Strategic change is the implementation of new strategies that involve substantive changes beyond the normal routines of the organization.
There may be slow change where change is introduced gradually in small incremental steps, so that the roles of managers and a slight change in tasks for other employees, sudden organizational change will encounter more resistance however carefully it is handled, so that for example, closing out without some resistance as people lose their jobs or the circumstances in winch they work alter.
Strategic change is the movement of a company away from its present state towards some desired future state to increase its competitive advantage. Many companies have gone through some kind of strategic change as their managers have tried to strengthen their existing core competences and build new ones to compete more effectively.
Strategic change has to be managed according to the needs of various organizational stakeholders. The key players are those with a high level of interest in an organization and a high level of power. For example, major shareholders are likely to have strong interest in a company and also a high level of power.
1. Introduction to Strategic Change 2. Meaning of Strategic Change 3. Types of Strategic Change 4. Approaches 5. Determining the Need
6. The Management 7. Strategic Change and the Culture of the Organization 8. Strategic Change, Structural Change and Technological Change 9. Coherence in Managing Change 10. Organizational Politics and Strategic Change and Other Details.
Strategic Change: Introduction, Meaning, Types, Need, Approaches, Barriers to Change and Coherence in Managing Change
- Introduction to Strategic Change
- Meaning of Strategic Change
- Types of Strategic Change
- Approaches to Strategic Change
- Determining the Need for Strategic Change
- The Management of Strategic Change
- Strategic Change and the Culture of the Organization
- Strategic Change, Structural Change and Technological Change
- Coherence in Managing Change
- Organizational Politics and Strategic Change
- Power and Strategic Change
- Leadership and Change Agent
- Managing and Evaluation Change
- Barriers to Change
- Success of a Change Programs
Strategic Change – Introduction
One practical way of introducing strategic change is to alter people’s routines, the way they do things. This can be achieved by introducing flexi time where it has not previously existed by moving offices and equipment, or by organizing cross-company working groups. In recent years many companies have attempted to introduce a greater customer focus by encouraging their employees to provide a customer service efficiently and with a smile.
The ‘customer comes first’ programs have been introduced, sometimes with financial incentives, and training programmes have been introduced to help employees understand the customer needs. Symbols/ logos can also play a part in strategic change, because they express more than their obvious content whether they are objects, events acts or people.
The selection interview process, for example may provide a signal it those being interviewed about the nature of the organization. A very formal and efficient interview procedure may signal a rather hierarchical organization where efficiency is a major priority, whereas an informal and rather chaotic procedure may indicate a released but not particularly efficient organization.
Different selection procedures pay mean that different people are appointed. At the same time, more obvious symbol, may indicate change, such as the location of the head office or the organization or workspace. If someone who is made redundant has their work place cleared of all their belongings in a very short this makes a clear statement about them position.
The behavior of the change agents may be a particularly important symbol of change. If change requires alterations in their behavior of employees, managers must show the way by changing their behavior because, for most people their work situation is not a matter of written or spoken abstraction but of deeds and actions.
The manger of a large retail store which provides itself on customer care needs to reinforce this message by taking to customer and employees. Middle managers play an important part in the implementation of change because they provide the link between the senior management and employees.
They can make sure that resources are allocated. Correctly and controlled appropriates, they can monitor performance and above all they can communicate the strategic view of senior managers to the employees they are managing.
Strategic Change – Meaning: With a difference between Incremental and Transformational Change
Change is necessary for all organization because, however much these may be desire to keep things as they are, everything around the organization is moving, competitors are seeking for easy to achieve their own competitive advantage, global changes take places an organization are established, expand, contract or collapse, and the economies of countries across the world rise and fall.
Government legislation and actions affect some organizations more than the others, as do climate conditions and so on. For whatever reason, organizations experience change in their business environment and unless they change in response they will experience strategic drift, so that they move further and further away from providing what is wanted by customers and stakeholders.
At the same time, there are inevitable movements within an organization caused by ageing buildings and equipment (and people) changes in personal changes in management and so on.
