Organisational Flexibility: a simulation model
Amaia Sopelana', Martin Kune”
' University of the Basque Country (UPV/EHU) & Fundacién TECNALIA Research & Innovation, Parg.
Tecnologico de Miramon, Paseo Mikeletegi, 2, 2009 Donosti, Spain. amaia.sopelana@tecnalia.com
?Operational Research and Management Science Group, Warwick Business School, University of
Warwick, Coventry, CV4 7 AL UK. Martin.Kunc@wbs.ac.uk
Abstract
Several theoretical and empirical studies identify main components of Organisational
Flexibility (OF) and show the relations between them. However, comprehensive analysis of
these interrelations over time through the implementation of organisational change remains a
challenge. This article presents a simulation model of OF when change strategies are
implemented confronting several states of environmental turbulence. Two models have been
developed to analyse patterns of behaviours in a simulation environment. The first model
represents the translation of the existing theory of OF. New understandings about the original
theory were generated leading to a second model with new constructs to be considered. The
second model incorporates the firm’s ability to change conditioned by the effects of the
resistance to change, the managers’ perceptions of real environmental changes and, the delays
originated by the implementation period of concrete changes at organisational level. The
simulation experiments conducted with both models suggest that the impact of change
strategies on organisational flexibility at different levels of environmental turbulence could
be studied as a complex concept. As a consequence, a more robust theoretical model in
Organizational Flexibility is provided.
Key words: Organizational Flexibility, Absorptive capacity, System Dynamics Modelling,
Simulation.
1. Introduction
Organisational flexibility — as the ability to adapt quickly to new or changing environments -
has received growing attention from both researchers and managers as a key driver for
companies to survive and prosper in turbulent and unpredictable environments (Dreyer and
Grenhaug, 2004) and it is becoming the new hallmark of organisational excellence (Volberda
et al., 2007). However, scholars have stressed the complex nature and multidimensional
structure of the organisational flexibility concept (Volberda 1996, Teece et al. 1997, De Toni
and Tonchia 2005). According to Dreyer and Grenhaug (2004) one of the main problems
managers face regarding flexibility is how to balance change and organizational stability.
Suarez et al. (2003) suggest that the task is even more difficult because there are not models
explaining the relationship between flexible capabilities, environmental turbulence and firm
performance (Suarez et al. 2003) along the enterprise lifecycle (Volberda, 1998; Dreyer and
Gronhaug, 2004; Verdt-Jover, et al. 2006).
The main motivation of the research is twofold. On the one hand, partial analysis of
organizational flexibility and its components may cause change strategies to be
misunderstood and not effectively implemented. On the other hand, the absence of temporal
dimension in such analysis hinders the identification and evaluation of the core constraints
affecting change at enterprise level. For example, strategies that seem to provide dynamism
may become sources of rigidity at another stage without a temporal dimension (Oliver, 1991).
Considering the complexity concerns and the lack of comprehensive modelling of the
‘organisational flexibility' concept, this paper employs system dynamics modelling (Sterman,
2000; Sastry, 1997; Repenning, 2002) to develop a more robust theoretical description. In
order to improve the understanding of existing explanations of organisational flexibility, we
adopted an approach similar to Sastry (1997). The objective of the model is to offer a more
robust description of organizational adaptation to changing environments validated with
selected simulations. We present our contribution through a set of dynamic propositions to
complement the guidelines to achieve different levels of Organizational Flexibility (OF)
within diverse environment scenarios proposed by Volberda (1998).
This paper is divided into five sections. Following this introduction, we develop the
theoretical arguments underlying the system dynamics model of Organisational Flexibility’s
framework. The third section will provide an in-depth exploration of the key variables of the
simulation model. With these outputs, simulation experiments with both models will be run
and some dynamic propositions shall arise from this exercise. We conclude with
interpretations for theory development, empirical inquiry and management practice around
the topic Organisational Flexibility. Implications for future research lines will be slightly
drawn additionally to these concussions.
2. Theoretical Background: Flexibility at Organisational
Level
Currently, companies facing the new pressures from the environment are being compelled to
improve their ability of continuously adapt to new competitive scenarios. The mentioned
ability will depend not only on being efficient in their organisational routines but also on
being innovative at the same time (e.g. Hayes and Abernathy, 1980; Tushman & O’Reilly,
1996). The notion of balance between exploration and exploitation activities (Benner and
Tushman, 2001) represents a common topic in literature related to organizational adaptation.
Raisch and Birkinshaw (2008) describe the different contexts in which the need to reconcile
the two orientations have been discussed: organizational learning, technological innovation,
organizational adaptation, strategic management and organizational design. Within the theory
of organizational adaptation, organizational flexibility — as the ability to adapt quickly to new
or changing environments - has received growing attention from both researchers and
managers as a key driver for companies to survive and prosper in turbulent and unpredictable
environments (e.g. Dreyer and Grenhaug, 2004; Verdi-Jover and Gomez-Gras, 2009). The
literature around organisational flexibility has been associated to several organisational
capacities (agility, versatility, adaptability, fit, responsiveness, etc.).
Volberda studies OF as a two dimensional concept: the managerial task of controlling the
organisation and the managerial task of organisational design (both also known as
Extensiveness of flexibility mix and Responsiveness respectively) (1998: 97). Figure 1
displays the core constructs and their relationships in Volberda’s OF theory: “This two-
dimensional conception of flexibility creates a paradox. The challenge for management is to
develop dynamic capabilities [which can accommodate variety and speed] that enhance
flexibility and to have an adequate design (technology, structure and culture] to utilise those
capabilities.” (Volberda and Rutges, 1999:101). Thus flexibility implies a paradox —
accommodating change and organizational stability simultaneously ' The way in which both
' Volberda (1998: 103) says “a flexible organization must possess some capabilities which enhance its flexibility
to avoid becoming rigid, but it must also be anchored in some way in order to avoid chaos.”
tasks fit in with the level of turbulence in the environment* determines how flexibility
paradox is resolved, resulting in different organisational forms, which Volberda defines as
flexible forms along the enterprise lifecycle. When the firm is deploying the managerial task
efficiently, the firm has a “sufficient flexibility mix” and when the organisational design task
is well developed, it has an “adequate organisational design” (1998: 81). In addition to this
argument, he also identifies another type of managerial flexibility, called ‘metaflexibility’.
Metaflexibility represents the organisation’s support monitoring or learning system
(Volberda, 1998: 121). Metaflexibility involves the processing of information to facilitate or
promote the continual adjustment of the composition of the management’s flexibility mix and
organisational conditions in line with changes in the environment. The level of a company’s
metaflexibility determines the ability to access new knowledge from outside the boundaries
of the firm — absorptive capacity — to scan the environment and evaluate the implications for
the organisation. These activities can be grouped together as Environmental Scanning
(Ansoff, 1980).
