MANAGING STRATEGIC CHANGE NOTES
According to Oakley and Krug (1993), the past decade marked a period of
unprecedented change in the world generally in business markets
specifically. Forecasts suggest that the ‗80s
were merely a prelude to the dynamic challenges ahead in the ‗90s and
beyond. Indeed the entire cycle of change has been altered dramatically.
The intervals between changes have shortened and the pace at which
change now occurs has quickened. It wasn‘t long ago that we had time to
adjust to change before more change was upon us, but no longer. In
today‘s turbulent market place, the only constant is change.
To be successful in today‘s fast changing market place requires that
business be conducted differently than ever before. While yesterday‘s
business people found a degree of comfort and certainty in knowing they
could continue doing things ―the way we‘ve always done them before,‖
today these words indicate that a manager or a company is already in or
headed for trouble. Yesterday we could rely policies and procedures to
assure our people were doing things right. Today‘s highly competitive
market demands that our people do the right things. Our people must be
continuously look for new and better ways to accomplish just about
everything , sometimes throwing old procedures out the door and leaving
that door open for creative and innovative thinking.
The need for innovation is not new, but never before has there been such
an urgent demand to continually create new and better solutions. For all
those working in the business arena, this means that a successful future
depends upon the ability to change atleast as quickly as the market
place. Change is a factor that every organization must accept and more
critical to the long-term success of an organization. Change in any
institution starts with leadership of an institution. When the present
organization structure does not adequately fit the need of when strategy
and strategic principles of organizing, top management to look for
reorganization. Many companies have reorganized their structure recently
because of the change in their strategies. The implementation may put
various changes in their strategies and action. When the change is
implemented thus managers should monitor its effect so that they
overcome the expected happenings in a timely fashion and react to it
intelligently.
MANAGING STRATEGIC CHANGE
● Understanding Strategic Change
● The Context and Forces of Change
● Approaches to Strategic Change Management
● Styles of Managing Change
● Change Leadership
● Resistance to Change
Introduction
● Change can be simply defined as a transition from one state to another
with focus on being different.
● Change is the only constant in today‘s life – for individuals and
organizations
● Some changes can be reversible while others are not hence the risk
involved in managing change.
● There are both objective and subjective conditions in making the
transition in organizations.
Definition
Change management is the use of systematic methods to ensure that an
organization change can be guided in the planned direction, conducted in
a cost effective manner and completed within the targeted time frame and
with the desired results” (Davis and Holland 2002)
Focus is on the process ―Change management is a structured and
systematic approach to achieving a sustained change in human behavior
within an organization‖ (Todd A. 1999) Focus is on the people aspects of
change
UNDERSTANDING STRATEGIC CHANGE
Strategic change is one that involves fundamental changes in the
business of the organization and its future direction Successful
strategic change is built on an overall strategic management system of
the organization. The strategy of the organization legitimizes the
change programme. The goal of strategic management is to build and
maintain sustainable competitive advantage and to maximize shareholder
value. Organizations have to change to align themselves to changes in
their environments. Purpose of strategic change is to ensure that
organization is heading in the right direction (effectiveness). Key
pre-occupation is anticipation
McKinsey Survey on Change Management (2006)
Why change?
- Reducing costs
- Moving from good performance to great performance
- Completing or integrating a merger
- Turning around a crisis situation
- Catching up to rival companies
- Splitting or divesting part of the organization
- Preparing for privatization or market liberalization
Source: The McKinsey Quarterly Jan 2007
Operational change
Is the type of change aimed at ensuring that the organizational
activities are being performed in the best way possible? Focuses on
excellence in whatever the organization does. Purpose of operational
changes is to ensure the organization is efficient. Strategic change
informs operational change.
CONTEXT AND FORCES OF CHANGE
In a fast paced global economy, change can not be an occasional episode
in the life of a corporation. Companies with rigid structures will be swept away. Corporate
cultures that can adapt will survive and thrive‖
Source: Business Week – Reinventing America, 1992.
