Comparison of the classical and systematic approach(Video) INTRODUCTION TO ORGANIZATIONAL DEVELOPMENT(OD)
Analysetools in ODD
Change processes in the company and in every company include a number of measures to improve performance. Transformation leverages opportunities to support an organization's mission, goals, and operations in a way that systematically impacts the company's declining quality metrics. The Organizational Development and Design (ODD) approach broadens the understanding of organizational structure, changes perceptions of purpose and mission, and improves the approach to performance indicators. ODD is a unique model for transforming organizations to achieve peak performance.
Organizational development and organizational design are practices for transforming a company with a focus on high performance and sustainability. ODD as a general phenomenon first emerged in the late 1990s when researchers first drew attention to distinct elements (Anderson, 2018). Organizational development was preceded by a series of psychological studies examining the effects of structure on employee behavior and motivation. Psychologists have found that human resources are the foundation of an organization more than a solid leader. Levine Kurt pitched the idea of studying the business ecosystem using dynamic waves to the team. His experiments provided clear examples of how proper planning can have a positive impact on employees' perception of work (Cummings et al., 2016).
Organizational design became the second phase of transformation: motivated and engaged employees were more interested in learning the rules and structure of metrics (Pertusa-Ortega et al., 2018). The hard elements of the organization were influenced by Fayol; He explained the need for a separation of positions and power. Competent management functions caused managers to consider feedback, adjustments and deviations as an integral part of the business. Organizational design is not strictly limited by a framework, but connects employees and managers.
Characteristics of ODD: models and theories
Organizational models have become a way to combat market monopoly and develop healthy competition. The automation of business processes and competitive pressures are forcing companies to look for new ways of designing workspaces to improve their operations. Various models and theories can achieve high performance based on the ODD approach. The purpose of organizational design models is to diagnose the current state, identify development opportunities, and define current goals and culture (Pertusa-Ortega et al., 2018).
McKinsey 7The model is a complex analytical model that includes both hard and soft elements of business systems. Each part is connected to the other, allowing multiple branches to be developed simultaneously (Kocaoglu and Demir, 2019). A company can use a differentiated approach to strengthen one of the seven components or, conversely, to weaken the focus on the other. The model allows for the assessment and redistribution of resources from one element to another. The advantage of the model lies in its versatility and the ability to connect critical structures. However, the disadvantages are considerable: The model does not deal with change management, but only sets the direction.
Among the transformation models, the Burke-Litwin technology stands out, which identifies various change factors and prioritizes them. This can be conventionally represented in a chart with the most critical factors at the top and the least important ones at the bottom (Satrevics, 2014). This technique reveals several groups of influencing factors: external factors, strategic factors (management and strategy), operational factors (structure, management, politics) and individual factors (motivation, values and needs). The model states that all aspects are integrated and a change in any one of them ultimately impacts the entire system. The sources of organizational change should be sought in the external environment (Pertusa-Ortega et al., 2018). Critical success factors of an organization are often influenced by changes outside the organization. The advantage of the model lies in the inclusion of soft and hard elements, which allow an analysis of the connection between strategies and individual abilities. The disadvantages are not significant: at first glance, the model seems inaccessible and complicated, but the step-by-step implementation can do wonders for the status of the company.
The agile organizational model is a business transformation practice that takes the traditional type to the next level and conquers new market niches. Currently, there are no brutal practices in corporate governance, as they severely limit employees' ability to change spaces (Anderson, 2018). Instead of bringing new products onto the market, traditional companies prefer to follow a traceable path that is becoming increasingly irrelevant. The model proposes four phases of transformation: crossing borders, destroying networks, changing systems thinking and relationships. The result is effective teamwork and a changed view of the organization. The advantage of the model lies in the decision-making in the specific case and the reduction of bureaucracy as well as the development of autonomous teams. The disadvantages of the flexible model can be described as the long time commitment and the need to invest funds in the retraining of managers.