Strategic change is the implementation of new strategies that involve substantive changes beyond the normal routines of the organization. There may be slow change where change is introduced gradually in small incremental steps, so that the roles of managers and a slight change in tasks for other employees, sudden organizational change will encounter more resistance however carefully it is handled, so that for example, closing out without some resistance as people lose their jobs or the circumstances in winch they work alter.
So a distinction can be made between incremental change and transformational change:
1. Incremental change does not alter underlying organizational cultural beliefs or values because it is about doing things a little differently and the cause of it is easily seen by everybody.
2. Transformational change does involve change in organizations cultural assumptions because it is about doing different things or doing themselves very differently, and the cause of the change is not very clear to everyone.
Incremental change in the most frequent type of change in most organization and is often initiated by employees who are directly involved with the organizational processes and customers. They may introduce it themselves or it may be introduced after discussions with managers.
On the other hand transformation change is associated with strategic leadership, so it is a top down process initiated by senior managers, it may be possible to look back on a series of incremental changes to see that together they constitute a transformational change.
Whether it is incremental or transformation, strategic change is concerned with changes which are necessary to maintain the link between the organization and it is environment so that it remains competitive and able to meet the needs of its customers.
Strategic Change – 3 Major Types: Reengineering, Restructuring and Innovation
Strategic change is the movement of a company away from its present state toward some desired future state to increase its competitive advantage. Many companies have gone through some kind of strategic change as their managers have tried to strengthen their existing core competences and build new ones to compete more effectively.
Three kinds of strategic changes that most of the companies pursue at least one of them are:
Business process reengineering is the redesign of business processes and the associated systems and organizational structures to achieve a dramatic improvement in business performance. The business reasons for making such changes could include poor financial performance, external competition, and erosion of market share or emerging market opportunities. BPR is not—downsizing, restructuring, reorganization, automation, new technology, etc.
It is the examination and change of five components of the business:
Michael Hammer defines business process reengineering in his book Re-engineering the Corporation as:
Fundamental rethinking and radical redesign of business processes to bring about dramatic improvements in performance.
Hammer focuses on one of the key concepts of BPR, that it is fundamental and radical. The alternative business improvement methodology is Continuous Process Improvement, which emphasizes small and measurable refinements to an organization’s current processes and systems. Continuous process improvement has its origins in total quality management (TQM) and Six Sigma, a program that began at Motorola.
BPR, as a term and as a practice, has a tarnished history. Reengineering became very popular in the early 1990s, however, the methodology and approach was not fully understood nor appreciated. Many times, improvement projects labeled with the title “BPR” were poorly planned and executed.
Employees and organizations cringed at the thought of another “BPR” experience. The term itself is being used less, or is being altered so that these types of initiatives are not associated with the “BPR” of the past.
Despite this abuse of the practice and tarnished name, the practice of redesigning business processes and the associated technology and organizational structure is more popular today than ever. Companies continue to reexamine and fundamentally change the way they do business.
Competitive pressures and a sluggish economy provide the impetus for continued efforts to “deliver more with less.” Reengineering remains an effective tool for organizations striving to operate as effectively and efficiently as possible.
Restructuring is another kind of change strategic managers use to implement strategic change to improve performance.
There are two ways of restructuring:
1. Reducing the level of differentiation and integration by reducing divisions, departments or hierarchy levels.
2. By reducing the number of employees to bring down operating costs. For example, when Jac Smith took over as CEO of General Motors in 1992, GM had more than twenty two level in the organization hierarchy and more than 20,000 corporate managers. Smith soon restructured the company to bring down the hierarchy levels to twelve and corporate managers to 10,000.
Restructuring also involves changes in relationships between divisions or functions.
Restructuring and downsizing becomes necessary due to:
I. Unforeseen changes in business environment,
II. New technological development turns the existing technology obsolete,
III. A reduction in demand due to widespread recession,
IV. Excess production capacity
V. High bureaucratic and operating costs
VI. To build and improve the competitive advantage
VII. Companies have not paid attention to monitoring their basic business processes.
VIII. Companies have not made the incremental changes to their strategies and structures that could enable them to contain/reduce costs and adjust to changing conditions.
For example, Hall Mark Card and Eastern Chemicals restructured to improve their competitive advantage and stay on top.
Therefore, companies are pushed to a situation where restructuring becomes necessary to survive and compete in a competitive environment.