~ Organizational
Flexibility
“Environmental |
Changing Flexible Forms
‘
| Sufficiency of Adequacy of
| Flexibility Mix Absorptive Capacity organizational design
| = | /
Environmental
Scanning
Top management team
Figure 1 Components of organisational flexi ty (adapted from Volberda, 1998)
When the metaflexibility allows environmental changes to be assessed in order to adapt the
configuration of the flexibility mix and responsiveness, four ideal types of organisations are
defined: rigid, planned, flexible, and chaotic configurations (Volberda, 1998). These types of
? Volberda (1998: 211) also suggests “...the sufficiency of the flexibility mix (managerial task) and the design
A of organizatic ditions (design task) must be continuously matched with the degree of the
environment turbulence to achieve effective flexibility.”
flexible forms enable firms to initiate or respond successfully to different levels of
environmental turbulence in order to sustain their competitive advantage’ We suggest the
interaction of key variables within dynamic adaptation processes towards the desired
adjustment is one of the areas that the OF’s theory has not considered in detail. The lack of
identification of dynamic adaptation processes can help to better understand the key
components of the implementation of OF strategies and organisational changes. This study
adds two new dimensions of organizational flexibility to capture the process of dynamic
adaptation and complement the transition of change strategies along the enterprise lifecycle:
firm’s ability to change, which depends on resistance to change, and perception time related
to the environmental turbulence changes. In that sense, organisational flexibility is considered
as a dynamic process rather than a characteristic of the organization. Thus, the effects of the
adaptation process can be interpreted as a path-dependent process involving an initial
position, a future objective, and a transition over time leading to different flexible forms.
The Organizational Flexibility theory appears in a number of conceptual works and in a
limited number of empirical studies facing its complexity and the interrelations between
variables at organizational level (Table 1). Some of these empirical studies and others more
theoretically focused have stressed the complex nature and multidimensional structure of
such subject (e.g. De Toni and Tonchia 2005). This could be the reason that explains the few
empirical studies which account for such complexity (Dreyer and Gronhaug 2004).
* In this opology, each ideal type is a result of a or emergent is ion strategy of
di ition of the flexibility mix and the design of the organizational conditions” (Volberda,
1998: 211).
Table 1: Research findings and challenges regarding organizational flexibility
Future
Authors — Context Outcomes Research
Chall
Eppink Managerial Capabilities: Strategic Flexibility
(1978) Change can be operational, competitive, or Suggests multi- Comprehensive
strategic. Distinct types of flexibility for each dimensionality and modelling of
type of change which minimize the vulnerability — hierarchical nature relationships
of organizations and their ability to respond
Sanchez Managerial Capabilities and Organizational
(1995; Design : ; : — Suggests high level Comprehensive
2004) organizational adaptation requires coordination multidimensionality :
ae Pa 5 modelling of
flexibility and resource flexibility; five modes of | (managerial and . .
: : ee eas relationships
competences reflect hierarchy of flexible organizational flexibility)
capabilities
Volberda Managerial Capabilities and Organizational
1996/1998) Desi: i
¢ i ) aad (responsiveness) Confirms hierarchical
Describes and develops a framework for OF. In .
4 A nature and Inclusion of
this framework, steady-state, operational, ge . . .
sbaali j multidimensionality of Time factor
structural, strategic flexibility, responsiveness of
construct
technology, structure, and culture are
considered
Lund, R. Flexible traits / Functional Flexibility Confirms flexibility is
(1998) Operationalises flexibility as manifested in linked to performance: Comprehensive
internal dimensions of structure, culture, the fulfilment of customer modelling of
processes, and external dimensions of expectations, integration relationships
technology and product market i i of new logy.
Dreyer and Managerial capabilities: Flexibility from Confirms existence of
Grgnhaug Resource-based view different types of flexible lneluslen or
(2004) volume flexibility, product flexibility, labour capabilities and their role Tinie factor
flexibility, financial flexibility, flexibility impact on achieving competitive
on performance advantage
rend and Strategic Flexibility Confirms multi- Comprehensive
(2004) mobility flexibility (alter production); range dimensionality at first- modelling of
flexibility (product/process diversity) order level relationships
Verdu-
Jover, Managerial capabilities: operational, structural
Lloréns- and strategic flexibility Confirms existence of lweluislen'at
Montes & different levels of flexibility and fit between real _ different types of flexible .
2 ae cli : ; ae Time factor
Garcia- flexibility and that required by the environment capabilities
Morales have a positive impact on innovative capacity
(2006)
Hatum and Managerial capabilities and Organizational i ;
Confirms multi-
Pettigrew Design: " ‘ " ‘
_— a ee dimensionality of Comprehensive
(2006) centralization and formalization; institutional ee e 5
fa . a organization design modelling
aan ee construct
organizational identity
Weihong Confirms multi-
XIE, Dan YE. dimensionality, the
2008. relationships between
Managerial capabilities: . P Inclusion of
: “ ees environment and z
Operational, structural & strategic flexibility Time factor
managerial capacities and
their impact on
performance
Literature is still waiting for models explicating relationships between flexible capabilities,
environmental turbulence and firm performance (Suarez et al. 2003). Any change initiative
that companies implement when they are looking for balancing stability and change
(exploration and exploitation), should be accompanied by the concern of such complexity.
Therefore, to address the complex nature of OF, the analysis of the interrelations between
variables of OF and their consequences at organizational level is still needed in this research
field. Additionally, the formula to accomplish organizational flexibility along the enterprise
lifecycle (with a temporal basis) remains limited (Volberda, 1998; Dreyer and Grenhaug,
2004; Verdu-Jover, et al. 2006). Within the context of organizational adaptation, some
authors start to investigate the temporal condition of that source of competitive advantage.
On Organizational Flexibility context, Volberda anticipated the possibility of modelling the
adaptation process from a dynamic point of view: “Flexibility is not a static condition, but it
is a dynamic process. Time is a very essential factor of organizational flexibility.” (1998:
235). He settles the possibility to address such adaptation process as a sequence of stages
allowing understanding of the key factors of organizational flexibility with different
environmental turbulence levels. Dreyer and Grenhaug (2004) forecasted the important
challenge of creating knowledge around the relationship between change and time concretely,
understand when to change to remain competitive. Verdu-Jover et al. (2006) state that their
findings capture the company behaviour at one moment of time and, as the companies
operate in turbulent environments, the overall construct of flexibility condition should be
studied throughout time. Recently, Tan and Zeng (2009) propose a stage-dependent model of
resource utilization which contributes to dynamic capabilities and consequently, to firm
performance due to such “time-varying dimension”. They consider such flexibility is a key
enabler since strategies that formerly provided systemic dynamism may become sources of
system rigidity at another stage.
