The Enterprise Change Office

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From Strategy To Organisational Change

Strategy shapes what the organisation needs to be capable of doing. Where existing capabilities are insufficient, organisational change may be required, with learning from that change contributing to the continuing evolution of strategy.

NB The remaining challenge is not a defect we should edit away: some strategy scholars and practitioners will include organisational change initiatives within “strategy execution”. Your framework deliberately draws a sharper analytical boundary. That needs to be acknowledged and defended on your deeper From Strategy to Organisational Change page rather than qualified out of existence here.

“To enable the realisation of its strategy and objectives” potentially excludes emergent, reactive and externally mandated change.

A critic could say organisations change because of regulation, crisis, technological disruption, acquisition, financial distress, environmental adaptation or unintended emergence—not always because management has formulated a strategy or objective first.

Contents
Introduction

This website maintains that all organisational change should be justified by strategic intent, either to pursue the enterprise’s chosen direction or to adapt to changing circumstances that require reassessing direction, strategy, or objectives.

So how does strategic intent develop through strategy formulation and execution? What are the implications for required organisational capabilities, and when does this necessitate organisational change?

The Strategy Process

The aim here is not to provide a comprehensive overview of strategy, but to focus on aspects of the strategy process that define required organisational capabilities. This process is examined through five related concepts: Strategic Intent, Strategy Formulation, Strategy Development, Strategy Execution, and Emergent Strategy – Learning Through Action. Although presented separately for clarity, these are not sequential stages. Strategy evolves through choices, actions, and learning, with execution experience influencing formulation, development, and even strategic intent.

Strategic intent defines what the organisation aims to achieve or become over the long term. It sets direction without specifying exactly how that direction will be pursued.

Strategic intent sets direction, but strategy requires the organisation to determine how it will pursue that direction.

Strategy formulation is the process by which the organisation assesses its circumstances and makes strategic choices. This involves analysing the external environment, organisational performance, opportunities, threats, capabilities, and constraints to determine where and how the organisation will compete, create value, or achieve its purpose.

Formulation requires making choices and trade-offs. Since resources are limited, pursuing one opportunity may preclude others. A strategy that tries to address every priority is unlikely to offer clear direction.

Terminology for the strategy process varies, and strategy formulation and development are sometimes used interchangeably. This website distinguishes them, as making strategic choices differs from developing those choices into a basis for execution.

Strategy Development translates choices from formulation into a coherent basis for execution. It sets strategic objectives, establishes priorities, identifies required capabilities, considers resource implications, and defines how progress and outcomes will be measured. This process turns strategic direction into a framework for assessing organisational capability and performance.

Strategy execution is the ongoing process of translating strategic intent, choices, and objectives into organisational outcomes. It includes both specific actions, such as acquisitions or market entry, and ongoing activities that utilise organisational capabilities. Through these actions, the organisation delivers goods and services, manages assets, allocates resources, and makes decisions, resulting in organisational value.

Organisational change may be part of strategy execution, specifically to ensure the organisation has the capabilities needed to pursue its strategy and objectives. These capabilities create lasting value when applied. Organisational change should be seen as an enabler of ongoing strategy execution, altering how the organisation creates value.

The previous concepts may imply that strategy is entirely deliberate, moving from intent to formulation, development, and execution. Organisations operate in changing environments where assumptions may be incorrect, and new opportunities or knowledge arise. As a result, strategy can also emerge through action and learning.

Emergent strategy refers to patterns of action that develop over time and may not have been intended in the original strategy. Practical outcomes can differ from expectations, and changes in customers, competitors, technology, or the environment may reveal unforeseen opportunities or constraints. Learning from experience can influence strategic choices and, if significant, prompt a reconsideration of strategic intent.

Emergent strategy is not the absence of direction or deliberate planning. Instead, it recognises that formulation, development, and execution are interconnected and iterative. Strategic intent offers orientation, while learning through action can influence both the path and the destination. Strategy evolves through the interaction of deliberate choices and discoveries made during execution.

This relationship can be depicted as a flow from strategic intent through strategy to required organisational capability, as shown in Figure 1. If current capability is insufficient, organisational change may be needed. Learning from execution and change can then inform the organisation’s evolving strategy.

Together, these processes define what the organisation aims to achieve, how it will pursue that ambition, and the capabilities required. The key question for organisational change is whether the organisation can currently execute its evolving strategy. If not, the gap between required and existing capability determines the necessary organisational change.

From Strategy To Organisational Capability

For organisational change, a key consideration from the strategy process is what the organisation must be capable of doing to pursue its evolving strategy and objectives.

