Organizational Development and Change Management Explained

What Is Organizational Development?

Organizational development is a planned, organization-wide effort managed from the top of an entity to increase organizational effectiveness and health through deliberate interventions in the organization's processes and practices. Organizational development plays a fundamental role in facilitating organizational change. It involves the use of organizational resources to develop effectiveness and increase productivity. It can be used to resolve difficulties within the organization or as a way to examine a process and find a more effective way of doing it.

The process of organizational development identifies areas of company operations where change is required. Each need is examined, and the possible effects are incorporated into a change management plan. Importantly, the plan specifies the precise ways in which change will advance and enhance company practices, which areas of operations will be impacted, and how change can be implemented efficiently for employees. Without organizational development as part of change management, a corporation would have significant difficulty developing effective change management programs (Cummings & Worley, 2016).

Key OD Elements That Drive Successful Change

The two fundamental and critical aspects of organizational development (OD) that facilitate successful organizational change and promote lasting success are goal setting and employee development (Rothwell, 2010). With regard to goal setting, it is essential to understand the objectives of the organization beyond the basic surface level. This encompasses setting improvement targets for every strategic objective. Every member of the team should have the information necessary to set personal or team goals that align with the organization's strategic objectives. The advantage of this approach is that organizational change is properly understood by all members of the organization. Lasting success is attained because every team member holds strategic objectives that facilitate the achievement of organizational goals over the long run (Rothwell, 2010).

The second critical aspect is employee development. This OD element provides staff members with the opportunity to work to their greatest potential. Employee development is essential to successful organizational change because employees receive learning, coaching, and development opportunities. When employees are trained, they acquire the knowledge, competence, and skills necessary for the effective implementation of change initiatives introduced into the organization (McLean, 2006).

Nokia as a Case Study in Organizational Change

A fitting example of successful organizational change is the case of Nokia. With the introduction of mobile phones into the market, Nokia experienced considerable market dominance. However, with the advancement of technology and the entry of other competitors, the company was forced to exit the mobile device market in the 2014 fiscal year due to mounting losses. Nokia subsequently sold its device business to Microsoft. The company's leadership recognized that a strategic shift toward networking equipment would be more effective.

In that regard, Nokia acquired Siemens and established a new portfolio strategy, organizational structure, capital structure, business plan, and management team. This organizational change has been largely successful: Nokia experienced a growing share price, attained significant revenues and returns, and grew to become the most valuable corporation in Finland (Nokia Corporation, 2017). The Nokia example illustrates how deliberate OD practices — including restructured leadership and clear strategic objectives — can enable a company to reinvent itself in a rapidly changing market.