We therefore, first of all, describe the interactions between the variables that determine the
dynamic behaviour to reach the desired OF level of the firm along different flexible modes of
Volberda’s typology during the enterprise lifecycle. Second, we consider explicitly, the non-
linear dynamics of the positive as well as negative effects of resistance to change on the
evolution of OF. This approach serves to explore how change strategies may lead to different
patterns of organisational flexibility development at varying levels of ET.
3. A dynamic view of flexible organisation: model
structure
Before presenting the results from the simulation modelling results, the model structure is
described in this section under two views of the theoretical interpretation of Volberda’s
framework. First, variables that come from Volberda’s theory shall be analysed based on
their dynamic interactions within the system (Figure 2). And secondly, new variables shall be
analysed and added to the initial model forming a new model called ‘Extended Model’
(Figure 3).
3.1 A Dynamic Model of Organisational Flexibility
Grounded on Volberda’s arguments (Volberda, 1998), a preliminary model of OF was
developed. This preliminary model represents the balance between its three main elements:
Flexibility mix, Responsiveness and Metaflexibility which configure the type of Flexible
Form that the firm is currently developing (rigid, planned, flexible or chaotic). The model
focuses exclusively on the aforementioned variables as constituting of organisational
flexibility; other processes such as for example, financial or commercial perspectives and,
certain organisational characteristics such as for instance, size or type of organization, have
not been considered in Volberda’s research.
Figure 2 shows a stock and flow diagram that indicates flow variables as pipes with valves
(Sterman, 2000) (see the Appendix for a detailed overview). Following this figure, the
Metaflexibility level of the firm determines the information gathering capacity of the firm to
understand and react to environmental turbulence. Then, the balance between the
Extensiveness of Flexibility Mix and Responsiveness level determines the current Flexible
Form; and the required flexibility level is determined by the Environmental Turbulence level.
When required flexibility exceeds or defects from the current one, the increasing or
decreasing level in Pressure to Change is accumulated until the two variables change as a
consequence of change strategies.
There are a set of loops in Volberda’s theory. Loop R1 involves the main feedback loop-
absorptive-capacity management; for example, if the OF level increases due to a surplus in
flexibility (required flexibility level by the environment is lower than the current flexible
form) , this leads to a decrease in perceived ET and, depending on performance of absorptive
capacity, to more accurate perception of the ET. The initial change thus tends to be
8
reinforced. Confronting a flexibility surplus, the firm’s information processing capacity is
activated only when market needs or new opportunities clearly appear. When Environmental
Turbulence decreases, this capacity must be directed towards enhancing the receptiveness to
new environments, for instance by using strategic planning processes. A similar example
serves to understand the nature of the balancing loops (B1-A & B1-B): assume the Pressure
to Change increases due to a deficit in OF; this leads the managerial and organisational tasks
to rise, which in turn leads to an increased FF that fits with the required ET. These feedback
loops balance the initial increase.
ae
DECREASE
—. Pch
| change | +————
a)
INCREASE
absorptive-capacity PCh
ment
Implementation
Fractional
DECREASE PCh
Adequacy of
Ore des
Ore design
CHANGE
~___ Responsiveness
Figure 2: Flow and stock diagram of or
to 's Theory
The OF variable represents how well the organisation matches the current ‘Flexible Form’
with the flexibility levels required by its environment. When both concepts coincide, the
company is achieving the optimal level in OF which is referenced by cero; when OF is
between 0 and 1, it means that a flexibility surplus exists; on the contrary side, between 0 and
-1, there exists a deficit in flexibility. When OF is unbalanced, it activates the pressure to
change managerial and organisational design tasks.
ORGANIZATIONAL FLEXIBILITY (t) = FLEX FORM(t) — perceived ET(t) {1
Unit: Dmnl
The Flexible Form (FF) is a combination of the level of Extensiveness of Flexibility Mix and
Responsiveness in similar proportions and it changes when this combination varies over time.
It represents the organisational type based on Volberda’s typology. Variations in this variable
can reduce the shortfall with respect to environment turbulence and the OF will be closer to
the optimal value.
FLEX FORM(t) = (Extensiveness of flex mix(t) + Responsiveness(t))/2 [2]
Unit: Dmnl
When managers face changing levels of ET, they may not be able to identify the changes or
interpret correctly the threats arising from those changes. Many organisations perceive their
environment as highly turbulent, while in fact they are confronted with a great number of
small changes, which are mainly predictable (Voverda, 1998: 186-187). The stock Perceived
ET represents the form managers understand the characteristics of the environment that the
firm is facing. It has one inflow determining its change rate (accumulation and depletion over
time) named as Perceived ET Change which refers to the corresponding changes in
managers’ perception of the ET.
Perceived ET(t) = Perceived ET(0) + So perceived ET change (s)ds [3]
Perceived ET(0)= 3; Unit: Dmnl
The change rate of this stock derives from the comparison between real ET and the analysis
that results of environmental scanning activities. It changes when the ET changes but also
depends on the influence of Metaflexibility, which means that the level of perceived
turbulence varies as the firm uses its absorptive capacity.
Perceived ET change(t) = (Environmental Turbulence(t) — perceived ET (t))/
Metaf lexibility (t)
Unit: Dmnl
Pressure to change is the stock that represents the accumulated level of pressure to change on
the Flexible Form when OF is not at the optimal level. The larger the gap between the
Flexible Form and the Perceived ET, the greater the level of this stock. It is the result of an
increasing rate minus the outflow of a deceasing rate.
Pressure to Change (t) =
Pressure to Change (0) + So INCREASE PCh (s)ds — DECREASE PCh(s)ds [5]
Pressure to Change (0)= 0; Unit: Dmnl
The decreasing rate represents the rate at which the system succeeds in approaching the
Flexible Form towards the required level of flexibility during the period of changes
(DECREASE PCh), and the increasing rate represents the rate at which the variables of
Flexible Form need to be modified in a following period (INCREASE PCh). This increase
could be positive or negative. We assume that a negative value of this variable means that
there exists a surplus in flexibility and the appropriate correction comes from a routinization
strategy (Volberda, 1998: 215) reducing Extensiveness of Flexibility Mix — for example,
10
because it is needed to concentrate the company’s efforts on adapting new competitive
advantages in order to prepare for the entry of competition- and Responsiveness — for
example, because a greater standardisation and professionalisation of processes is needed
(more mechanistic structure).
When pressure builds up, managers may have several choices to get the firm closer to desired
form depending on the state of the environment. ET is the exogenous variable of the model. It
is analysed by evaluating its dynamism, complexity and uncertainty level (competitive
forces). A key causal relationship exists between ET and the perception of such turbulence.