This website examines capability at two distinct but connected levels.

  • At the higher level are the underlying principles and assumptions that shape how the organisation creates value, exercises authority, allocates resources, manages accountability, and makes strategic choices. This is referred to as the organisation’s Governing Logic on this website.
  • At the more tangible level are the organisation’s Culture, Business Model, Value Chain, and Operating Model. Collectively, these form what this website terms the Enterprise System. The Enterprise System expresses the Governing Logic and provides the capabilities through which the organisation operates.

The relationship between the two is not one-way. Governing Logic shapes the Enterprise System, but experiences and behaviours within the Enterprise System can also reinforce, challenge, or change the Governing Logic. They are mutually influential yet analytically distinct.

This distinction is important because a strategy may require capabilities the current Enterprise System lacks. It may also demand new ways of creating value, allocating authority, or making decisions that conflict with the existing Governing Logic. In these cases, organisational change must address both capability gaps and the underlying assumptions.

From Required Capability To Organisational Change

Once the required capabilities for the evolving strategy are identified, they should be compared to current capabilities. If current capabilities are sufficient, organisational change may not be needed. If a gap exists, change may be necessary. Importantly, neither required capabilities nor the gap are fixed; organisational change generates learning that can refine both capability needs and the supporting strategy.

The nature of the capability gap and the level of uncertainty determine how organisational change should be approached. If the existing Governing Logic remains suitable and required capabilities are clear, changes can be made within the Enterprise System through First-Order Change. If the strategic requirement challenges the Governing Logic, both required capabilities and future configuration may be uncertain. In such cases, Second-Order Change requires more exploration, learning, and adaptation, rather than assuming a predetermined future state.

Organisational change is part of the broader strategy process. It is undertaken to develop the capabilities needed for strategy execution, with understanding of those capabilities evolving through change. Therefore, all organisational change should be traceable to strategic intent. If a proposed change is not connected to organisational goals, the allocation of resources should be questioned.

The Role Of An Enterprise Change Office

Identifying a gap between required and current capabilities does not automatically determine the necessary organisational change. The gap must be understood, its causes analysed, and its implications for the Governing Logic and Enterprise System assessed before deciding on a response. Moving directly from identifying a gap to launching an initiative risks addressing the problem without fully understanding it.

An Enterprise Change Office (ECO) plays a key role here. By collaborating with strategy leaders, operational managers, and specialists, the ECO helps translate capability gaps into well-defined organisational change. It provides an enterprise perspective on strategic requirements and their implications for capability, Governing Logic, and the Enterprise System. The ECO also helps identify boundaries, dependencies, and whether the change is First-Order or Second-Order. It does not make the strategic choices that create these requirements.

For First-Order Change, this may result in one or more Change Initiatives, with the ECO helping to ensure their scope addresses required changes across the Enterprise System, not just the most visible needs. If analysis shows that the existing Governing Logic may constrain the strategic response, defining a conventional initiative too early is inappropriate. Instead, the ECO can help create conditions for Second-Order exploration, where assumptions are challenged and future options are explored before committing to a solution.

The ECO does not set strategic intent, formulate or own strategy, or automatically govern resulting changes. Strategic decisions remain with those who have organisational authority. The ECO provides the architecture, processes, standards, expertise, and enterprise perspective needed to understand the implications of those choices and translate capability gaps into coherent organisational change.

The relationship is also reciprocal. Organisational change generates insights about capabilities, constraints, dependencies, and assumptions that may affect strategy. The ECO ensures relevant learning is shared with those responsible for strategy, informing and challenging ongoing strategic thinking without making strategic decisions itself.

Explore Further

Approaching Second-Order Change

This website adopts a strategy-led framework that examines the relationships between strategy, the Enterprise System, Operational Continuity, Governance Logic, and the Two Orders of Organisational Change.

From Capability Gaps To A Portfolio Of Change

This website adopts a strategy-led framework that examines the relationships between strategy, the Enterprise System, Operational Continuity, Governance Logic, and the Two Orders of Organisational Change.

Structuring The Problem Statement For First-Order Change

This website adopts a strategy-led framework that examines the relationships between strategy, the Enterprise System, Operational Continuity, Governance Logic, and the Two Orders of Organisational Change.

Using Strategy Maps To Structure Organisational Change

This website adopts a strategy-led framework that examines the relationships between strategy, the Enterprise System, Operational Continuity, Governance Logic, and the Two Orders of Organisational Change.
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The Potential Weaknesses Of An Organisational Change Playbook

Some of the potential weaknesses of an Organisational Change Playbook and possible mitigations are addressed below.

