Framework
Theory E and Theory O of change
The question it answers
When leading a major organisational change, should a CEO pursue fast economic value through hard levers (Theory E), build culture and capability (Theory O), or combine both?
- Origin
- Beer & Nohria, 2000
- Diagram type
- Comparison table
- Level of analysis
- Firm
Diagram
Theory E and Theory O of change
| Criterion | Theory E (economic) | Theory O (organisational) | Combined |
|---|---|---|---|
| Goals | Shareholder value | Organisational capability | Embrace the paradox of both goals |
| Leadership | Top-down | Participative | Set direction from the top and engage people from below |
| Focus | Structure and systems | Culture and behaviour | Both hard and soft |
| Process | Planned | Spontaneous, emergent | Plan for spontaneity |
| Reward | Financial incentives | Commitment | Use rewards to reinforce, not to drive |
Sources
References
Listed A–Z by author surname, Harvard style. A source with a DOI links to https://doi.org/…; one without links to its page or says plainly that it has no DOI.
- Beer, M. and Nohria, N. (2000) Cracking the code of change. Harvard Business Review.No DOIhbr.orgSource page