Accordingly to Volverda, every process of increasing flexibility starts by influencing the
Metaflexibility level (1998: 198) -whether a real divergence in the OF level exists- before
altering the other two main variables. This stock represents the range of activities in the
information gathering process. When speaking about Metaflexibility, Volberda refers to
“meta-capabilities”, “management’s absorptive capacity” or “high-order learning ability”
(1998: 197). For this research, the adopted concept to represent such capability is what is
named as environmental scanning (1998: 198). Variations in this variable can reduce the
shortfall with respect to environment turbulence due to the Perceived ET is adjusted to a
better interpretation of turbulence. It means the divergence in OF is more accurate allowing
managers to recognise and respond to the need for an organisational change with the
appropriate routinization or revitalization policies. The assumption for this research deals
with how the firm carries out an extensive competitor analysis, monitors technological
developments concerning our products/services and the production/service process or,
systematically registers customers’ needs and complaints.
Metaflexibility(t) = Metaflexibility(0) + fi CHANGE in Metaf lexibility (s)ds [6]
Metaf lexibility(0)= 3; Unit: Dmnl
This stock has a unique inflow that is affected by the pressure to change and implementation
time. This inflow variable represents the changes due to a routinization strategy (confronting
a flexibility surplus) — the firm’s information processing capacity is directed towards
enhancing the receptiveness to new environments, for instance by using strategic planning
processes — or when the firm implements a revitalization strategy (confronting a flexibility
deficit) — by coding its limited and basic scanning procedures, the resulting increased
Metaflexibility facilitates the development of dynamic capabilities which boosts the flexibility
mix and makes the firm more responsive to new market forces.
11
CHANGE in Metaf lexibility (t) = (Metaflexibility (t) * Pressure to change(t)) /
Implementation Time (t)
Unit: Dmnl
Once managers have a more accurate perception of the changes in the environment, the OF
shortfall may still exist. The processes that bring the organisation back to the optimal level of
OF are represented by balancing loop B1 & B2: after adapting Extensiveness of Flexibility
Mix and Responsiveness the organisation achieves a FF that is well-suited to its environment.
Extensiveness of Flexibility Mix represents how the firm performs its managerial task related
to flexible capabilities. A negative value of Pressure to change (there exists a surplus in the
OF because of a lower level of ET) knocks the change rate of this variable. Whereas Pressure
to Change is positive (a flexibility deficit exists), the change rate of this variable is positive
due to the fact that an increase of dynamic capabilities is needed.
Extensiveness of Flex Mix(t) =
Extensiveness of Flex Mix(0) + i CHANGE in Extensiveness of Flex Mix(s)ds [8]
Extensiveness of Flex Mix(0)= 3; Unit: Dmnl
In a routinization strategy, to reduce the Extensiveness of Flexibility Mix (Flexibility Gap
loop (B1-A)) represents to concentrate the company’s efforts on adapting new competitive
advantages in order to prepare for the entry of competition. It generally implies refining
existing core competencies and establishing more control over new flexible capabilities that
allows the strategy to be focused in one direction. On the other hand, in a revitalization
strategy, it is related to creating new capacities or activating those which may be unexploited.
It implies unlearning 'old' routines, developing new core competencies, extending the firm’s
ability to change decision-making and communication processes and changing corporate
strategy and/or the nature of business activities.
CHANGE in Extensiveness of Flex Mix(t) =
(Extensiveness of Flex Mix(t) * Pressure to change(t)) / Implementation Time(t) [9]
Unit: Dmnl
Once the adequate mix of flexible capabilities has been achieved and established, the OF
level still remains far from the optimal level so, the third stage of this change trajectory is
related Responsiveness which represents the adequacy of organisational design conditions to
effectively exploit the flexibility mix (‘Adequacy of Organisational Design’ (B1-B)).
In a routinization strategy, the Pressure to Change will take negative values and will reduce
Responsiveness level, which generally implies the tendency to greater standardisation and
12
professionalisation of processes and the institutionalisation of information processing and
decision making (more mechanistic structure). Furthermore, the varieties of cultures that exist
in the organisation focus on avoiding deviations from the firm’s vision. On the other hand, in
a revitalization strategy it means less process regulation (e.g. less formalisation and
specialisation), to lose the basic organisation form (more organic structure) and, a more open
external orientation and a more innovative culture.
Responsiveness(t) = Responsiveness(0) + i CHANGE in Responsiveness(s)ds [10]
Responsiveness(0)= 3; Unit: Dmnl
CHANGE in Responsiveness(t) = (Responsiveness(t) * Pressure to change(t)) /
Implementation Time(t) [11]
Unit: Dmnl
The output on both tasks (managerial and organisational design tasks) because of Pressure to
change variations is not immediate; there is a time lag between the moment at which
managers realise the need to implement a change strategy and the actual moment of doing so.
Volberda (1998: 201) names this time lag as Jmplementation Time which represents the
reaction or implementation time of the new Flexible Form. As one of the causes for this
delay, he identifies the organisational barriers in technology, structure and culture which can
influence this implementation time. Such strategies explained above imply different levels of
complexity which will affect the period of time in adjusting the flexibility mix and the
organisational conditions.
3.2 Effects of resistance to change in organisational flexibility (OF)
In this section some new constructs are described that, joined with the first model in previous
sub-section, will be the basi
for the simulation analysis that is described in section 4.
Volberda anticipates that the implementation of a change trajectory towards more flexibility
at organisational level can create dissatisfaction. He assures that organization members have
to express their complaints with current state if they are to lose their inertia (1998:242-243).
In line with this argument and within organizational change literature, there exists a huge
research that stresses resistance to change as one of the main reasons for the failure many
change initiatives (e.g. Armenakis & Bedeian, 1999 or more recently Gilley, Gilley &
McMillan, 2009). Among other causes of employees’ resistance, Vakola and Nikolaou point
to stress caused by organizational change as an inhibitor of change since it can create
negative attitudes toward change (Vakola and Nikolau, 2005: 163). In their comprehensive
13
literature review about the sources of resistance to change, Pardo del Val and Martinez
Fuentes (2003) they cited, among others, embedded routines and lack of the necessary
capabilities to implement change — capabilities gap. Sastry describes the negative relation
between inertia (one of the sources of resistance to change) and ability to change: when
inertia is high enough, organizational managers are less able to recognize and respond to the
need for a change (1997: 244).
Figure 3 represents the extended model of the one presented in Section 3.1. The previous one
represents the continuous process to achieve the desired form while the environment evolves,
which is produced by two balanced and one reinforcing feedback loops (see figure 2).
However, resistance to change hinders the firm’s efforts to change as a result of a self-
reinforcing process generated by the organisational reaction to changes (feedback loop R2).