Introduction
At the beginning of the twenty first century, change is everywhere. The
reality of yesterday is different from that of today and possibly that
of tomorrow. Social, political and economic changes have greatly
compromised individuals and organizations ability to respond.
Organizations just like individuals follow a certain logic or system and
sometimes react irrationally. Some are fairly successful while others
are failing. How can we – as individuals, as well as organizations,
prepare for the uncertain future? Change management is empowering organizations and individuals for taking over responsibility for their own future. Creating a learning organization is an example of one such form of empowerment
Context for change
The forces that operate to bring about change are many and varied. Some
forces are gentle while others are strong and can cause devastation to
structures and operations in an organization.
Multiple Causes
- Identifying the causes of change (PESTEL analysis, Internal analysis
etc.) - Analyzing the causes of the change is a good beginning point in
change management
Driven by Environmental Turbulence
- Predictable
- Forecastable by extrapolation
- Predictable threats and opportunities
- Partially predictable opportunities
- Unpredictable surprises
Varieties of Change
Arising from the various levels of turbulence in the environment, there
are varieties of change in organizational Changes.
Forces of change
- Most of the forces of change can be traced to some fundamental
forces of change. - Growth of capital intensive manufacturing.
- Accelerated tempo of new technology
- The concentrated patterns of consumption
- Neo-protectionism era.
What are the implications of these forces to change in Kenyan
organizations today?
Technical Obsolescence and Technical Improvements Stems from competitors or availability of new
technologies, Internally from R & D e.g. replacing product models every
short time (shorter PLC and persuade customers to replace these products
as frequently.
Accelerated diffusion of new technology
Political and Social events
- Changes in political ideologies and inclinations over time
- Changing political systems e.g. in 1980 – pressure not to trade with
South Africa – now? - Convergence of cultures and social systems
Globalization of markets and operations
- Improved communication
- Similarities in technological infrastructure
- Similarities of consumer demand and life style patterns
- These have led to growing incidence of strategic alliances and joint
ventures.
Increases in size, complexity and specialization of organizations
- Most organizations have grown in size and increasingly utilizing
specialized technology. - These changes require new organization structures and skills for
cooperation and coordination.
Greater strategic awareness and skills of managers and employees
- These require changes in the scope of their jobs and call for
strategic development and growth of the company
Neo-protectionism
- World trade has been fairly liberalized
- Competitive power of the corporation is no longer in the
monopolistic status - Competition has eroded the abilities of corporations.
- Global competition as opposed to localized competition
- Free flow of resources in the world
All these pose challenges and change in the way of doing things is
inevitable.
Types of change
There appears to be four basic types of change, which affect organizations.
Technology changes
Production processes
The product or service changes
Concerned with output of the business
Administrative changes
Structures, policies, budgets rewards systems
People changes
- Attitudes
- Expectations
- Behaviors
- A change in one of these changes will place demands for change on
one or more of the others. - Major changes in the strategic perspective forces changes in the
structure which forces change in jobs and consequently on behaviors.
Implications - The approach to management of change will need to be context dependent.
- Managers have to balance different approaches to management of
change according to circumstances they face.
APPROACHES TO STRATEGIC CHANGE MANAGEMENT
Introduction
- Change in organizations can be either proactive or reactive.
- Proactive change involves actively attempting to make alterations to
the work place and its practices. - Companies that take a proactive approach to change are often trying
to avoid a potential future threat or to capitalize on a potential
future opportunity. - Reactive change occurs when an organization makes changes in its
practices after some threat or opportunity has already occurred. - Broadly there exist two forms of change
- Planned change
- Emergent change
Planned change
Views organization change as a process of moving from one fixed state to
another through a series of preplanned steps. Distinguishes change that
is conscious as opposed to change that was brought about by accidents or
impulse or that which might be forced on an organization. Most closely
associated with the practice of Organizational Development (OD). OD is
about people and organizations and people in organizations. It is also
about planned change, i.e getting individuals, teams and organizations
to function better. Planned change involves common sense, hard work
applied diligently over time, a systematic goal oriented approach, and
valid knowledge about organizational dynamics and how to change them.