Under the ODD theories different ways of organizing a company related to one aspect of the business are considered. Organizational design theories mainly include bureaucratic models, unitary and multidimensional forms, mechanistic and organic structures, heterarchies and autonomies. While bureaucratic models and unitary states are considered outdated, others show positive market dynamics. Application of the theory is the result of the organization's original structure, and managers often resort to a combined method.
There is no specific theory of business incentives in organizational development, but two approaches can be distinguished: the modernist-objective perspective and the symbolic interpretive perspective. Modernist organizational theory focuses on objective data derived from reality. These include the physical characteristics of the workplace and the evolution of the relationship between technology and society. Modernists believe that business is driven by real-world situations and the organization's responses to them. Symbolic interpretation theory focuses on the use of specific symbols and their impact on relationships within the organization (Nicotera, 2020). This means that the collective and individual experiences of employees in a given organization become the starting point for further action. This theory relates to the subjective perception of reality made up of emotional and personal feelings in the design of business activities.
Comparison of the classical and systematic approach
There are different views on the business approach, differing in the principles of creating an organization and its activities. Taylorism is a leadership style that advocates the need to uphold differentiation and division of labor. However, each component requires a science-based standard of performance. The bureaucratic business model was proposed by Weber, who derived regulatory responsibility by hierarchy. Fayol advocated division of labour, as did Taylor, but responsibility always rested with the department or company head. In addition, Fayol did not recognize decentralization and argued for the need for unified goal setting and leadership.
The classic strategy approach places value on rationality and analysis. With this approach, the process must be formally transparent and include concrete measures to maximize profits. The classic strategic approach to economics emerged in the 1960s thanks to the work of American economic historian Chandler and theorist Ansoff. The classic approach is based on recognizing profit as the overall goal of every organization, and companies use rational planning to solve their problems and achieve their goals. He places great emphasis on the management team's willingness and ability to develop strategies to maximize profits through long-term planning.
The systems approach allows us to view an organization as a system made up of interconnected elements. Originally used in the exact sciences and engineering, in the late 1950s it was also used in management applications, which was a major achievement for the Faculty of Management Sciences. The systems approach assumes that each of the components that make up the system has its own goals. However, the core of the systemic approach is to ensure the efficiency of the entire organization.
The systems approach is closely related to the humanistic incentives of ODD as it integrates employee happiness and happiness into the overall business system. Rather than leading teams and applying rigid discipline, ODD applies principles of motivation and ethics to achieve results (Cornelis et al., 2019). Psychological research over the last century has contributed significantly to the understanding of group dynamics and group T-learning, which stimulates organizational development. Criticisms of these practices have typically been based on the inability to restore awareness of positive thinking and the incompleteness of Lewin's field theory (Cummings et al., 2016).
Travel group: PESTLE and SWOT analysis
In order to create a comprehensive process model of the company, an analysis of the organizational structure in terms of compliance with the functions performed in business processes is required. This is usually presented in the form of a graphical diagram showing the hierarchical subordination of employees. TG has a typical hierarchical structure: the head office is subordinate to subsidiaries with specific brands. Travel UK is a newly established structure with legal departments: business support, development and customer service. Thanks to the rules and processes followed by the department heads, the systems work successfully. The implementation of trade union legislation in the UK also contributes to effective organizational regulation.
SWOT analysis is the basic classic tool of business analysis, and all subsequent analysis methods are either refined or based on data from it. In the context of strategy development, it is the second basic element after shaping the vision and mission of the company (Songhurst, 2017). The state of the enterprise depends on how effectively it can respond to various external influences. Therefore, SWOT analysis allows you to assess the influencing factors and predict future strategy and marketing plans. The analysis shows that strengths include a clear sustainability strategy and monthly TG advisory committees. The weakness probably lies in the fact that unexpected crises are not given the attention they deserve.