Fractional
INCREASE _
increase R to
. Resistance
= Sy
Ability to change“ aK
7 the Flex form
Fractional DECREASE \
/ Resistance reise \
goal
+ zs
ORGANIZATIONAL
FLEXIBILITY
/ = 5, |
| 3 z ‘ | Se |
Environmental a
\ Turbulence =o NN Pressare
chan DECREASE
7] Pch
\
FLEX FORM Persson
absorptive-capacity
‘management
| Fractional
| DECREASE PCh
Sulficiency
flex mix
‘CHANGE in
Responsiveness *—
Figure 3 - Anew Dynamic model for Organisational Flexibility
The effectiveness of the strategies to recover the optimal OF level by moving the FF to the
desired level, will also depend on how the firm fosters the need for the proposed changes in
the company, represented in the reinforcing loop ‘Organisational reaction to changes’ (R2).
When ‘Pressure to Change’ has built up to a level high enough to activate the implementation
of a change strategy, managers relieve the pressure by changing the FF but, in parallel, the
14
accumulated levels of ‘Pressure to change’ rises ‘Resistance to change’. Some complaints
from organisation’s members should be expected when the firm is proposing new changes.
As the resistance to change becomes higher, the ‘Ability to change’ falls and limits the efforts
of strategies implemented (through B1-A & B1-B loops). The OF level achieved through the
dominant balancing loops may be far from optimal due to the unintended effect of the
reinforcing loop R2, which acts as vicious cycle to undercut the effect of adapting the firm’s
Extensiveness of flexibility mix and responsiveness. Here, we present the new changes
originated by the addition of two new constructs.
The rate of change in the level of OF is given by the difference between Perceived
Environmental Turbulence and the current FF plus the ability of the firm to change the FF.
Thus, change in organizational flexibility is determined by two factors. First, the need to
change results from the pressure originated when OF has not achieved the optimal level
(zero) due to a deficit or a surplus of flexibility “...sufficiency of the flexibility mix and the
A
design quacy of the or
1 gayi:
must be contii ly matched with the
degree of environmental turbulence.” (Volberda, 1998: 204). Second, the effect of this need
of change is counteracted by the organization’s ability to effectively implement such
decisions of change (variable Ability to change the flex form).
ORGANIZATIONAL FLEXIBILITY (t) =
(FLEX FORM(t) — perceived ET(t)) * Ability to change the Flex form [Inew]
Unit: Dmnl
The component ‘Ability to Change the Flexible Form’, represents the firm's ability to achieve
the optimal OF through the control of emerging opposing forces to impose the new changes
in organisational conditions or in the management of flexibility capacities efficiently. Thus,
this variable is represented by a function of the resistance to change. This variable has a
positive impact in the OF level, in the sense of, higher values on this variable will make OF
level closer to the optimal value (zero). Ability to change is inversely related to ‘Resistance to
Change’.
Ability to change the Flex Form (A) = f (Resistance to change) [12]
Unit: Dmnl
fa) = fA"" > 0; fa) = fy" = 1
When resistance to change is at low levels or 0, ability to change has the maximum level 1.
When resistance to change is high enough, organizational managers are less able to
effectively implement change strategies so, ability to change decreases and OF remains far
15
from the optimal value. The minimum level of Ability to change is not zero due to the
assumption that the highest level of inertia is not enough to preclude the desired change.
Resistance to Change represents the extent to which the organisation’s participants disagree
with incremental or radical changes (which alter their current working conditions in the
organisation). It is a state variable which is modified over time by changes in Resistance to
change. At the beginning of the simulation, it is equal to 0 due to the OF is in the optimal
level and no pressures to change exist. It affects the firm’s ability to implement the change
strategies chosen by the managers.
Resistance to Change(t) = Resistance to Change(0) + So INCREASE PCh (s)ds —
DECREASE PCh(s)ds [13]
Resistance to Change(0)= 0; Unit: Dmnl
Resistance to change is increased as a result of a fractional increase rate which is determined
by the pressure of change. According to Volberda, the levels of resistance with revitalization
strategies will be higher than in routinization strategies due to totally new values and norms
are required and past experience may not provide any advantage (1998:242). The effect of a
high level of pressure, coming from higher gap in flexibility, modifies the inflow into the
Resistance to Change stock. If pressure to change achieves the highest value (2) the trajectory
of change implies to move the Flexible Form twice so, too many efforts will be required by
the staff and the resistance will achieve the highest level. The decrease in Resistance to
Change is the result of the firm’s ability to control or manage such resistance by, for
example, effective communication of the necessity of change and its consequences. The
Fractional Decrease rate and the value of the Gap in Resistance set the outflow to the stock.
If the difference between desired and real resistance (positive gap) is positive, the firm will
influence over the resistance. A negative gap indicates low levels in resistance to change and
therefore no efforts are needed to reduce it. The Fractional Decrease rate represents how the
firm is following the recommendations from Volberda in the transition process.
Another change introduced in the previous model is the consideration of delays in the
perception of the changes by the managers. That means Perceived ET will also depend on an
estimated Perception Time. The variable Perceived ET change is proportional to the
difference between the current value of Perceived ET and the current ET. The greater the
difference, the more distant will be managers' perceptions of the reality of their competitive
environment. Each quarter, a fraction of this difference is added to the Perceived ET average.
16
The fraction is inversely related to the. Thus, the updating process is modelled as a change
every time period equal to a given fraction of the difference between current perceived ET
and current ET; it is an exponential adjustment process. The smoothing is necessary to
capture the effects of perception and measurement delays.
perceived ET change (t) = (Environmental Turbulence (t) — perceived ET(t)) /
Perception Time(t) [4new]
Unit: Dmnl
In the next section, we will analyse the change strategies regarding the implementation of
change within the OF theory using the comparison of simulation findings from both models.
4. Simulation Findings
None of the flexible forms is a permanent solution to solve the flexibility paradox and that is
because Volberda proposes different trajectories for coping with competitive change within
the categories of the routinization of entrepreneurial firms and revitalization of established
firms (Volberda, 1998: 215). Following the implementation of a strategy, what would happen
if the new combination fails to achieve an optimal OF level? Does this mean that the
performance of managerial and organisational design tasks is unsuitable?
Having a formal model developed simulations tests are conducted in this section while the
strategies of change are implemented. A systematic approach is used to explore the
simulation model by comparing the two models outlined before. First, the base case, or ‘OF
model’ is introduced and examined under the implementation of the change strategies. The
OF model shows the dynamic behaviour that Volberda predicts. In a second step, the second
model is tested by comparing its behaviour over time with the output in the ‘OF model’. With
the second model, we explore new conditions under which a particular structure plays a key
role in determining the dynamics of the system and thus, some dynamic propositions are
proposed. To be able to capture short-term as well as long-term patterns, the model is
simulated over a period of 60 units of time (month). In all simulation experiments, the system
begins in a steady state in which the inflow in each stock equals its outflow. In the present
model it implies that Flexible Form coincides with the flexibility required by the environment
and consequently, the OF achieves the optimal level, zero.
