Cracking the Code of. Change by Michael Beer and Nitin Nohria. Included with this full-text Harvard Business Review article: The Idea in Brief—the core idea. Citation: Beer, Michael, and Nitin Nohria. “Cracking the Code of Change.” Harvard Business Review 78, no. 3 (May–June ): – In this article, authors Michael Beer and Nitin Nohria describe two archetypes–or theories–of corporate transformation that may help executives crack the code.

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Cracking the code of change. – Semantic Scholar

The main aim of the study was the realization that organizations need to adapt to change or they will die. According to research included in the article, seventy percent of all change initiatives will fail.

Yet again, historically, few researches have been undertaken on change that relates to entrepreneurial companies which are not necessarily large.

The authors therefore set to bridge this academic gap. Theory E is a hard approach and is based on economic value and usually results in economic incentives, layoffs, downsizing and restructuring. Theory O a soft approach, which is based on organizational capability and focuses on developing corporate culture and human capability through individual and organizational learning.

This article explores each theory and how it has been implemented on its own.

Beer and Nohria then demonstrate how the theories can be combined to create successful, lasting change. In their methodology, they used a mixed method design including both qualitative and quantitative data.

Qualitative analysis consisted of semi structured interviews and survey comments, the quantitative analysis consisted of survey descriptive statistics and correlation analysis based on survey result from the three companies.

In conclusion, Beer and Nohria have presented lessons we can take away from this article. One of them is companies should not rush to change instead they should try and find a balance between Theory E and O approaches. This is because a combination of the two theories enables a company to achieve a lasting change. The writers recommend the use of the combined theories to other organizations to achieve lasting change. They further realize that it can only be possible with continued monitoring and long-term organization objectives.


Another recommendation would be, further research be undertaken involving a larger sample to validate the theories. They studied two companies, both in the paper production, and looked at how each executive of the companies approached change.


Champion International Company paid attention on changing its corporate culture to improve teamwork, communication and employee productivity, which was a Theory O approach. To show the differences between these hard and brer approaches, Beer and Nohria devised a system to compare the three companies.

They accomplished this by compiling a list of key dimensions of change. By looking at different dimensions of each company, like its goals, leadership and focus, Beer and Nohria were able to outline key differences between each theory on its own and identify what would happen when the theories were used together.

Cracking the code of change.

He facilitated the creation of major payoffs that developed anf sustained competitive advantage in the competitive environment. However, in my view its application would be hard depending on the life cycle of the firm. Those firms at maturity stage can apply both theories whereas those companies at its decline stage may only concentrate on shareholders welfare as their survival technique Hayes The study also focused on three companies, this implies that the findings cannot be generalized to other companies.

A more general study with a comprehensive sample eber be recommended. In addition, the alternative—an arbitrary and halfhearted mixing of E and O—is extremely confusing and debilitating to an organization. Instead of this halfhearted approach, managers are better off picking a nohia model: According to Jensen an organization should have a single valued objective function that calls for purposeful behavior, which may not be possible when there befr multiple dimensions which may potentially lead to confusion and complexity.


In my personal experience I worked for a bank that valued its employees too much and we took it for granted that we were the most important component of the bank. This behavior hurt the economic values of the bank as employees became lazy. Gill in an empirical study observed that whilst most organizations espoused that employees were valued as human assets; these nlhria did not always espouse policies and practices that are consistent to that especially during a change process.

In a summary, this empirical article by Beer and Nohria was interesting to read.

Cracking the Code of Change

It has provided invaluable information on the theories of change. It is a good starting point for scholars including myself to build upon and expand the knowledge on theory E and O using other key dimensions of change. References BeerM. Cracking the code of change. Harvard Business School Press. The theory and practice of change management 3rd Ed. Use of soft and hard models of HRM to illustrate the gap between rhetoric and reality in workforce management Working Paper No.

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