Innovation is the process by which organizations use their skills and resources to create new technologies or good and services so that they can change and better respond to the needs of their customers. An organization that is prone to innovation can succeed dramatically. For example, Apple Computers succeeded in computer industry due to its innovation of personal computer.
Innovation, one the one hand, brings change, one the other entails a high level of risk because the results of R and D activities generally lack certainty. Innovation can lead organizations to change they want, it can also lead to the kind of change, they do not want.
Organizations that depend on innovation as the way to achieve competitive advantage should adopt adjustable structures such as matrix or cross-functional team- structures that give people freedom to experiment and be creative.
Strategic Change – 2 Important Approaches: The Style of Managing Change and The Tactics of Change Management
A change agent needs to consider the approaches appropriate for managing change.
The major approaches include:
(i) The styles of managing change, and
(ii) The tactics of change management which include-
(a) Change in organizational routines
(b) Symbolic activity
(c) Political activity
Kotter and Schlesinger have discussed some appropriate styles of management for managers responsible for managing change.
a. Education and Communication:
If misinformation and lack of information create barriers to managing change, education and communication might be appropriate. It requires an atmosphere of mutual trust and confidence and respect between managers and employees. If large numbers are involved in the change, this style proves to be time consuming, as the mass briefing of people will not communicate the strategy effectively.
Therefore, for effective communication small group briefings and debate would be more appropriate. In such a situation the direction or process of strategic change lack clarity, so relying on processes of communication is problematic.
This is a very democratic way. Participation in the change process increases the feeling among the employees that the decision is their own. They realize that the change process is a must. This strengthens their commitment to it.
The participation of employees in the change may involve setting up of project teams or task forces. Those involved are able to make a meaningful contribution to the decision making process that results in higher quality decisions.
The risk involved in this approach is that solutions will be found from within the existing paradigm. The change agent may require retaining the ability to intervene in the process.
Delegation is an important aspect of this method. The “change agent retains the coordination of and authority for such processes, but delegate other aspects of the change process …the sponsor of the change maintains overall control and ensures that progress is monitored and improvement demonstrated.” The sponsor of the change maintains overall control and ensures that progress is monitored and improvement demonstrated.
Coercion or edict is the imposition of change or the issuing of directives about change. It is the explicit use of power. Coercion is the least successful style of managing change except in a state of crisis or confusion.
Tactics refer to the specific measures or ways of action/management style to implement the change strategy.
The common basic tactics for change are the following:
Routines are the institutionalized ways of doing things. They tend to persist over time and guide people to do their jobs. An organization that becomes especially good at carrying out its operations in particular ways achieve real competitive advantages, but there is also the risk that the same routines tend to block change and lead to strategic drift. They become powerful enough when required to change in order to accommodate some new strategy.
Change process may also be symbolic and symbolic acts and artifacts of an organization help preserve the paradigm.
The way selection interviews are conducted gives an indication to the interviewee of the nature of the organization and the expectation from them. A highly formal interview procedure may suggest a mechanistic, rather hierarchical organization whereas a more informal interview symbolizes an environment and expectation of challenge and questioning. Thus selection processes are symbolic in nature.
Behavior of the change agents themselves is the most powerful symbol in relation to change. The behavior, language and stories associated with such executives can signal powerfully the need for change and appropriate behavior relating to the management of change.
The behavior of executives can also severely undermine change processes. Too few senior executives understand that, having made pronouncements about the need for change, it is vital that their behavior is in line with such change.
The language used by change agents is also important in effecting change. Change agents use metaphor and symbolism in their language of change. Language is not simply to do with communicating facts and information, it is also powerful because it is symbolic and is able to carry several meaningful at once. Change agents may consciously or unconsciously employ language and metaphor to galvanize change.
Strategic Change – Determining the Need for Strategic Change: To Access the Extent of Change and Identifying Obstacles to Change
The first step in the change process for strategic managers is to determine the type and magnitude of change appropriate for an organization. Sometimes this need is obvious, as when divisions are fighting or when competitors introduce a product that is clearly superior to anything that the- company has in production.
