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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Note on Human Behavior: Tue Washington Post May 19, Harvard Business Review March: Because the theories are so different, managers cannot juggle them simultaneously and the resulting mess 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. Contributing Knowledge to Electronic Knowledge Repositories: For example, a company can first lay-off employees Theory E and then cut down organizational hierarchy and improve communication Theory O.

Nitin NohriaSandra J. The main aim of the study was the realization that organizations need to adapt to change or they will die. The company should look for spontaneity. Those firms at maturity stage can apply both theories whereas those companies at ceacking decline stage may only concentrate on shareholders welfare as their survival technique Hayes Nissen SoutheastCon Sucher, Joseph Badaracco, and Bridget Gurtler.

This article explores each theory and how it has been implemented on its own. Risk, transition, and strategy.

Cracking the code of change. – Semantic Scholar

Skip to search form Skip to main content. Rather than rely on a single form of incentives that concentrate on a single issue, the company should tailor its incentives to get the managers and employees to be the best they can be.


This theory is the process of changing, obtaining feedback, reflecting, and making further changes. Cracking the code of change. Theory E hcange Theory O can be successful when used together at the same time.

The anxiety of learning. Companies can enact Theory O and Theory E in sequence. This is a losing situation because however high the gain in productivity a company experiences cannot overcome losing market share and consumers.

Finally, consultants should get managers to think and not just blindly act on a set of procedures. Topics Discussed in This Paper. In their methodology, they used a mixed method design including both qualitative and quantitative data. The theory and practice of change management 3rd Ed. The two theories are Theory E and Theory O.

Companies that enact this strategy have a strong, long-held, commitment-based psychological contract with their employees.

Theory O a soft approach, which nohris based on organizational capability and focuses on developing corporate culture and human capability through individual and organizational learning. Citations Publications citing this paper.

Combining E and O is directionally correct, they contend, but it requires a careful, conscious integration plan. Nohria, Nitin, Sandra J. To show the differences between these hard and soft approaches, Beer and Nohria devised a system to compare the three companies. Managers using Theory O believe if they focus exclusively on the price of their stock, they might harm their organizations. The simultaneous use of both theories is more likely to be the source of sustainable competitive advantage.

Cracking the code of change.

However, those who do not learn and cannot learn should be replaced. According to Jensen an organization should chane 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. Theory O is change based on organizational capability: This note summarizes the recent research, shows its implications cange the basic steps in ethical decision making, and provides a basis for in-depth discussion of the character-versus-situation question.


Skip to main content. Beer and Nohria present the examples of two companies, Scott Paper and Champion International, that used a purely E or purely O strategy to create change–and met with limited levels of success. The writers recommend vracking use of the combined theories to other organizations to achieve lasting change. Change management as a platform for activity-based management. This lack of speed and possible loss of direction can cause doubt and disillusionment with the process.

They further realize that it can only be possible with continued monitoring and long-term organization objectives. This should become a balancing act between initiating actions that follow one theory and then contradict that theory. Another recommendation would be, further research be undertaken involving a larger sample to validate the theories.

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Cracking the Code of Change

In my personal experience I worked for a bank that valued its employees too much and we took it for granted that we were the most important component of the bank.

E change strategies are more common than O change strategies among companies in the United States. For example, if Theory E Employees last policy follows Theory O Employees first policy policies, employees and managers may feel betrayed.

But few companies manage corporate transformations as well as they would like.