and is based on economic value and usually results in economic incentives, layoffs, downsizing and restructuring.

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