17
The base case model
The simulation starts with the third type of organizational form proposed by Volberda, the
Flexible type. To understand the behavior of the system in a non-steady state, the model was
tested using a variety of changes in ET that originate the need for adopting a change strategy
accordingly. In order to resolve flexibility paradox, Volberda proposes two types of change
strategies which adjust the FF, allowing the firm to move towards the optimal level of OF.
On the one hand, when stability is needed, a routinization strategy is the most appropriate
strategy in moderately competitive environments where the firm faces decreasing levels of
environmental turbulence (the exogenous variable in the model) and stability needs to be
introduced. The company suffers a surplus of its ‘extensiveness of flexibility mix’ and the
firm’s ‘responsiveness’ level is superior to what is needed with respect to the environment. In
a period of decreasing levels of turbulence, the firm may pass through the four types of
Flexible Forms (mentioned in section 2) as far as the routinization strategies are
implemented.
In the following figure (Figure 4), an example of transition from Flexible to Planned form
due to decreasing environmental turbulence is represented.
Required vs Current Flexible Form
o 6 2 W 2m 30 36 42 4 34 60
Tims (Month)
FLEX FORM : Base Case_rout
perceived ET : Base Case
Environmental Turbulence : Base Case_rout ———————_ Dmnl
Figure 4 Example of Maturation transition-Flexible to Planned form
A routinization strategy is implemented due to in a lower level of ET (dynamic and
competitive environment) the only source of a firm’s survival is represented by the success
on efficiency through the implementation of a Maturation trajectory (Volberda, 1998; 218)
which pushes the firm from Flexible to Planned type. For example when an innovative
organisation overcomes its earliest stage of activity, and the level of growth and success in a
scenario of perfect competition starts to dismiss. In the new ET, the firm is not able to retain
its competitive advantage and, difficulties to limit the entry of competitors to its market share
18
appear as the level of turbulence decreases (higher level and quality of competitors). As
Figure 5 shows the need of Maturation strategy is illustrated by a positive gap in OF which
represents a flexibility-surplus; the OF level is above its optimal value (zero) and ‘Pressure to
Change’ may represent the flexibility gap to be covered by the corresponding strategy change
that in this case, is represented by a routinization strategy.
ORGANIZATIONAL FLEXIBILITY Pressure to change
6 2 WS #4 30 % 4 4 S4 6 o 6 2 W 2% 30 3 2 48 S460
‘Time (Month) Time (Month)
ORGANIZATIONAL FLEXIBILITY : Base Case_rout Dil PE Base Case_rout Dal
Figure 5 - Example of Maturation transition-Flexible to Planned form
In this case, the optimal level in OF is achieved by month 31. OF follows the predicted path
in order to achieve the desired FF as the environment turbulence decreases. Lower levels of
“Extensiveness of flexibility mix’ imply reducing or controlling uncontrolled capabilities and
lower levels of ‘Responsiveness implies tightening organisational conditions.
On the other hand, if the organisation requires change, a revitalization strategy allows the
transition to be controlled towards increasingly competitive markets. Generally speaking, this
type of transition is initiated when the firm wants to address new market tendencies, new
business models, new competitive advantages and it will be more effective under hyper-
competition). The following figure (Figure 6) shows an example of transition from Flexible
form to Chaotic form due to increasing levels of ET.
19
Required vs Current Flexible Form
0 6 12 18 2% 30 36 42 48 54 60
Time (Month)
FLEX FORM : Base Case_revit 1
perceived ET : Base Case_revit
Environmental Turbulence : Base Case_revit. ————- |
Figure 6 Example of p i italizati ition-Flexible to Chaotic form
For example, when firms operate in a very innovative business and face an Environmental
Turbulence of extreme turbulence. The transition towards chaotic arises from the
environmental forces. The environment is turning off too many variables and uncertainty and
the firm is developing an excess of flexibility which could result in chaos and it is very
difficult to control. While the first simulation (decreasing levels ET) showed the adaption
process without overcome the expected values of FF and Perceived ET, this time the FF
begins the expected change although it overcomes the required value. This pattern of
behaviour fits with Volberda assumption that the firm must be ready to achieve competitive
advantage and return to the flexible form in order to avoid chaos. According to Volberda
(1998: 222), if the environmental scenario evolves and the OF level does not match the
required one, the firm runs the risk of managers using wrong information to make
inappropriate decisions. Consequently, the environmental forces can turn the firm in any
direction. According to Volberda, if the environmental scenario evolves and the OF level
does not match the required one, the firm runs the risk of managers using wrong information
to make inappropriate decisions (1998: 222). Consequently, the environmental forces can
turn the firm in any direction. A ‘strategic neglect’, lack of administrative stability, can result
in a lack of decisiveness about research priorities, a fragmented structure and a loose
constellation of subcultures. As Figure 7 shows the need of revitalization strategy is
illustrated by a negative gap in OF which represents a flexibility-deficit; it implies that the
firm’s flexible form is inferior to what environment is requiring and consequently, the OF
level is below its optimal value (zero) and ‘Pressure to Change’ shall represent the flexibility
gap to be covered by the corresponding strategy change.
20
ORGANIZATIONAL FLEXIBILITY Pressure to change
o 6 WW 22% 30 36 42 48 54 60 o 6 2 Ws 30 cr
Time (Month) ‘Time (Month)
ORGANIZATIONAL FLEXIBILITY : Base Case_revit —————— ml __ Pressure to change : Base Case_revit ———______— Dm
Figure 7 Example of pI i italizati ition-Flexible to Chaotic form
The negative gap in OF is reduced by a revitalization strategy and it achieves its optimal level
by month 29. In this simulation exercise, OF follows the predicted path to achieve the desired
FF as the environment turbulence increases until between month 7 and 11 in which the OF
overcomes the level 0 representing a surplus of flexibility. Initially, FF was under required
level of flexibility to result in negative values in OF, so pressure to change immediately
began to accumulate. Increased levels in Metaflexibility resulted in higher perceived ET,
making the reinforcing loop R1 stronger. Pressure to change quickly built up to a level high
enough initiate the balancing processes of B1-A and B1-B, by which the organization
reoriented in response to sustained negative OF. The R1 reinforcing loop dominates over the
balancing process and impulse the system to an inappropriate reorientation leading to for
example, the chaos. If the revitalization strategy is not rooted in stability, the change
trajectory can collapse.
The following table (Table 2) gathers the main outputs of the simulation in the base case, ‘OF
model’. The discrepancies between routinization and revitalization strategies looking for
optimal level in OF is the result of a gap in the original theory described by Volberda.
Although the theory explains how to strive organizational adaption to decreasing or
increasing levels of ET it fails in not providing guidelines to overcome unexpected
difficulties. The simulation results with additional assumptions presented in the following
section will serve to correct unexpected trajectories in the OF or the FF.
