A Comparative Analysis of Theories E and O in Change Management

This report provides a comparative analysis of Theory E and Theory O, two prominent approaches to change management within organizations. Theory E, focusing on economic value and structural changes, is contrasted with Theory O, which emphasizes organizational capabilities and internal shifts in goals, culture, and employee attitudes. The report highlights key differences across focus, process, and reward systems, with Theory E emphasizing top-down structural changes for financial results and Theory O advocating for self-evolution and experimentation. The author concludes that Theory E is a more comprehensive approach, believing that structural changes have a broader impact on the organization. The report references Beer and Nohria (2000) to support the analysis and provides insights into the practical implications of each theory.

Comparing Theories

Compare the two theories Of and E and argue which of these theories is more suitable for
managing people through the change process
Success and development of any organization depends upon the sum total of several
factors that combine to form it as one process. With the advancement of technology and
volatility in market place there is a need of frequent up-gradation in the elements of organization
with which it runs. Hence, change is a dispensable tool in present time that is required to be
adopted by an organization to drive towards growth and development. My knowledge about the
process of change was confined to the limited area. In my opinion it is a gradual process that
does not need any force to act upon but reading the module has made me know that it is the
systematic and planned approach adopted by a company.
Through the module, I have learned that there are fundamentally two approaches to bring
change in any organization stated in the form of theories those are Theory E and O. Theory E is
based on economic value that focuses on altering the structure of a company whereas approach
of theory O is to bring change in organizational capabilities. Going through both the models I
can state that theory E caters to bring changes by inculcating alterations in economic incentives,
organizational structure, value of its shareholders and other related. But in contrast to theory, O's
approach is towards the shifting the internal issues of organization such as its goals and targets;
objectives, culture and attitude hold by the employees (Beer and Nohria, 2000).
Learning module has broadened the domain of my understanding towards the process
adopted for bringing changes in the organization. Hence, from that understanding I can elucidate
that mentioned theories differ from each other in all the key dimensions such as focus, process
and reward system. I have encountered many differences in each dimensions such as with respect
to focus I can state that theory E's emphasis on altering structure in top down manner caters to
derive financial results. It is believed that bringing changes in the hardware of organization
completely changes its working. On the other hand, following theory O demands to change
software of the organization to increase the productivity and efficiency. I realized that the
fundamental difference exist in the process adopted by both theories such as Former intends to
imbibe changes in planned format and established programs whereas totally opposite of it the
later one that is “theory O” believes in the adoption of self evolution and process of
experimentation to derive the suitable method. It adopts pragmatic approach towards change.

One of the crucial point I have figured out while learning was that reward system is
imperative in bringing change in a company. In theory E providing financial incentives are
considered the suitable way while theory O intends to motivate their employees by building
better relational constructs and networking between employer and employee.
I have gone through every component of both theories and the way in which it is
processed to bring changes in the organization. From the learning I can infer that the suitable
technique is adopting “theory E” which works in comprehensive manner. Further, I believe that
changes brought in structure trickle down its effect on the whole organization.

REFERENCES
Books and Journals
Beer, M. and Nohria, N., 2000. Cracking the code of change. Harvard business review. pp.135-
141.