What is The Diagnostic Model of Organizational Change?

Diagnostic Model of Organizational Change

The success of today’s small and medium-sized companies is largely based on their ability to implement organizational change and change their work principles as quickly as possible when their environment starts to create pressure for changes. So, here I would like to talk about the diagnostic model of organizational change.

One way that managers can survive is to implement a systematic approach to following and analyzing different sources of change. This is the basis of organizational diagnosis models for change, which is only one model among many change management models like:

I will cover all of them in other posts here.

Why do Organizations Need Diagnostic Models for Organizational Change?

We live in a world where change is normal and something that occurs every day in organizations of any kind. Our expectations today were higher than those from yesterday. Our expectations for tomorrow are also higher than today.

Customer expectations are changing at a much higher speed than in the past. Suppliers change their way of doing business. Partners are different over time. The interest of various stakeholders as a part of the closed environment of organizations varies over time.

Outside changes will appear regardless of whether companies want them or not. Then, how safe is small and medium-sized businesses from the external forces that can cause changes in their organizations?

Production managers will always need a red light as a sign that exists in the manufacturing process. These signs will tell them when something is wrong to stop the production process, eliminate errors or problems, and activate the process again to continue without errors.

It’s the same with organizational systems. Managers need to immediately be aware of different signs from their organization’s internal and external environment to tell them they need to do something.

Discovering different change sources as quickly as possible becomes one of the key components of successful change management that will bring competitive advantages to today’s organizations.

Uncertainty and Diagnostic Models of Change Management Process

I have already written about an entrepreneurial journey and uncertainty in the post titled “Your entrepreneurial journey is not the journey from A to B.” But it is important to recall some of the thoughts in that post.

Usually, entrepreneurs start with their vision of the future and where they want their businesses to be in that future. They know where they are now and know where they want to be in the future.

We can present this as in the figure below. For example, the organization is currently in position A and wants to be in position B.

Entrepreneurial Journey From A to B

But, as we already know, the entrepreneurial journey is not so simple. The first thing that they will need is strategic planning to predict their journey in the most detailed pieces.

The reality is not so straightforward for entrepreneurs because their organizations operate in a highly uncertain environment that will not allow them to follow their plans to get where they want to be.

For example, when they start their journey defined with their business plan, they can quickly find that they will need to change direction. That means the business must go to D to reach position B. In such a way, carefully prepared plans will have to be adjusted because they quickly become irrelevant.

Changing the Direction as a Part of the Diagnostic Model of Organizational Change Management Models

Another thing that entrepreneurs can find when they start implementing their plan is that it is better to go to position C instead of position B.

Entrepreneurial Journey From A-B-C-D

But that’s not the only problem entrepreneurs will face on their journey.

On their way to get to the final destination, they will have different obstacles and constraints. You will already predict some of them in your plan. But usually, the larger part of them will appear as you go through your entrepreneurial journey.

It doesn’t matter whether you go from A to B or you have already discovered changes in the business environment that tell you to change your current route and go to C instead of B. Or, if you find that you need to go to D first to get to B, the path to the final destination will always have different types of obstacles and constraints. You will need to overcome them if you want to get where you want to be. These obstacles and constraints on your way are caused by different forces that put pressure on your organization. Those forces are change sources.

Entrepreneurial Journey From A-B-C-D-Sources

Natural Organizational Change Management Model

The model proposed by Conor, Lake & Stackman, called “natural” organizational changes, can serve as a model of organizational change. Natural refers to an unmanaged change process because the change starts by itself and, with business processes, moves through the organization itself.

The idea is that some causes, like destabilizing forces, try to destabilize the organization, and because of that, this model is one of the diagnostic models for implementing changes.

Those forces can be from the outside and inside of an organization.

For example, a destabilizing force from outside the organization is when a new, better competitor’s product or service appears. This destabilizing force can significantly impact organizational performance. So, the organization must respond to that destabilizing force, which is real change, to ensure that outside forces will not impact organizational performance.

An example of an internal destabilizing force can be a change in the top management, whereby the new management brings new management practices and business processes, which will change the organization’s operations. Again, these changes can impact organizational performance, which strongly signals the need for changes.

The picture below shows this model.

natural organizational changes

So, the first step in the model is related to organizational diagnosis; it doesn’t matter if it is a diagnosis of organizational performance or following external aspects. The goal is to discover those destabilizing forces that clearly signal that something will have to change in the organization.

But the next question, that is, the next step in this change model, is to answer the question of what needs to be changed in the organization to respond to those destabilizing forces and improve the company’s performance. The authors of the model believe that those changes can be in one or more of the following elements of the organization:

  • Tasks performed by individuals,
  • Changing processes that exist in the organization,
  • The strategic direction of the organization and
  • Changing organizational culture, i.e., values, norms, and behaviors.

