An important aspect of organizational culture is the mindset, influenced by the basic assumptions and core values underlying it. It is the same as in the case of individuals whose thinking and behavior is governed by certain values imbibed through their own life experiences. An organization, at any given point of time, tends to be in a particular psychological state or mental mode, which, in turn, influences its functions, activities, and processes.
An organization’s psychological state arises out of its experiences in the business environment in which it operates, the basic assumptions it holds about the environment (markets, customers, technology, community) and itself (mission, strategy, capabilities/competencies), and its operative culture.
“A mental mode is the peak of a particular existential/experiential state that an organization gets into over time (as do individuals, who live in their own mental modes and most often see what they want to see) and that remains there governing it’s thoughts, processes, and actions until the mode changes. The mental mode may be inferred from the policies, patterned procedures, rules and regulations, and habits governing an organization’s specific and general behaviors. A change in ‘mode’ occurs as intended change (organization rethinks its mission, purpose, or strategy), as change that is unintentional and forced (as and when the organization undergoes a crisis), or as a natural part of an organization’s progression through the various stages of its life-cycle.”
Mental modes are characterized by the dimensions of time (past, present, future), stability-instability (homeostasis-heterostasis), inadequacy-adequacy (or depletion vs repletion), and reality-unreality.
To manage change is to identify the mental mode that prevails in the organization’s current functioning and behaviors.
- To what extent it enables the organization to adapt effectively to the changing business environment
- How to move it into a mental mode that is appropriate to achieve the best organization-environment fit.
It is these capabilities of a firm that determines the degree of its depletion or repletion in dealing with change and achieving a right fit with the environment. That is why past successes may not guarantee an organization’s survival in the present just as present successes may not warrant its success in the future.
How effectively an organization relates to its external environment and achieves a proper fit depends upon its reality orientation. In other words, how accurately does it perceive the various environmental forces impacting on it and assess its own strengths and weaknesses? Organizations characterized by a past orientation and perceiving themselves as replete when in reality they lack in the required competencies may exist in the unreality dimension. Since an organization’s culture and its mental mode are closely related, a significant change in one will induce change in the other.
An organization is likely to exist in four mental modes: deficiency, inertia, problem-solving and proactivity.
- Deficiency: An organization exists in the deficiency mode when the threats/problems it experiences in the business environment are due to its weaknesses, when it is unable to cash in on the opportunities in the environment due to its weaknesses, or when its core competencies (strengths) are unrelated to current business opportunities, hindering it from responding constructively.
- Inertia: When an organization thinks or finds that its weaknesses are not actually related to the problems it is facing or the opportunities it is having, it is said to be in a state of inertia. After having experienced success for many years the organization may cling to its continued success. Because it is clinging to its continued success it fails to recognize that moving in of potential competitors and most often gets caught unaware. It fails to realize that a new competitor may move in and change the face of the market itself with some innovative product or service. Inertia may also happen when an organization, which has been founded, or run successfully under a successful leader, experiences a change of leadership. The new leader may not be as dynamic as the past one and thus is afraid to take risk. The new leader instead of taking the organization head makes efforts just to maintain the successful track record.
- Problem Solving: “An organization is said to be in a problem solving mode, when its core competencies are related to problems/threats in the environment enabling the organization to deal with them.” The organization has a realistic perception about itself and has identified those areas, which needs to be focused on. The forces in the environment, which are facilitating and hindering the organization are well understood and the organization makes an effort to bridge the gap between the desired and the actual state. Problem solving organizations understand that the organization must move towards a greater level of decentralization. The have become aware that employees are in a better position to make decisions when it comes to those issues which affect the day to day working of the organization. The success of a problem-solving organization depends upon the extent its decisions are based on performance, market, customers, technology, employee management policies and well-designed information systems.
- Proactivity: Innovative organizations, which focus on their core competency and look for opportunities beyond the boundaries beyond their current business, are in the proactive mode. The organization is constantly vigilant to capitalize on the passing opportunities and look at future markets and technologies. In such organizations leaders are willing to take the risk and manage the organization to be flexible enough to mold itself for future opportunities.