PESTLE analysis is one of the basic methods to analyze the organization's external environment before SWOT analysis. It is used to identify market trends for overall industry dynamics. Its results are necessary to assess potential threats and opportunities in the business environment (Dalirazar and Sabzi, 2020). Travel Group is interested in the technological development of the company: it is reflected in the use of modern systems that reduce CO2 emissions and toxic factors. Political awareness is unstable: on the one hand, the company respects the union's position; On the other hand, it can lead to a weakness in the regulation of human resources. For example, employment policies assume that conditions for employees are different before and after a merger, increasing reliance on internal quality metrics. TG values socio-cultural performance: the focus is on employee involvement in the overall strategy. This is a good indicator and the company benefits significantly by presenting this policy to the market. The economic factors of TG are expressed exclusively in environmental protection: reduction of water consumption.
The structure used by TG is fundamentally in line with good management practice: clear, hierarchical rules for legal relationships convey a clear and understandable picture of responsibility. To assess performance, the company uses three key criteria that indicate a high level of management. As already mentioned, the topic of unions is quite controversial and represents a weakness of the company. Despite the merger, it is probably necessary to revise the company structure and align the rules. The company's mission and goals are focused and clear, thanks to them they will not lose their relevance in the future. If it's a corporation, a different hierarchical principle is likely to apply—for example, mechanistic or autonomous theories. They can work because they specialize in developing centralized management and accountability
Cultural Theory: Fusion and Sustainability
The experience gained in international business and in empirical research has shown how important it is to take the cultural aspect into account. Culture must be understood as a way of life and a worldview system specific to individual nations (Panda and Gupta, 2018). This definition covers all aspects of people's lives and identifies a specific culture with a specific country. On the other hand, culture is a set of values and norms in a given society and this definition is most important for companies. The corporate culture is based on the beliefs and principles that are recognized as valid in the company. This is reflected in how the organization conducts its business and how it treats its employees and customers.
Merger theory is a business tool that allows companies to move from one level to another and grow. The necessary consequence of the merger is the initial price drop that is typical when a merger of structures is first announced. Another indicator is the redistribution of resources to subsidizing industries. There are three types of mergers: horizontal, vertical, and conglomerate mergers. Horizontal mergers are companies in the same industry or category with roughly the same performance and productivity. Horizontal mergers are necessary to reduce costs and expand product offerings. In some cases it is possible to reduce competition by redistributing market activity. In vertical mergers, a typical situation is the acquisition of a company in its sector by a large company that enters the market at the beginning of product sales (Salop, 2018). In TG's case, this was likely to have been exploited as the company increased demand by establishing central offices and maintaining its terms of employment. Conglomerate mergers are characterized by bringing together independent companies to reduce the risk associated with entering the market. As a result, the established relationship can become an effective target of sales management at certain intervals.
Kurt Lewin introduces the concept of a quasi-need, which implies an intention that arises in a specific situation and conditions human action and strives to be fulfilled. Every object has its own value for humans - a kind of energy charge that causes a certain tension in a person that needs to be released. His theory applies to TG as it regulates the parameters of human trait evaluation and value (Cummings et al., 2016).
Philip Kottler was aware of the parameters for coordinating marketing plans: he developed the 4P concept - product, price, campaign, location. The marketing mix is a set of controllable marketing variables, the sum of which is used by the company to elicit the desired response from the target market. Description of TG according to him: the product is tourist services, the price is the price of the company and air transport, the promotion is based on the theory of sustainable development, and the place depends on the location of the centers.
The organization clearly mentions another important business concept: the sustainable development necessary for its improvement. The company tries to meet the needs of employees and customers by constantly improving the interaction and development process. TG also contributes to environmental sustainability and resource conservation by addressing climate-related issues. The ethical aspect of TG consists in the attitude towards employees and customers, achieved through a comfortable organization of the structure.
In addition to the SWOT analysis, an important tool for designing an organization is the RACI – the role definition system. The RACI method is a practical and precise tool for designing and planning changes, i.e. involving different roles in the processes and tasks. The RACI matrix allows you to organize the relationships between the structural elements of the system and streamline the process (Sitar and Watts, 2021).