There are two main requirements of such an analysis:
(1) To assess the extent of incremental or transformational change required, and
(2) To identify the specific barriers to change
Incremental strategic change is more common than transformational change within an organization. More often, managers find it difficult to determine that something is going wrong in the organization. Organizational problems may develop gradually for a number of years before they become obvious.
For example, the profitability at General Motors and IBM fell. The companies being reputable, the fall in profitability was not noted. However, after some time the investors realized that these companies’ stock was overvalued and the managers were not taking the steps necessary to restructure the companies and turn around their performance quickly, the stock prices fell sharply.
A state of strategic drift occurs when a company’s strategic managers, who are in a position to take action, recognize that the company performance is deviating from the actual performance. Measures such as a decline in profitability, return on investment, stock price, or a fall in market share indicate that there is need for a change.
The decision to restructure and right-size an organization needs the establishment of a new set of tasks and role relationship among organizational employees. The change may threaten the jobs of some employees. Therefore, they resist the change to taking place.
The identification of barriers to strategic change helps to decide what levers and mechanisms of change are likely to be useful. The cultural web can provide a framework for identifying the aspects of the organization that will tend to preserve the current assumptions and ways of doing things.
Routines, control systems, structures, symbols and power or dependency relationship can, therefore, be important blockages to change. However, the identification of such blockages can help to provide an agenda for considering appropriate mechanisms for change. Obstacles to change can be found at four levels in the organization, corporate, divisional, functional and individual.
Strategic Change – The Management
In one way or another, changes in any organization have to be managed where operational change is involved, this can he left to the unit or team most involved and management responsibility may be mainly in terms of overall policy. For example any changes to jobs must adhere to industrial relations agreements and equal opportunity policies, while technical changes have to consider health and safety policies.
Strategic change will be more fundamental and requires much more management involvement in the whole process of seeing through the appropriate change. A simple model of change has a starting point that there is usually a degree of inertia in an organization and something prompts change.
1. There has to be a sufficient number of strength of senior managers who feel dissatisfied by the way things are and who want to do something about it.
2. They need to have an idea of the direction in which the organization should be moving.
3. They need to have some fairly simple first steps in order to start the process of change.
4. Finally, there factors multiplied together must exceed the perceived costs of changing.
This means that there is not very much point in developing a strategy for managing change if senior managers are satisfied with present strategy for one reason or another, or if they lack the confidence to make the necessary changes. In time of crisis, developing a strategy for change in straight forward because everyone can understand that something needs to happen.
There is a tendency in these circumstances to introduce well tried cost cutting strategies, such as budget reductions, the elimination, of layers of management, closing plans and making people redundant. Everybody understand their actions, however, unpopular they may be.
While these actions may become necessary they can also be considered to be negative approaches to strategic change, often taken because senior managers have not anticipated the need to change.
Andrew Pettigrew (and others) is a number of books have considered the management of strategic change in terms of the content, process and context of change. In these books, strategic change has been seen as occurring in a ‘context’ and as a result of pressures on an organization which were either external or internal or both, and can be described as they why of change, the reason for it becoming necessary.
The ‘Context’ can be seen as the ‘what’ of change, the actual changes that have to be made. The ‘process’ is the ‘how’ of change, the way in which there changes are made depending on the strategy introduced by the organization. The strategy would depend on the need for change by the organization and its capability to respond to this need.
This capability depends on the competences of the people involved the available resources and finances, the load and building under the organization control and the information it has at its disposal. How capable an organization control, and the information it has at its disposal. How capable an organization was in meeting the need to change also depends on its structure and the values and attitudes held by its employees.
The ‘incremental’ approach to managing change suggests that managers have an intended destination for their organization, but this discover how to reach it by taking logically connected decisions step by step. Managers do not make major changes but build incrementally in a consistent manner what they already have.
This approach reduces conflict and opposition, about it can lead to ‘strategic drift’. Managers may build on their understanding of their organization and the situation in which it is working, so that the incremental changes are adding to the accepted ‘way we do things around here’. This means that the organization moves further in a particular direction, which may be the wrong direction in terms of its survival in the future.
The incremental approach can lead to strategic drift. ‘Strategic drift’ arises where an organization to driven down the same, familiar, path by its own momentum, becoming more and more out of time with its environment. This means that while the industry is changing in a new way, the organization is developing the old way.