Potential Weakness Mitigation
Bureaucracy and unnecessary work Lean processes, proportionate governance, and only the documentation necessary.
Rigidity and reduced agility Explicit tailoring provisions, alternative approaches and professional judgement within defined governance boundaries.
False confidence in competence Defined competence requirements, appropriate training, specialist support, assurance and escalation arrangements.
Outdated or ineffective guidance Accountable stewardship, regular review, feedback from practice and evidence-based improvement.
Fragmentation and duplication A coherent process architecture linking activities, decisions, responsibilities, methods and information.
Limited use in practice Integrate with normal management activities, provide accessible guidance, set leadership expectations, and offer practical support.
Disproportionate costs Assess organisational need, develop incrementally, and evaluate the value delivered.

Figure best viewed on tablet or above

These mitigations reduce risks but do not guarantee Playbook effectiveness. Its value depends on the quality of underlying practices, user competence, and leadership’s willingness to address deficiencies.

Does First-Order And Second-Order Change Still Apply?

First-Order and Second-Order Change were developed long before current descriptions of organisational environments such as VUCA (Volatility, Uncertainty, Complexity, Ambiguity) and BANI (Brittle, Anxious, Nonlinear, Incomprehensible). Organisations are now seen as continually adapting, rather than moving episodically between stable states. It is therefore reasonable to question whether a distinction from an earlier context remains useful.

The distinction remains relevant because First-Order Change does not necessarily mean simple, predictable, or incremental change. It can be extensive, continuous, complicated, complex, emergent, and highly uncertain. Organisations may repeatedly adapt structures, processes, technologies, and ways of working while their underlying organisational order remains intact.

VUCA and BANI may increase the frequency, interconnectedness, and unpredictability of adaptation. However, neither uncertainty nor complexity determines the order of change. An organisation can experiment, learn, and adapt continuously without fundamentally changing its organisational order.

Second-Order Change identifies a qualitatively different situation: the underlying organisational order itself becomes subject to reconsideration and potential change. Developments in markets, technology, regulation, societal expectations or other conditions may eventually challenge fundamental assumptions about how an organisation creates value, understands its identity, exercises authority, allocates resources or determines accountability. Adaptation within the existing order may then no longer be sufficient.

The boundary is not always clear. Successive First-Order adaptations may gradually challenge the existing organisational order. However, uncertainty, emergent outcomes, or experimentation alone do not make change Second-Order. The distinction lies in the level at which change occurs, not its size, frequency, or predictability.

Although the organisational environment has changed since these concepts were introduced, the distinction remains relevant. In fact, under ongoing uncertainty and adaptation, distinguishing between change within an existing order and change to that order may be even more important.

Linda Ackerman and Three Types of Change

Linda Ackerman developed an influential distinction between Developmental, Transitional and Transformational Change in Ackerman (1986). At the time, she was primarily an Organisation Development practitioner and consultant.

Ackerman defined Developmental Change as improving existing conditions. Transitional Change involves moving from a current state to a clearly defined new state, with the transition managed over a controlled period. In contrast, Transformational Change results in a fundamentally different state that emerges over time and cannot be fully specified in advance.

This distinction means Transformational Change is qualitatively different from improving an existing organisation or implementing a predetermined design. Figure 2 illustrates these three forms.

Developmental Change Improvement of what is; new state is a prescribed enhancement of the old state. 26_11
Transitional Change Design and implementation of a desired new state that solves an old state problem; requires management of the transition process to dismantle the old state while putting in place the new state; managed timetable. 26_12
Transformational Change

Market requirements force fundamental changes in strategy, operations, and worldview.

New state is unknown - it emerges from visioning, trial and error discovery, and learnings.

New state requires fundamental shift in mindset, organising principles, behaviour, and or culture, as well as organisational changes, all designed to support new business directions.

Critical mass of organisation must operate from new mindset and behaviour for transformation to succeed and new business model or direction to be sustained.

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Figure best viewed on tablet or above

Adapted from Ackerman (1986) and Ackerman Anderson (2016) 

Figure 2: Ackerman’s Classification Of Change

On this website, daschange.info, Ackerman’s Developmental and Transitional Change are interpreted as forms of First-Order System Change, while her Transformational Change is interpreted as Second-Order Transformational Change. This is an analytical mapping made within this website and is not part of Ackerman’s original model:

  • Developmental and Transitional Change are treated as forms of First-Order Change because both can occur while the underlying organisational order remains substantially intact.
  • Transformational Change is associated with Second-Order Change, where that underlying organisational order itself becomes subject to reconsideration and potential change, and the eventual future state cannot necessarily be specified in advance.