21
Table 2: Simulation results
Initial Conditions
Change in ET
Result
Loop dominance
Equilibrium: required
flexibility (ET=3) coincides
with the FF (=3); OF is in
Decreasing level in ET (2)
routinization strategy is
needed (Figure 4 & 5)
OF initially increases until
the Pressure to change is
low enough to activate
Loop B1A-B1-B —
balance
the optimal level the change in FF
Equilibrium: required Increasing level in ET (4) OF initially decreases Loop R1 dominates
flexibility (ET=3) coincides revitalization strategy is until the Pressure to
with the FF (=3); OF is in needed (Figure 6 & 7) change is high enough to
the optimal level activate the change in FF
Extended model — validating the dynamic propositions
According to the research proposal of this paper, new variables have been added (see figure
3) to Volberda’s framework and the simulation model could help to underlie or reject the
dynamic propositions of this research work. We have introduced Ability to Change,
Resistance to Change and Perception Time to the base case model (see figure 3). We aim to
represent through these variables the firm’s ability to effectively control the resistance
coming from staff and manager’s perception of the changes in the ET as it has been identified
by Sastry (1997); Volverda (1998); Armenakis & Bedeian (1999); Pardo del Val and
Martinez (2003); Vakola and Nikolau (2005); Gilley, et al. (2009).
In the first model, Perceived ET depends on the absorptive capacity (Metaflexibility) of the
firm without considering that this perception is not immediate. If this variable is adjusted to a
better interpretation of turbulence through introducing a delay with ‘Perception time’, the
divergence in OF is more accurate allowing managers to recognise and respond to the need
for an organisational change with the appropriate revitalization policy. Loop R1 provides the
reinforcing dynamic by which “metaflexibility” builds an accurate perception of turbulence.
Metatflexibility & Perceived ET Metaflexibility & Perceived ET
° 2 4 0 awe CCS
"Tine (Mon) Tim (Monti)
Dani
Dani
peroeived ET = Base Case_revit pereched ET : Extended model revit
Figure 8 Metaflexibility and Perceived ET in both models
22!
Figure 8 shows that when implementing a revitalization strategy because mature
organisations search for business opportunities to survive, managers have to focus efforts on
adjusting (increase) the absorptive capacity (meta-flexibility) and thus, guaranteeing the
aforementioned strategies to be based on existing environmental turbulence to which the firm
faces. The results of the simulation in the base case model again show that metaflexibility is
changing over the required increase.
Volberda mentions that the results of the implementation of such strategies are not immediate
and introduces the concept of ‘Implementation Time’. However, the delay in the consecution
of expected results is superior than the managers could predict. We have conducted a so-
called STEP change in Environmental Turbulence at the start of the second in the simulation,
implying a structural increase of ET from the initial-equilibrium level to a new level
(revitalization). All responses in stepping up OF or FF involve structural increases 6 months
later than the ET change in the case of the Extended model and 4 months later in the case of
base case.
ORGANIZATIONAL FLEXIBILITY ORGANIZATIONAL FLEXIBILITY
Vy 03
-08 04
o 6 2 WW 2 30 2 4s S460 6 2 1 28 30 2 4 54 60
‘Time (Month) Time (Month)
FLEXIBILITY : Ba Deal FLEXIBILI | revit step. ——— Drm
ORGANIZATIONAL FLEXIBILITY : Ba Deal ORGANIZATIONAL FLEXIBILITY :Extenled model revit Dan
Figure 9 Response to a step input in the base case and the extended model
Figure 9 shows the impact on OF if ET is stepped up with increasingly higher volumes: the
later the increase in ET, the later the equilibrium in OF. When revitalization strategies are
implemented by focusing the company’s efforts on increasing the Extensiveness of flexibility
mix and increasing the responsiveness level, extra time will be needed to transmit the need to
change and re-design the organisational conditions efficiently to the organisation’s members.
Dynamic Proposition 1:
en routinization or revitalization strategies are i y focusin; /@ company’s
Wh t t l ipl. d by. th
efforts on decreasing/increasing the Extensiveness of flexibility § mix and/or
decreasing/increasing the responsiveness level, extra time will be needed to transmit the need
23
to change and re-design the or isational conditi efficiently to the organisation’s
members.
In the extended model, the growth of resistance to change is the consequence of the
reinforcing loop (R2). Figure 10 represents the comparative analysis of both models in a
revitalization strategy. Initially, pressure to change builds up rapidly and continues to build at
a decreasing rate, exhibiting a pattern of goal seeking behavior until it reaches a fairly steady
level by month 30. This pressure to change is accumulated and translated to the managers.
The staff's resistance appears when organizations aim to implement the corresponding
changes in responsiveness and extensiveness of FF. In revitalization strategies, this pressure
is depicted as some routines and some process regulations which are implemented. For
instance, both chaotic and flexible forms lack administrative stability due to the deliberate
tendency of managers not to pay attention to the administrative structure.
Pressure to change
o 6 2 2 3 36 4 4 SF 60
‘Time (Month)
Pressure to change : Base Case_ revit ————________— mn
Pressure to change [revit Dani
Ability to change Resistance to change
1 02
0.9375 0.175
0.125
osi25
o4
0.75 0 6 12 18 4 30 36 48 54 60
o 6 2 W 2 30 36 OO “Time (Month)
“Time (Month)
Resistance to change : Base Case_revit mi
Abiliyto change the Flex form : Extended model rout. Resistance to change : Extended model revit ml
Figure 10 - Pressure to Change, Ability to change and Resistance to change in the extended model
Subsequently, excessive ‘pressure to change’ amplifies the ‘resistance to change’ when some
routines are established and some process regulations are implemented. Growing levels of
‘resistance to change’ may lead to severe and disruptive administrative problems and the
firm’s ‘Ability to Change’ decreases because staffs do not want extra efforts in bureaucratic
24
statements. The achieved OF level through the dominant balanced loops may remain far from
optimal. Figure 10 shows how the Pressure to change takes higher values in Base Case than
in the Extended model once ability to change and resistance to change are introduced in the
model. Resistance to change follows the predicted path of a “S-shaped growth” — growth is
exponential at first and gradually slows until the state of the system reaches the equilibrium
level.
Once Pressure to Change starts to increase the reinforcing loop R2 works as virtuous
direction decreasing the Ability of the firm in balancing OF with the environment
requirements. Through revitalization strategies, company efforts on achieving the OF optimal
level generates resistance to change which may stop the adaptation process. The firm may
lose its competitive advantage due to an excess of administrative structures or due to the
totally new values and norms that are required and past experience may not provide any
advantage. Consequently, as Figure 11 represents, the disequilibrium is higher in the Base
Case due to the fact that there aren’t any control over the resistance from staff. They have to
be well informed about the change in order the firm achieve the desired results.