The introduction of information technology created this gap or drift for many companies – where they continued to use their old manual systems, rivals were developing the new technology. The gap between the company and its rival will widen until it is forced to make sudden changes in order to survive. Example of this have been with IBM’s relatively slow more into the production of personal computers, companies were rapidly developing them.
Strategic managers have to manage their main cause of strategic change, which can be identified as the environment, business relationship, technology and people.
1. The environment – shifts in the economy, competitive pressure and changes in legislation can all lead to major strategic change,
2. Business relationships – new acquisitions, partnerships, competition and other significant developments may require substantial changes in the organization structure.
3. Technology – new developments can have a substantial impact on organization and ‘ways of working’.
4. People – new employees may have different expectations, which is especially important when the leadership of an organization changes.
Pettigrew and Whipp (1991), in Managing change for competitive success, studied strategic change at four companies – Jaguar cars, Longman Publishing, Hill Samuel merchant bank and prudential life assurance – and made a general examination of the industries in which these companies were operating.
Their conclusions were that there were five interrelated factors in the successful management of strategic changes:
1. Environmental assessment – every part of the organization should be constantly assessing the competition, so that strategies can emerge constantly from this process.
2. Leading change – the type of leadership required depends on the particular circumstances of the organization, which provides a constraint on leaders. They may be most effective when they move the organization forward at a comfortable, if challenging, pace, because bold actions can be countered productive.
3. Linking strategic and operational change – this may be prescriptive in the sense of a strategic manager providing a specific strategy for the organization, or it may be partly emergence in the sense of allowing for the evolution of strategy over time.
4. Strategic human resources management human resources constitute the knowledge skills and attitudes of the organization, and some individuals are better than others at managing people.
5. Coherence is the management of change – the goals of the organization must not conflict with each other, the process of change must respond well to the environment, a competitive advantage must be achieved and the strategy must not provide unsolvable problem. Overall, the organization needs to be able to develop a balanced approach to change that is both focused and efficient.
Strategic Change – Strategic Change and the Culture of the Organization
By definition, change involves moving from a previous strategy so the starting point for the change process may be seen as an attack on the existing strategy. This approach is likely to produce resistance to change, particularly from those who introduced the previous strategy or who feel they have benefited from it. Ideally the culture of the organization helps in the process of change by being a ‘change culture’.
The culture of an organization is the way we do things around here it is the beliefs, customs, practices and ways of thinking that are dominant in an organization. If the strategic change attempts to alter their pattern of behavior, customs and beliefs and pattern of behavior.
On the other hand, there is the view that culture are so embedded in an organization depends on the ability to manage the organization culture then this culture may make or break that success. For many organizations the ‘old’ ways of doing business cannot continue if they are to survive in today’s high- technology based global market.
For many years, organization thrived and proposed by focusing their efforts on their ‘core’ competence that is doing one thing and doing it well. Their organization supported this business focus by emphasizing issued such as structure, procedures and loyalty to the organization.
A hierarchal structure, with layers of management each responsible for a specific area of the business, was very effective in this environment. The increasing speed of communication as a result of developments in information technology and the emergence of new countries as a major competition have altered the nature of many industries with a greater emphasis on flexibility and on satisfying customer needs quickly and efficiently.
Strategic Change – Structural Change, Strategic Change, Technological Change
i. Strategic Change:
Strategic change has to be managed according to the needs of the various organizational stakeholders. The key players are those with a high level of interest in an organization and a high level of power. For example, major shareholders are likely to have strong interest in a company and also a high level of power.
They need to be satisfied that satisfied those strategic changes are being made at the correct time and that the changes are the right ones. They will have a particular interest is making sure that the changes encourage a higher yield and a rise is the share price.
On the other hand small shareholders may have a strong interest in the organization but have little power their own, so that the company will be less concerned about informing them of changes or making changes that they approve of. In the same way, key workers will need to be treated carefully in the change process, with adequate reward for any changes they have to make while workers also can easily be replaced will need fever incentives to change.
