Why I Use The Term “Enterprise Change Office”
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Contents
Definition
Within this website, organisational change is defined as:
“The adaptation of an organisation’s Enterprise System and, where necessary, its Governance Logic to support the achievement of its strategy and objectives.”
Consequently, organisational change management is defined as:
“The coordinated leadership, governance, delivery, and engagement activities through which organisational change is conceived, governed, delivered, adopted, and sustained.”
The concepts developed throughout these pages form an integrated framework in which each idea builds upon those that precede it. A shared understanding of organisational change provides the foundation needed to distinguish between different forms of change, explain how the framework fits together, and identify the organisational capabilities required to support effective change.
What Is Strategy?
This website defines strategy as what the organisation is seeking to achieve and how it intends to achieve it.
Organisations execute strategy through their Enterprise Ecosystem and the day-to-day operation of that ecosystem, referred to here as Operational Continuity. Organisational change becomes necessary when the current Enterprise System, or the enterprise’s Governance Logic, is no longer considered capable of supporting the achievement of the organisation’s strategy and objectives.
Without a clear understanding of strategy, it becomes difficult to determine whether organisational change is necessary, what form that change should take, or how success should be measured. A more detailed discussion of strategy and its relationship to organisational change is provided here.
The Enterprise System
This website uses the term Enterprise System to describe the interconnected elements through which an organisation creates, delivers, and sustains value. The Enterprise System comprises Culture, Business Model, Value Chain, and Operating Model. Collectively, these elements provide the organisational capabilities required to execute strategy and achieve objectives.
The term a system is used deliberately because these elements are highly interdependent. Changes to one element frequently influence the others, and organisational performance depends not only on the effectiveness of the individual elements but also on how they interact as a coherent whole.
The Enterprise System is explored further here.
Operational Continuity
Whilst the Enterprise System provides the capabilities required to create value, Operational Continuity exploits those capabilities through day-to-day activities. It is through Operational Continuity that customers are served, products and services are delivered, regulatory obligations are met, and value is created and delivered. Consequently, Operational Continuity is the primary mechanism by which strategy translates into tangible outcomes.
The concept of Operational Continuity is considered further here. The webpage also explores why the term Operational Continuity is preferred to the more commonly used phrase Business-As-Usual.
Governance Logic
Whilst the Enterprise Ecosystem describes how an organisation currently creates and delivers value, Governance Logic describes the underlying assumptions, principles, and decision-making mechanisms that shape how the organisation is directed and controlled. Governance Logic influences how resources are allocated, how authority is exercised, how risk is managed, how performance is assessed, and ultimately how organisational success is defined.
The concept of Governance Logic is explored further here.
The Two Orders of Organisational Change
Organisational change literature recognises that not all organisational change occurs at the same level. In some situations, change can be achieved by adapting elements of the Enterprise Ecosystem whilst preserving the existing Governance Logic. In other situations, the Governance Logic itself must change. This distinction gives rise to the concept of the Two Orders of Organisational Change:
First Order Change
Adapts elements of the existing Enterprise System whilst preserving the organisation’s underlying Governance Logic. Although processes, structures, technologies, capabilities, or ways of working may change, the fundamental assumptions about how the organisation creates value and governs itself remain intact. Most organisational change falls into this category because organisations continually refine and improve their capabilities without fundamentally redefining their identity or governing principles.
Second-Order Change
Occurs when the organisation’s existing Governance Logic is no longer capable of supporting its strategic needs. In these circumstances, the organisation must reconsider more fundamental questions concerning how value is created, delivered, governed, measured, or sustained. Rather than simply adapting elements of the Enterprise System, Second-Order Change challenges the assumptions that underpin the ecosystem itself and may result in a fundamentally different way of operating.
The distinction between the two orders of change is important because approaches that are effective for First-Order Change are not necessarily effective for Second-Order Change. Understanding which order of change is being undertaken, therefore, has significant implications for how change is led, governed, and executed.
The concepts of First-Order Change and Second-Order Change are explored further here.
Summary
Organisational change cannot be understood in isolation from strategy. Strategy establishes what the organisation is seeking to achieve, whilst the Enterprise Ecosystem provides the capabilities required to achieve it. Operational Continuity exploits those capabilities to create and deliver value, and Governance Logic provides the underlying assumptions and principles through which the organisation is directed and controlled.
When the existing Enterprise Ecosystem and Governance Logic are no longer sufficient to support the organisation’s strategic objectives, organisational change becomes necessary. Depending on the nature of the challenge being addressed, this may involve either adapting the existing ecosystem through First-Order Change or fundamentally reconsidering the underlying Governance Logic through Second-Order Change.