Organizational change is an essential concept to understand in our complex world. In this lesson, you’ll learn one of the theories of organizational change. You’ll also have a chance to take a short quiz following the lesson.

Defining Organizational Change

Organizational change is both the process in which an organization changes its structure, strategies, operational methods, technologies, or organizational culture to affect change within the organization and the effects of these changes on the organization. Organizational change can be continuous or occur for distinct periods of time.

General Concepts

The study of organizational change is interdisciplinary in nature and draws from the fields of psychology, sociology, political science, economics, and management. You will not find a grand, unified theory of organizational change. Instead, you will find distinct theories that have not really been integrated to date. In this lesson, we’ll focus on the Carnegie School of thought on organizational change.

The Carnegie School Theory of Organizational Change

The Carnegie view of organizational change was developed in the late 1950s and early 1960s. It focused on studying sources of stabilization and change in an organization. The Carnegie School made three important contributions to organizational change:

Failure-induced change: The theory of failure-induced change is rather simple. An organization will change its strategies, technology, culture, and other features of the organization in response to failure in an attempt to reach its goals. For example, if your company’s old computer systems are wreaking havoc on your company’s productivity, you may upgrade the systems to reach productivity goals.

Routinization of organizational activity: According to the Carnegie School, standard procedures, programs, and routines provide stability to an organization. Organizational change occurs when these standards are changed. Standard routines and processes can also help with organizational change, according to the dynamic capabilities approach to management. Under this approach, processes and routines are used to help an organization facilitate and adapt to change. A classic example is a company’s research and development department, which aids the company in keeping up in a competitive market.

Model of organizational learning: The Carnegie School also proposed a model for a learning organization. You should first note that learning is a different concept from change. You can learn without changing and change without learning; however, change, including fear-induced change, can influence learning. Learning can also increase the chance of effective organizational change. According to the model, organizational learning requires four components: knowledge acquisition, information distribution, knowledge interpretation, and organizational memory.


Here’s an example to illustrate the contributions to organizational change made by the Carnegie School. Let’s say that you are the president of a publishing company that puts out a print magazine that has been in publication for more than 50 years. Unfortunately, your venerable magazine is facing extinction just like many of your competitors. You realize the company must change or die.

After learning more about the changing market, you realize you have no choice but to stop the printing presses and go completely digital. You form a transition team that will develop a plan to implement the necessary changes for saving the company and transforming it in order to compete in the world of electronic publishing. The team’s report recommends changes to the company’s current technology, employee skill sets, culture, and strategy. You agree with the recommendations and seek to implement the changes.

Lesson Summary

Organizational change is about the process of changing an organization’s strategies, processes, procedures, technologies, and culture, as well as the effect of such changes on the organization. There are many different theories about organizational change. One such theory is the Carnegie School of thought, which made three significant contributions to the concept of organizational change: fear-induced change, routinization of organizational activities, and a model of organizational learning.

Learning Outcomes

When you are done, you should be able to:

  • Explain what organizational change is
  • Recall which fields the study of organizational change draws from
  • Discuss the Carnegie School’s three important contributions to organizational change