Emergent change
This approach emerged in the 1980s. Views change as a continuous, open
ended and unpredictable process of aligning and realigning the
organization to its changing environment. It recognizes the need for
organizations to align their internal practices to the external
conditions. Most importantly, it sees change as a political process
whereby different groups in an organization struggle to protect and
enhance their own interests. Views change as a process that unfolds
through interplay of multiple variables (context, political process, and
consultation) within an organization. Change not a series of linear
events within a given period of time but rather a continuous process.
Handling change is part of every manager‘s role and not work of a
specialist. Emphasize a bottom up approach as opposed to top-down
approach implied in planned change.
Task:
Read to understand the Models in each approach to change management. To
what extent are the models mutually applicable, inapplicable?
STYLES OF MANAGING CHANGE
Introduction
Understanding and managing changes are the dominant themes of management
today. Adapting to the ever-changing present is essential for success in
the unpredictable future. However, there is no one ‗right formula‘ for
the management of change. The success of any attempt at managing change
will also be dependent on the wider context in which that change is
taking place. Different styles of managing change are likely to be
necessary according to different contexts and in relation to the
involvement and interest of different
groups. The styles include:
- Education and communication,
- Collaboration/participation,
- Intervention,
- Direction, and
- Coercion (most extreme form).
Education and Communication
Involve the explanation of the reasons for and means of strategic change
in order to win the support of every one in the organization. Based on
the assumption that if people are given the rationale for change, they
will see the need for it and therefore accept it. This may be useful
when resistance, based on inadequate or inaccurate information, is
anticipated.
Collaboration or Participation
It is the involvement of those who will be affected by strategic change
in the identification of strategic issues, the setting of the strategic
agenda, the strategic decision-making process or the planning of
strategic change. Can be helpful in increasing ownership of a decision
or change process, and in increasing commitment to it. Leads to better
quality of decisions than would have otherwise been
achieved.
Intervention
Involves the co-ordination of and authority over processes of change by
a change agent who delegates elements of the change process.
The change agent could delegate certain elements of the change process
to project teams or taskforces. The teams become involved in the change
process and see their work building towards the change process.
Beneficial in that it not only involves members of the organization in
idea generation but also in the implementation of solutions.
Direction
Involves the use of personal managerial authority to establish a clear
future strategy and how change will occur. Usually top-down management
of strategic change and may be associated with vision or strategic
intent developed by someone recognized as the
leader in the organization.
Coercion
Involves the imposition of change or the issuing of edicts about change.
It is the explicit use of power and may be necessary if the organization
is facing a crisis. This style may be useful in crisis situations or
rapid transformational change The styles of managing change are not
mutually exclusive in a change programme. Application of one style in
managing change does not preclude the application of others. Different
stages in the change process may require different styles of managing
change and that different styles suit different personality types.
CHANGE LEADERSHIP IN STRATEGIC MANAGEMENT
Introduction
The management of change is often directly linked to the role of a
strategic leader. Leadership is the process of influencing an
organization in its efforts towards achieving an aim or goal. Change
agents or change champions provide the leadership role. The leader‘s
roles include creating vision, empowering people, building teamwork, and
communicating the vision. The qualities of an effective leader can be
summarized as being visionary, skilled, competent, delegative,
motivative, analytical, persistent, enduring and flexible.
Leadership competencies
A leader is a man who has the ability to get other people to do what
they don‘t want to do and like it. Changes in organizations are more and
more common and appear at faster pace and employees are expected to be
even more adaptable. Leaders play an important role in setting an
example for all those values, behaviours and considerations expected
from employees. Leaders have to ensure that changes in an organization
are accepted and implemented in a way resulting not only in better job
performance but also in
general understanding and satisfaction of all. Leadership competencies
for successful change management can be categorized
as:
- Cognitive,
- Functional, and
- Social abilities and skills
Cognitive competencies Include divergent thinking, critical thinking,
creativity, problem solving, strategic thinking, analytical skills, and
numerical abilities
Functional competencies include language and communication skills,
technological skills (IT, media etc.), multicultural competencies
(knowledge of a general and other cultures, foreign languages, etc.),
learning abilities and personal development, career planning skills,
managerial skills, and decision skills.