Among the tools for evaluating the organizational development of TG companies, it is necessary to use measurement as an element of the change process. People-related organizations should use a variety of systemic quantitative measures that allow objective, reliable information to be obtained (Wilson and Zamberlan, 2015). One of TG's goals is employee engagement. This tool helps you see new KPIs from a new angle.
At first glance, the seemingly odd case theory is also a powerful ODD tool. This is related to the nature of systems operating under uncertain conditions, forcing the organization to consider random events. Because many events occur independently, it is impossible to control every change. However, understanding the overall environment (environmental and financial) will be a valuable part of the company's mission.
A company like TG, dependent on external and internal events, needs to think about a systemic transformation. A change in the marketing department will entail a change in the commercial operations, and the transformation of the human resources department is inseparable from the union activities of the subsidiaries (Pertusa-Ortega et al., 2018). GT is intended to improve internal communication and link these changes to possible external influences. Although the organization focuses on three indicators, this is not enough to provide a framework for sustainable development. Perhaps the company needs new forms of organization to improve its structure.
ODD is therefore a set of activities necessary to create a stable and developed organization. The emergence of ODD and its elements is associated with the development of psychological management studies and competent management as a business theory. ODD consists of theories and models that consider different approaches to organizational structure. Compared to the classic approach, the systems approach is relatively new and more effective as it allows you to assess the big picture. SWOT and PESTLE analyzes are powerful tools for determining business health and choosing the direction for its improvement. TG was formed as a result of a vertical merger as it expanded the market and maintained the terms of employment. ODD analysis tools help assess business health: RACI is essential for role regulation, and contingency theory is useful for preventing errors.
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Organizational development theory is dedicated to expanding the working knowledge of individuals to enhance and to make more effective organizational performance and change. In order to command a clear understanding of this theory, it is vital to understand its essential elements.How would you explain what organization theory and design is? ›
Organisation theory is the study of organisational design, relationships and structures. It focuses on such dimensions as level of organisation formalisation, specialisation, standardisation, hierarchy of authority, complexity, size, goals and strategy.What is organizational development 1 in your own words? ›
A definition. Organizational development is a critical and science-based process that helps organizations build their capacity to change and achieve greater effectiveness by developing, improving, and reinforcing strategies, structures, and processes.What is organizational structure and organizational design why it's important explain the six key elements of organizational design? ›
6 key elements of organizational structure
According to Organizational Behaviour, these elements are: departmentalization, the chain of command, the span of control, centralization or decentralization, work specialization, and the degree of formalization (Bobbins, Judge, & Campbell, 2012).
Organizational climate, organizational culture, and organizational strategy are the three main sections of organizational development theory. Organizational development is a continuous process based on managing future change based on diagnosis, planning, and evaluation.What are the 4 organisational theories? ›
Organizational theory is the study of the structures of organizations. Four major theories contribute to this study – classical organizational theory, human relations or neo-classical theory, contingency or decision theory and modern systems theory.What is organizational design explain in your own understanding? ›
Organisational design is the process of aligning the structure of an organisation with its objectives, with the ultimate aim of improving efficiency and effectiveness. Work can be triggered by the need to improve service delivery or specific business processes, or as a result of a new mandate.Why is organizational design theory important? ›
Good organizational structure and design helps improve communication, increase productivity, and inspire innovation. It creates an environment where people can work effectively.What is organizational theory in simple words? ›
Organizational theory refers to a series of interrelated concepts that involve the sociological study of the structures and operations of formal social organizations. Organizational theory also seeks to explain how interrelated units of organization either connect or do not connect with each other.What are the 5 stages of organizational development? ›
- Identify the needs of the organisation. ...
- Decide on how to address those needs. ...
- Select your intervention. ...
- Implement the intervention. ...
- Evaluating the impact.
