How Organization Development Works in Business

Organization development is a social science that focuses on organizational structures, organizational effectiveness, and collaborative change processes. Also known as organizational development or just OD, it offers an interdisciplinary approach to organization-wide change management. Organization development traces its core roots to Kurt Lewin, the founder of the Research Center for Group Dynamics (RCGD) at Massachusetts Institute of Technology.

Practitioners of organization development specialize in organizational change, and they tend to achieve this through a series of intervention initiatives. OD interventions are structured activities focused on gently but effectively changing business processes. These interventions can target any part of a business, but they all serve the same goals: process improvement and transformative change.

Business leaders use organization development to change their organizations for the better. Potential outcomes of the organization development process include:

• Improved quality and performance management: By changing processes within a business, OD professionals can ramp up quality management and performance management processes. These often occur via group interventions.
• Strengthened employee engagement: Organization development interventions can facilitate team building and better human relations within a company. They can also align team members toward a common cause.
• Employee development: Organization development practitioners can use individual interventions, such as mentoring, to prompt an employee’s own professional development. A human resources department might aid in the facilitation of such interventions.
• Leadership development: Some companies use the organizational development process to identify and train their next generation of leaders.
• Corporate restructuring: Companies use organizational development to steer the process of expansion (through mergers and acquisitions) or downsizing (through divestments and corporate contraction).

The organization development process operates on four core principles:

1. 1. Mission: Successful organizations draft mission statements that outline the objectives and values that align all their stakeholders.
2. 2. Vision: Organizational vision is a high-level look at where the organization wishes to be in the future.
3. 3. Strategy: A company utilizes strategic planning and action research to work toward the goals described in its vision statement.
4. 4. Goals: By listing goals as part of a larger action plan, a company can name its markers of success and the metrics it will use to measure that success.

Traditionally, an organization development intervention progresses through seven stages.

1. 1. Identifying a need for change: An OD intervention begins when a team member recognizes a need for change. Nearly anything in the organization is fair game for change, whether that’s quality management, talent management, employee wellness, or market expansion.
2. 2. Diagnosis: Next, an organization must conduct an honest diagnosis of its current condition. What is the present state of the business? What existing assets can be leveraged for the needed change? What existing factors are posing conflicts to change?
3. 3. Data collection and data analysis: Using interviews, questionnaires, in-person observation, and accessible databases, OD professionals can conduct an organizational audit to learn more about existing conditions.
4. 4. Reporting to stakeholders: At this stage, OD professionals report their findings to stakeholders. They seek feedback from internal team members to learn what they got right and what perceptions need correcting. Together, all parties lay out the vision for change.
5. 5. Designing organization development initiatives: Now the organizational development team creates the specific intervention it will use to enact change within the company. They name goals, strategies, and metrics to track organizational change.
6. 6. Implementation: At this point, the organization development team must implement its plans. This can be difficult, as longtime stakeholders may be resistant to change. But by embracing team members' natural desires and their core competencies, OD professionals can chart a course toward real, lasting change.
7. 7. Observing change and adjusting as needed: The final step of organizational development is watching change take hold within a company. OD strategies may need to be refined as time goes on. Yet if a company commits to honest self-assessment and a sincere effort to change, all its stakeholders—from top management to everyday employees—can expect to see meaningful change in their operations.

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