Personal and social competencies include self-direction, interpersonal
skills, teamwork skills, compassion, integrity, mobilizing skills,
personal and social values, and ethical dimensions.
RESISTANCE TO CHANGE
Quote
“There’s nothing more difficult to take in hand, more perilous to
conduct, or more uncertain of success than to take a lead in the
introduction of a new order of things, because the innovation has for
enemies, all those who have done well under the old conditions and
lukewarm defenders in those who may do well under new”.
(Source: Machiavelli (1611), The Prince ―Reasonable people do not do
reasonable things‖ Reason is an analytically logical thing.
Implementation does not automatically follow strategy formulation
(there‘s always some resistance).
Treatment of strategic planning and implementation as sequential events
is an artificial convenience. (the way planning is done can determine
eventual implementation). Resistance is not confined to introduction of
strategic planning. It occurs whenever there
is a departure from historical behavior, culture and power structure.
What is resistance to change
• a multifaceted phenomenon which introduces delays, additional costs
and instabilities into the process of change.
• May take the form of:
Procrastination and delays in triggering the process of change.
Unforeseen implementation delays and inefficiencies which slow down the
change and make it cost more than originally anticipated.
Efforts within the organization to sabotage the change or to absorb it
in the welter of other priorities.
Types of Resistance in Management
- Systemic resistance
- Behavioral resistance
Systemic resistance
- Organizational Resistance caused by among other factors:
- Organization design
- Organizational culture
- Resource limitations
- Fixed investments
- Inter-organizational agreements
- Defined as the passive incompetence of the organization occasioned
by the above factors - It is proportional to the difference between the capacity required
for new strategic work and the capacity to handle it. - It occurs whenever the development of capacity lags behind strategy
development.
Minimizing systemic change
- Provide dedicated capacity by planning and budgeting for it.
- Integrate management development into the change process.
- Stretch the duration of change to maximum possible to assure timely
response to environmental challenges. - Use sequence: behavior development system build up strategic action
Behavioral Resistance
- Individuals
- Employees
- Managers in other departments
- Collective resistance
- Managers who share common tasks
- Coalitions and power centers within the organization
Reasons for resistance by individuals
- Parochial self interest
- Though of loss of something of value as a result
- Political camps in organizations fighting each other (power struggle)
- Misunderstanding and lack of trust
- Implications not understood
- Lack of trust of those in authority or in other departments.
- Resist in order to save face – accepting may mean admitting past
mistakes - Low tolerance for change
- Fear of not being able to develop skills/behaviors required
- Different assessments
- Different view from managers
- Some may see more costs than benefits
- May be good if based on full information as it may point to some
potential problem - Threat to Job Status/Security
- Employees worry that any change may threaten their job or security.
- Breakup of Work Group
- Changes can tear apart established on-the-job social relationships.
- Competing Commitments
- Change can disrupt employees in their pursuit of other goals.
Dealing with behavioral resistance to change
Education + communication
Commonly used in situations where there is a lack of information or
inaccurate information and analysis
Advantages
Once persuaded, people will often help with the implementation of the change
Drawbacks
- Can be very time consuming if lots of people are involved
Participation + involvement - Commonly used where the initiators do not have all the information
they need to design the change, and where others have considerable
power to resist.
Advantages
- People who participate will be committed to implementing change, and
any relevant information they have will be integrated into the
change plan
Drawbacks
- Can be very time consuming if participators designed inappropriate
change
Facilitation + support - Commonly used where people are resisting because of adjustment problems
Advantages
No other approach works as well with adjustment problems
Drawbacks
Can be time consuming, expensive and still fails