Changes in these elements will mean that the organization is no longer the same. It has changed to respond to the destabilizing factors. But the process does not end there. Whether those changes have successfully dealt with those destabilizing forces must be checked. If these changes have dealt with those destabilizing forces, then the maintenance of the new organization is continued, and if the changes have not produced the required organizational outputs, then the process requires us to go back for additional changes to those elements to respond in an appropriate way to those destabilizing factors.

Organizational Diagnosis

When we look at this model of changes, we must note that destabilizing forces are the focus of our attention. Someone inside the organization will get information that those destabilizing forces have appeared. In that part, the role of business intelligence will be crucial for an organization’s timely response to those destabilizing forces.

Because the destabilizing forces are the basis of changes, the authors of this model mention another stage called organizational diagnosis, which actually means monitoring and analyzing the outside and inside of the organization to discover the destabilizing forces. So, the change process cannot begin related to what needs to be changed or choosing the specific change method until the destabilizing factors are clearly recognized. This diagnosis is not shown in the basic model by the authors, but it clearly represents the basis of changes.

According to the authors of this model, the diagnosis is composed of four basic parts:

1. Problem Formulation

Problem formulation is a statement about the existence of a certain type of problem for the organization.

For example, the competition introduces a new product that is much more competitive than ours, or a change in the exchange rate of the relevant currency causes an increase in the prices of our products or services. It is a formulation of the problem.

However, I believe the process of change cannot start from here. With such a statement, it is assumed that we already know that the new competitive product creates problems in our organization, which represents a destabilizing factor.

Because of that, I think that there will need to be certain steps in this stage even before formulating the problem. This can be

  • Selecting the key factors (entities) from the outside and inside of the organization to be monitored,
  • Monitoring those entities and
  • Formulating possible problems based on monitoring of their behavior.

2. Collect Information About the Problem

After the problem is defined, the next stage is to collect information about it, representing a review of internal documentation, conducting interviews in the organization, analyzing work tasks, etc.

Here, it is noted that this information collection refers to the available information in the organization itself, which will show us the key needs for changes when analyzed in the next stage.

But, with the previous stages, we already have much information about the destabilizing forces. Now, we need to gather information about the current situation in the organization itself and how we could compare it with those about the destabilizing forces.

3. Analysis of collected information

This stage must begin with assessing the collected information’s validity and whether it is sufficient to decide further actions.

When we are sure that we have enough information about the current situation, we can start comparing it with information about the destabilizing forces to discover the gaps that will have to be filled with the change management process to increase organizational performance.

4. Suggestions for future actions

Finally, the analysis should lead to increased knowledge and conclusions for future actions that the organization must implement to increase organizational performance.

Proposed Diagnostic Model for Organizational Changes

Because of the expected uncertainty, today’s managers must use diagnostic models of change. This model will allow them to follow different sources of organizational change, analyze their internal and external environment, and update sources that they already have and manage. The figure below presents one simple but good diagnostic model of change I developed years ago and implemented in several client organizations.

Diagnostic Model of Organizational Change

As you can see, this model contains several steps:

1. Key sources of changes

This means we need to have important key performance indicators that will need to be followed inside the organization and external sources for change, like competition, market, regulatory changes, etc. We can easily go to the next step if we define passive change sources.

2. Data collection about the sources

Now, we need a system to collect important information about the sources. It will need to cover all key sources defined in the previous step.

3. Assessment and analysis of the collected information about the sources

Now that we have all the important information, it will need to be assessed, especially regarding validity and reliability, and then analyzed to check for some requirements to change the current status quo situation.

4. Data collection about possible problems

As we have already mentioned previously, we can have problems inside the company that can also become change sources. So, this is the second source of information.

5. Assessment and analysis of the collected information about the problems

This is the step where we need to analyze the second source of information collected regarding the identified problems inside the organization. Because of that, this model is one of many possible diagnostic models.

6. Initial problem formulation and confirmation of the problem

Now, both analyses (from the third and fifth steps) go through this step to formulate the problem and confirm that the problem exists in the organization. When I talk here about the problem, I don’t think only about current or existing problems but also about the problems that will appear in the future. This is because we analyze information from outside the organization to locate possible external change sources.

7. Suggestions for the future actions

When we formulate and confirm the problem, we can start working on strategic planning for the steps we must cover to start the implementation phase of changes. It doesn’t matter if it is organizational development or another known change model. We will need to do something.

Here, the diagnostic models of change focus more on the diagnosis and usually end when we need to select another appropriate model. It is not about implementing change, but the focus is telling the management when they need to change something in the organization.

Besides the initial collection of different change sources, this model’s basic principle is part of the continuous analysis. It is important to predict the organization’s future steps. So, you need to analyze the organization’s internal and external environment continuously. In such a way, you can locate different problems. These problems will also update your initial collection of drivers or forces for change. So, you will be prepared for the future.

More About Changes…

If you want more articles about changes, try the following articles:

  1. Resistance to Organizational Change
  2. How Safe is Your Business From the Outside Changes?
  3. Optimal Level of Resistance to Change
  4. How do you implement organizational changes in your business?
  5. Your Business Needs to Make Something! 11 Warning Signs