References

Ackerman, L. S. (1986) ‘Development, Transition, or Transformation: The Question of Change in Organizations’, OD Practitioner, 18(4), pp. 1–8.

Ackerman Anderson, L. (2016) ‘Organization Development and Transformation: What It Takes’, in Rothwell, W.J., Stavros, J.M. and Sullivan, R.L. (eds.) Practicing Organization Development: Leading Transformation and Change. 4th edn. Hoboken, NJ: John Wiley & Sons, pp. 60–78

Jean Bartunek And Michael Moch And The Orders Of Change

The Organisational Development scholars Jean Bartunek and Michael Moch developed the distinction between different orders of organisational change from a cognitive perspective. In Bartunek and Moch (1987), they examined how schemata could help explain different forms of organisational change.

Schemata are organising frameworks people use to understand and interpret events. Bartunek and Moch described First-Order Change as incremental change occurring within schemata already shared by organisational members. Second-Order Change involves modification of those shared schemata themselves.

They also introduced Third-Order Change, which they described as developing the capacity of an organisation’s members to recognise their existing schemata and change them as circumstances require.

Their work suggests that fundamental organisational change may require changes to the shared frameworks through which organisational reality is understood, rather than only to structures, processes or behaviours.

References

Bartunek, J. M. & Moch, M. K. (1987) ‘First-Order, Second-Order, and Third-Order Change and Organization Development Interventions: A Cognitive Approach’, The Journal of Applied Behavioral Science, 23(4), pp. 483–500.

Amir Levy And Second-Order Change

Amir Levy was an organisational theorist whose work in the 1980s helped apply First-Order and Second-Order Change specifically to organisations.

Levy (1986) distinguished between change within an existing organisational framework and Second-Order Change, which involves more fundamental organisational transformation. Together with Uri Merry, he further developed these ideas in Levy and Merry (1986), examining organisational transformation through perspectives including organisational paradigms, culture, myths, purpose, and approaches to managing Second-Order Change.

Their work reinforced an important distinction: organisational transformation concerns a qualitative shift in the organisation and its underlying paradigm, rather than simply the quantity, scale or difficulty of change undertaken.

References

Levy, A. (1986) ‘Second-Order Planned Change: Definition and Conceptualization’, Organizational Dynamics, 15(1), pp. 5–23.

Levy, A. & Merry, U. (1986) Organizational Transformation: Approaches, Strategies, and Theories. New York: Praeger.

Paul Watzlawick And The Two Orders Of Change

Paul Watzlawick was a psychologist, communication theorist and influential figure at the Mental Research Institute in Palo Alto, California. Working with John Weakland and Richard Fisch, he drew on systems theory to examine why attempts to solve problems sometimes leave the underlying conditions that generate them unchanged.

Watzlawick et al. (1974) distinguished between First-Order and Second-Order Change. First-Order Change occurs within an existing system: its components, behaviours or processes may change while the rules governing the system remain substantially intact. Second-Order Change alters the system itself by changing the rules, assumptions or relationships through which it operates.

This distinction provides an important conceptual foundation for the Two Orders of Organisational Change used within this website.

References

Watzlawick, P., Weakland, J. H. & Fisch, R. (1974) Change: Principles of Problem Formation and Problem Resolution. New York: W. W. Norton & Company.

Ecosystem

The Office of Government Commerce And P3O®

The Office of Government Commerce (OGC) was a UK government body established in 2000 to promote efficiency and best practices in public sector procurement, project management, and programme management. One of its significant contributions was the development of the P3O® (Portfolio, Programme, and Project Offices) framework, first published in 2008. This framework provides principles and guidance on designing and operating effective support structures for delivering change. P3O® was created in response to the growing need for organisations to align their strategies with execution and to standardise the roles of PMOs across different contexts.

In 2014, the stewardship of the OGC’s best practice portfolio was transferred to AXELOS, a joint venture between the UK Cabinet Office and Capita. AXELOS continues to maintain and publish the official P3O® guidance, with the most recent version being “Portfolio, Programme and Project Offices: P3O® Guidance” (AXELOS, 2013).

The guidance outlines a hierarchy of structures, which is summarised in Exhibit 1. It also notes that “projects” can stand alone and do not need to be part of a “programme”.

Exhibit 1: P30® Hierarchy