Paradigm Shift as the Most Radical Structural Change

MIS 2 - Assignment # 5

In the spectrum of organizational change, which is the most radical type of change: automation, rationalization of procedures, business reengineering, or paradigm shifts?

During one of our discussions in the MIS subject, I have learned that formulating a strategic plan on a regular basis is still necessary for any organization even though their current strategic plan is already effective. Why is that so? Because there is a big possibility that a few years from now, their strategic plan will be not as effective as it is today. We have to remember that we are in a fast-changing environment and what happens tomorrow can be very different from today. From that context alone, changes in an organization can be considered inevitable. Even the slightest changes can make a huge difference for the organization. Therefore, the type of radical change for the organization should be properly weighed according to the level of risk as well as the return of investment for the organization.

But what is an organizational change?

Organizational change is any action or set of actions resulting in a shift in direction or process that affects the way an organization works. Change can be deliberate and planned by leaders within the organization (i.e., shift from inpatient hospital focus to outpatient primary care model), or change can originate outside the organization (i.e., budget cut by Congress) and be beyond its control. Change may affect the strategies an organization uses to carry out its mission, the processes for implementing those strategies, the tasks and functions performed by the people in the organization, and the relationships between those people. Naturally, some changes are relatively small, while others are sweeping in scope, amounting to an organizational transformation. Change is a fact of organizational life, just as it is in human life (Flowers Bloom: organizational change -most radical type of change, 2009).

The organizational change can be brought about by the fast changing environment or acts as a strategic move in order to adapt in the current situation or get ahead with the competition. Either way, the organizational change that can occur in an organization can be defined into four kinds of structural organizational changes that is brought about by information technology. These are: automation, rationalization of procedures, business reengineering, or paradigm shifts.

Figure 1

The first one is Automation.

In plain definition, automation is a system of manufacture designed to extend the capacity of machines to perform certain tasks formerly done by humans, and to control sequences of operations without human intervention. The term automation has also been used to describe non-manufacturing systems in which programmed or automatic devices can operate independently or nearly independently of human control. In the fields of communications, aviation, and astronautics, for example, such devices as automatic telephone switching equipment, automatic pilots, and automated guidance and control systems are used to perform various operations much faster or better than could be accomplished by humans (Besel, 2008).

In a correlation to being a radical change in an organization, automation is the type of change that uses technology to the tasks in an organization more efficiently and effectively. Basically the goal of automation is the increased efficiency of the operations in an organization. Calculating paychecks and payroll registers, giving bank tellers instant access to customers deposit records this are all examples of automation.

Based on Figure 1, we can already deduce that compared to the other three types of structural changes, automation have the lowest risk but also the lowest return of investment or reward for an organization. It just means that among the four types of structural changes that can occur in an organization, automation is the least radical change because of the low risk as well as the low reward that an organization can get. If you compare it with the three, automation has the least impact for an organization.

During automation, new bottlenecks in production are frequently revealed and make the existing arrangement of procedures and structures painfully cumbersome (Solo,2009). This is where a deeper form of structural change called the Rationalization of Procedures can be adapted.

Basically, the rationalization of procedures is streamlining of procedures and eliminating obvious bottlenecks that are revealed by automation for enhanced efficiency of operations (Malhorta, 2000).

Compared to automation, the rationalization of procedures provides higher risks but at the same time higher chance of return of investment for the organization.

A more powerful type of organizational change is what we call as Business Process Reengineering.

In plain definition, business process reengineering is the reorganization of way business is run. It is a management approach that examines aspects of a business and their interaction and attempts to improve the efficiency of the underlying processes (“Business process reengineering”, 2008).

It is in business process reengineering in which business processes are analyzed, simplified and redesigned. Using information technology, organizations can rethink and streamline their business processes to improve speed, service and quality. Business reengineering reorganizes work flows, combining steps to cut waste and eliminating repetitive, paper intensive tasks. Its usually much more ambitious thank rationalization of procedures, requiring a new vision of how the process is to be organized (Solo,2009).

Reengineering is the radical redesign of business processes that depends upon information technology intensive radical redesign of workflows and work processes (Malhorta, 2000).

Compared to automation and rationalization of procedures, business process reengineering change conquers higher risk however it also covers the possibility of higher rewards for the organization.

Rationalizing procedures and redesigning business processes are limited to specific parts of a business. New information systems can ultimately affect the design of the entire organization by transforming how the organization carries out its business or even the nature of the business (Solo,2009).

A more radical form of business change is called Paradigm Shift. Paradigm shift involves rethinking the nature of the business and the nature of the organization. In many instances firms seeking paradigm shift and pursuing reengineering strategies achieve stunning, order or magnitude increases in their returns on investment (Solo,2009).

Figure 2

Based on Figure 2, from the term “re-everything”,I can deduce that a paradigm shift is the overall change of the organization. I consider it as the most extreme type change that an organization would do. It is like the combination of all the changes made by the first three types of structural changes. This type of change is considered to be the hugest gamble that an organization might decide to do. Why? Because based on Figure 1, it has the highest possible risk as well as the highest possible return of investment in a company.

From figure 1 alone, we can already observe that the paradigm shift covers highest risks compared to other types of change. However, it also covers higher rewards for the organization. I can deduce that based on the degree of risk and reward that a paradigm shift in an organization can give, therefore a paradigm shift can be considered the most radical change that an organization can adapt compared to automation, rationalization of procedures and business re-engineering.

Some business model innovations like Barnes and Noble and Toys R Us represent ‘paradigm shifts’ that characterize not transformation at the level of business processes and process workflows, but radical rethinking of the business as well as the dividing lines between organizations and industries (Malhorta, 2000).

Such rethinking of the nature of the business and the nature of the organization itself characterizes paradigm shifts as the hallmark of business model innovation (Malhorta, 2000).

References:

Besel, Michael N. "Automation." Microsoft® Student 2008 [DVD]. Redmond, WA: Microsoft
Corporation, 2007.

Business process reengineering. (2008). Microsoft Student 2008 [DVD]. Redmond, WA:
Microsoft Corporation.
Flowers Bloom: organizational change (most radical type of change). (2009). Date Retrieved:
December 22, 2009 Retrieved from: http://marketing-automation-software.net/

Malhorta, Y., (2000) .Knowledge Management & New Organization Forms: A Framework for
Business Model Innovation. Date Retrieved: December 22, 2009. Retrieved from: http://www.brint.org/KMNewOrg.pdf
Solo, A.O. Management Information System. Atlantic International University. Date retrieved:
December 22, 2009 Retrieved from: http://aiu.edu/applications/DocumentLibraryManager/upload/Management%20Information%20Systems.pdf