Key concepts of OD theory include: organizational climate (the mood or unique “personality” of an organization, which includes attitudes and beliefs that influence members' collective behavior), organizational culture (the deeply-seated norms, values, and behaviors that members share) and organizational strategies (how ...What are the key values of organizational development? ›
Organization Development is guided by strong values such as humanistic, organization-wide, inquiry-based and collaborative, developmental-focused, systems-oriented, and research- and evidence-informed.What is a real life example of a functional organizational structure? ›
Examples of organizations with a functional structure include: Amazon, Starbucks. A functional structure groups employees into different departments by work specialization. Each department has a designated leader highly experienced in the job functions of each employee supervised by them.Are there four basic elements in organizational design? ›
Edgar Schein, a prominent organizational psychologist, identified four key elements of an organization's structure: common purpose, coordinated effort, division of labor, and hierarchy of authority. Each of the four elements represents an essential component of an effective structure.What are the three pillars of organizational theory? ›
There are three different types of organizational theory: Classical Organization Theory, Neo-Classical Organizational Theory, and Modern Organizational Theory. In this article, we will explore the Classical Organizational Theory.What is the difference between organizational design and organizational development? ›
Simply, Organisation Design is deciding the function and purpose of your business. Organisation Development is deciding how to maintain the purpose and function.What is an example of an organizational theory scenario? ›
An ideal example of organizational change theories in action is the creation of assembly lines. Henry Ford, the founder of Ford Motor Company, implemented this innovative design by modifying factory production. The assembly line method—new parts are added at every workstation—is still used in many modern factories.What are the five 5 organisational approaches? ›
Five common approaches — functional, divisional, matrix, team, and networking—help managers determine departmental groupings (grouping of positions into departments). The five structures are basic organizational structures, which are then adapted to an organization's needs.What are the factors that influence organizational design? ›
Although many things can affect the choice of an appropriate structure for an organization, the following five factors are the most common: size, life cycle, strategy, environment, and technology.What is the most important organizational theory? ›
This theory discusses how to divide up professional tasks in the most efficient and effective way. Classical theorists pay particular attention to the professional dynamics and relationships within an organization and how these relationships may impact the company's function and production.
Design theory is a system that helps graphic designers better understand how they can communicate a message to audiences through visuals. It involves identifying the different elements in an image and explaining why they're important.What are the modern organizational design theories? ›
Modern Organizational Theories is divided into two major types – Systems Theory and Contingency Theory.What is organizational theories summary? ›
Organization theory is concerned with the relationship between organizations and their environment, the effects of those relationships on organizational functioning, and how organizations affect the distribution of privilege in society.What is an example of organizational development? ›
What are examples of Organizational Development? Examples of activities often a part of Organizational Development include employee training, strategic realignment, product research, management restructuring, and service development.What are 7 organizational development processes? ›
To implement this framework, companies analyze each of the seven S's — shared values, strategy, structure, systems, style, skills, and staff — and come up with solutions for improvement. The key factor is shared values, which are the organization's main priorities.What are the 3 most important values you feel should be present within any organisation? ›
- Commitment to Customers.
Organisational development has three types of strategies for the organisation change i.e. empirical- rational strategy; normative strategy; and power-coercive strategy. Normative strategy is more popular in organisation settings and it can be cover other two types of strategies.What are the six key factors which you must consider for your organizational design? ›
- Work specialization. Work specialization is a process that assigns each professional to a specific task. ...
- Departmentalization and compartments. ...
- Formalization of elements. ...
- Centralization and decentralization. ...
- Span of control. ...
- Chain of command.
The following steps can be of great help in designing a suitable organisational structure: 1. Clearly defined objectives, 2. Determining activities, 3. Assigning duties, 4.What are the four basic organizational design challenges? ›
Four of the most common irritants I've seen arise as a result of ineffective organization design are: competing priorities, unwanted turnover, inaccessible bosses, and cross-functional rivalry.