ORGANIZATIONAL FLEXIBILITY
02
0.08 SF
03
055
08
o 6 2 W 2 30 36 4 4 sa 60
Time (Month)
ORGANIZATIONAL FLEXIBILITY : Base Case_tevit —————— il
ORGANIZATIONAL FLEXIBILITY : Extended model revit ————— Dil
Figure 11 Comparison of Organisational Flexibility in both models
Dynamic Proposition 2:
Through inization or revitali:
strategies, company efforts on achieving the OF
optimal level generates resistance to change which may stop the adaptation process. The firm
may lose its competitive advantage due to an excess of administrative structures or due to the
totally new values and norms that are required and past experience may not provide any
advantage.
The second simulation tests and their results are gathered in the following table (Table 3).
25
Table 3: S y of Pr itions Generated from Simulation Experiments
Proposition Firm’s characteristics Impact on OF
PL Considering a Perception time which Favours more accurate perception of ET.
affects change rate of
Metaflexibility
P2 Extra time will be needed to Allows to predict the changes by considering the
effectively implement and transmit delay
the changes.
P3 Ability to change is influenced by the Some change strategies cannot be implemented
resistance to change or are implemented without success
This paper describes the first causal model of Volberda’s theory applying System Dynamics.
Based on the content analysis of the theory, Volberda’s theory has been completed including
variables that are important for organisational change but they were not included in the
original text. The main aim of this research is to contribute towards a more robust
organisational flexibility theory by uncovering flaws in the original development. In
particular, we explore the impact of ET on the level of Organisational Flexibility along
different lifecycle stages. The model developed in this paper incorporates some constraints
arising from the implementation of change strategies.
The simulation model allows us to elaborate dynamic propositions related to several
strategies of organisational change. Dynamic propositions developed by the authors support
Volberda’s framework as they illustrate the behaviour implied in his model but also,
complement the transition guidelines proposed by Volberda. The simulation experiments
conducted with the models demonstrate that the impact of change strategies on organisational
flexibility is non-linear and complex in nature.
Initial findings suggest that these strategies can fail to manage change successfully. Failure
can come from an anticipated decision of transformation when the environmental threats are
not understood properly, when the implementation of new values, systems or processes take
longer than expected, if the transformation in organisational design is delayed and when the
resistance to change is big enough to inhibit any flexibility initiative.
Future research involves using real case studies to validate our dynamic propositions
quantitatively. It is expected that the results propose several additions to existing explanations
of the organisational change process, for instance, integrating new variables in the framework
and evaluating the organisational response time to such strategies. In a further step, empirical
26
validation of both models, the first model and the extended one, will be provided by a
longitudinal industrial field study of seven engineering enterprises during the period 2004-
2011. This field study is undertaken to search for evidence of the implementation of
flexibility practices. A qualitative analysis of the empirical data and SD simulation results on
such an empirical data will be compared to support the contribution of SD modelling to the
dynamic analysis of an organisational theory.
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Appendix: model documentation
The model was developed in Vensim, software for system dynamics (SD) modeling. The
main abbreviations are:
OF: Organisational Flexibility
ET: Environmental Turbulence
FF: Flexible Form
PCh: Pressure to Change
R to CH: Resistance to Change
Equations of the extended model
ORGANIZATIONAL FLEXIBILITY (t) =
(FLEX FORM(t) — perceived ET(t)) * Ability to change the Flex form [1]
Unit: Dmnl
FLEX FORM(t) = (Extensiveness of flex mix(t) + Responsiveness(t))/2 [2]
Unit: Dmnl
Perceived ET(t) = Perceived ET(0) + Sy perceived ET change (s)ds [3]
Perceived ET(0)= 3; Unit: Dmnl
perceived ET change (t) = (Environmental Turbulence (t) — perceived ET(t)) /
Perception Time(t) [4]
Unit: Dmnl
Pressure to Change (t) =
Pressure to Change (0) + Jy INCREASE PCh (s)ds — DECREASE PCh(s)ds [5]
Pressure to Change (0)= 0; Unit: Dmnl
INCREASE PCh = IF THEN ELSE (ORGANIZATIONAL FLEXIBILITY<O, (—
1*(ORGANIZATIONAL FLEXIBILITY)), MAX((Pressure to change~ ORGANIZATIONAL
FLEXIBILITY), (-1*ORGANIZATIONAL FLEXIBILITY)))
DECREASE PCh = Fractional DECREASE PCh*Pressure to change
Fractional DECREASE PCh = GRAPH (ABS(OF))
GRAPH: (0,1),(1,0)
Metaflexibility(t) = Metaflexibility(0) + So CHANGE in Metaflexibility (s)ds [6]
Metaflexibility(0)= 3; Unit: Dmnl
CHANGE in Metaf lexibility (t) = (Metaflexibility (t) * Pressure to change(t)) /
Implementation Time(t) [7]
Unit: Dmnl
Extensiveness of Flex Mix(t) =
Extensiveness of Flex Mix(0) + is CHANGE in Extensiveness of Flex Mix(s)ds [8]
Extensiveness of Flex Mix(0)= 3; Unit: Dmnl
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CHANGE in Extensiveness of Flex Mix(t) =
(Extensiveness of Flex Mix(t) * Pressure to change(t)) / Implementation Time(t)
Unit: Dmnl
Responsiveness(t) = Responsiveness(0) + i CHANGE in Responsiveness(s)ds
Responsiveness(0)= 3; Unit: Dmnl
CHANGE in Responsiveness(t) = (Responsiveness(t) * Pressure to change(t)) /
Implementation Time (t)
Unit: Dmnl
Ability to change the Flex Form (A) = f (Resistance to change)
AQ) =f" > 0; f (0) = 7" =
Ability to change the Flex form = GRAPH (Resistance to change)
GRAPH: (0,1),(0.1,0.9),(0.5,0.75),(0.75,0.5)
Resistance to Change(t) = Resistance to Change(0) + So INCREASE PCh (s)ds —
DECREASE PCh(s)ds
Resistance to Change(0)= 0; Unit: Dmnl
Increase R to CH = Resistance to change*Fractional INCREASE Resistance
Fractional INCREASE Resistance = GRAPH (ABS(Pressure to Change))
GRAPH: (0,0),(0.5,0.1),(1,0.5),(2,0.75)
[9]
[10]
(11)
{12]
[13]
Decrease R to CH = IF THEN ELSE (Gap in Resistance>0.1, Resistance to change*Fractional
DECREASE Resistance, 0)
Gap in Resistance = Resistance to change — Resistance goal
Parameters of the Base Case:
Environmental Turbulence: 4
Implementation Time: 12 months
Fractional DECREASE Resistance: 0.5
Resistance goal: 0.1
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