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others, these companies vigorously study competitors, market leaders in different
industries, clients, and customers. By benchmarking against industry best practices,
they constantly look for ways of improving their own operations. Learning
organizations are also good at studying customer habits to generate ideas. For

example, Xerox uses anthropologists to understand and gain insights to how
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customers are actually using their office products. By using these techniques,
learning organizations facilitate innovation and make it easier to achieve
organizational change.
KEY TAKEAWAY
The changing environment of organizations creates the need for newer
forms of organizing. Matrix structures are a cross between functional and
product-based divisional structures. They facilitate information flow and reduce
response time to customers but have challenges because each employee reports
to multiple managers. Boundaryless organizations blur the boundaries between
departments or the boundaries between the focal organization and others in the
environment. These organizations may take the form of a modular organization,
strategic alliance, or self-managing teams. Learning organizations
institutionalize experimentation and benchmarking.
EXERCISES
1. Have you ever reported to more than one manager? What were the
challenges of such a situation? As a manager, what could you do to help your
subordinates who have other bosses besides yourself?
2. What do you think are the advantages and disadvantages of being
employed by a boundaryless organization?
3. What can organizations do to institutionalize organizational learning?
What practices and policies would aid in knowledge acquisition and retention?

7.3 Organizational Change
LEARNING OBJECTIVES
1. Identify the external forces creating change on the part of
organizations.
2. Understand how organizations respond to changes in the external
environment.
3. Understand why people resist change.
Why Do Organizations Change?
Organizational change is the movement of an organization from one state of
affairs to another. A change in the environment often requires change within the
organization operating within that environment. Change in almost any aspect of a
company’s operation can be met with resistance, and different cultures can have
different reactions to both the change and the means to promote the change. To better
facilitate necessary changes, several steps can be taken that have been proved to
lower the anxiety of employees and ease the transformation process. Often, the
simple act of including employees in the change process can drastically reduce
opposition to new methods. In some organizations, this level of inclusion is not

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