A start-up is a typical example of an organization having a simple structure because apart from the founder there may be one or few employees who multi-task, and take care of all that has to be done to help attain organizational goals. Communication is informal and there is a high degree of collaboration.What is an example of a functional organizational design? ›
Examples of departments in a functional organization structure include a sales department, a marketing department, a production department, a human resources department, etc. In this vertical management structure, employees of each department only communicate with one another and their leaders.What is functional organizational structure in simple words? ›
A functional organizational structure is a common type of business structure that organizes a company into different departments based on areas of expertise, grouping employees by specialty, skill or related roles.How do you measure organizational effectiveness? ›
Measuring organizational performance can be accomplished by: Comparing actual achievements against set goals. Comparing the projected aims, such as profit and innovation, against actual results. Measuring the efficiency of business functions, areas, and processes.What are the pillars of organizational structure? ›
The key to organizational excellence is combining and managing them together. The five pillars are: Pillar I – Process management; Pillar II – Project management; Pillar III – Change management; Pillar IV – Knowledge management; Pillar V – Resource management.What are the four common denominators of all organizations? ›
The four common elements of an organization include common purpose, coordinated effort, division of labor, and hierarchy of authority.What is theory and practice theory and practice? ›
Theory and Practice provides a venue for all manner of music-theoretical scholarship, including thehistory of music theory, music theory pedagogy, and interdisciplinary research. It has been published annually by the Music Theory Society of New York State since 1975.What is the practice of organizational development? ›
Organization development (OD) is an effort that focuses on improving an organization's capability through the alignment of strategy, structure, people, rewards, metrics, and management processes.What is the concept of theory and practice? ›
Theories are academic models or frameworks that are developed to help explain or predict certain phenomena. They are generally discipline specific and often build upon or even contradict one another. • Practice describes the application of knowledge or skills in a given situation.What are the definitions of theory and practice? ›
Practice is the observation of disparate concepts (or a phenomenon) that needs explanation. A theory is a proposed explanation of the relationship between two or more concepts, or an explanation for how/why a phenomenon occurs.
Theory gives deep understanding and allows manager to view the problems from different perspectives which leads to decision-making & practice.What is an example of practice theory? ›
Bourdieu uses the concept of field instead of analyzing societies solely in terms of classes. For example, fields in modern societies include arts, education, politics, law and economy. Cultural capital is also part of practice theory and is directly related to strategy.What comes first between theory and practice? ›
From this lens, theory is a prerequisite for practice. However, if the goal of learning is to better the practice, then we should aim to establish new theories.What are the five key organizational practices? ›
The Five Ps of an organization are Purpose, Philosophy, Priorities, Practices, and Projections. To clarify, this structure of organizational attributes offers a unique way to understand an organization.What are the 4 pillars of organizational development? ›
Additionally, there are four guiding principles, or pillars, to keep in mind in the organizational development process. Those pillars are mission, vision, strategy, and goals.What are the 5 stems of organizational development practices? ›
Typically, OD is explained as stemming from five major backgrounds (stems): i) Laboratory training, ii) Action research or Survey feedback, iii) Normative approaches, iv) Quality of work life, and v) Strategic change.What is the importance of theory and practice? ›
Theory and practice in education is created for getting better understanding, teaching, and learning in broader areas of interests within the educational fields. It is set up for the experienced educators so that theory and practice could be use together among individuals for improving knowledge.What is practice theory summary? ›
Practice theories emphasize ways of engaging with the world and are concerned with exploring human activity, subjectivity, intersubjectivity, embodiment, language and power in relation to the 'organization, reproduction and transformation of social life' (Schatzki, 2001, p. 1).What is more important theory or practice? ›
Theory teaches you the experience of others. Theoretical knowledge can give you a deeper understanding of a concept through seeing it in the context of understanding the why behind it. of practical knowledge is very wide, there are some things you can only learn through doing and experiencing.How do you study theory and practice? ›
- Learn Concepts. ...
- Read Aloud. ...
- Write to Learn. ...
- Self Made Notes. ...
- Revise, Revise, and Revise. ...
- Use Visualization. ...
- Take Breaks in Between. ...
- Study Multiple Subjects Instead of One.
Theories are formulated to explain, predict, and understand phenomena and, in many cases, to challenge and extend existing knowledge within the limits of critical bounding assumptions.