Page 184 - E2 Integrated Workbook STUDENT 2018

Chapter 13

3.4 Beer and Nohria’s Theory E and Theory O

Beer and Nohria identified that a large proportion of all business change initiatives
fail. They believed that this was caused by managers becoming overwhelmed by the
detail of the change management process and failing to focus on the overall goals of
the change itself.

Beer and Nohria identified that every organisational change conforms to a variant of
either:

Theory E strategies Theory O strategies

 These are based on  These are 'softer'
measures where approaches to change,
shareholder value is the often involving cultural
main concern. adjustment or enhancing
employee capabilities
 Change usually involves through individual and
incentives, layoffs, organisational learning.
downsizing and
restructuring.  This requires involving
employees in the change
process.

Theory E approaches will tend to ignore the feelings and attitudes of their employees,
which will often lead to a loss of motivation and commitment from staff members.
This can damage the competitive advantage of the organisation.

Theory O organisations will often fail to take the 'tough' decisions that may be
needed.

To solve these problems, Beer and Nohria recommended that organisations should
implement both Theory E and Theory O approaches simultaneously and try to
balance the associated tensions.

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