Employees may well be reluctant to change because they have a vested interest in the present ways of doing things. They have their establishment, power bases, the skills to do the job and they know where they are in the work situation. Change in an organization tends to be either a reactive change brought about by a sudden or unplanned event, a planned change which in a systematic, deliberate change in the way part or all of the organization function.
Strategic change will alter way in which the organization operates in one way or another, and existing employees may not see this as being for the better. Using outsiders as change agents can be productive where those feelings of oppositions are strong. So that for example, a new Chief executive from outside the organization can bring a new perspective on the organization which is not constrained by past routines and organization culture.
Consultant can be used as facilitates in strategic workshops or can be used as a reference point in order for managers to be able to claim that other people apart from them are recommending change. Their vary cost may indicate that something is wrong in the organization which requires experts to identify and to help in implementing change.
They also bring a dispassionate view to the process, since they have a different perspective from people in the organization and they may have valuable experience from working in other organization.
ii. Structural Change:
‘Structural change’ involves altering organizational design, levels of decentralization, levis of communications the distribution of authority within an organization, span of management, job designs to improve organizational performance.
Decentralization has been a major area of change with a for example, ‘delaying’ to reduce the number of management starts and improve communications. ‘Out-sourcing’ has meant that specific functions and activities in an organization are no longer provided internally but are moved to an external organization. This type of change alters the working arrangements in an organization that is the way it operates.
iii. Technological Change:
“Technological change” refers to alternations in the equipment, processes materials, and knowledge with which an organization creates and provides its products and services. For example, work processes may be altered by introducing computer – controlled machinery to replace some of the functions on the assembly time.
This alters ‘the way things are done around law’ and creates resistance among the workers on the time as their jobs are changed. ‘People change’ refers to alterations in the behaviors, attitude skills and expectations of employees so as to improve organizational performance.
The changes are usually undertaken through such methods as employee training and development, in order to instruct people in new skills, behavior and expectations, on there may be a recruitment campaign to attract the desired presumed into the organization.
Another approach to ‘people change’ is through organizational development (OD). The roles of employees as stakeholders with concept such ‘a job for life’ and ‘company loyalty’ increasingly are replaced by the concept of individual ‘ownership’ of skills and careers. People offer their skills to companies on the understanding that they will be loyal to the firm so long as it satisfies their need for financial rewards and job satisfaction.
These employees are still stakeholders in the sense that if necessary they will move their skills elsewhere. There are of course, many people who do rely on an organization for their careers for a variety of reasons, such as an old-fashioned feeling of loyalty, inertia, family ties in a location, a lack of confidence in their ability to find other work and so on. There employees have a vital interest in the company because they are relying on it, and therefore any strategic change affects then as stakeholders.
Organization development is usually a process of recognizing a problem which requires a need for change, diagnosis the situation in order to understand what changes are required, obtaining reorganization for the problem among all employees so that people believe that it exists, and selection of solutions.
It is important in order to achieve a relatively smooth change, for employees to accept that there is a problem and that a problem exists, they understand their contribution to the problem or the impact it has on them, and they become committed to doing something about it.
It is then possible to plan the change and implement it. Ideally in the strategic management of an organization the organizational development process introduces techniques which can applied continuously so that change is the accepted norm rather than an occasional and rare phenomenon.
The technique which can be introduced to make change a normal process include training to update skills and to alter behavior. Customer care programs for example, have been introduced into many companies in order to enhance the service that they provide. Team building can increases the cohesiveness of particular units and of the whole organization.
For example cross-organizational team can help employees from different departments and sections of an organization to understand each other’s problems and to co-operate with each other, communication can be improved so that people understand the reason for continuous change, and consultation about changes and their implementation can kelp both managers and other employees to understand and acquire ownership of changes.
Strategic Change – Coherence in Managing Change
Strategic change is much more likely to work if it is coherent across all aspects of the organization.
1. These needs to be a consistency between the intended strategy, the stated strategic objectives, the operations changes introduced and the behavior of mangers.
2. The direction of strategic change should be consistent with that is happening in the environment and the way in which this is understood in the organization. It should also be managed with due regard to stakeholders, including supplier and customers, on whom the organization is critically reliant.
3. The strategy should be feasible in terms of the resources it require the structure of the organization, and the changes that need to occur in organizational culture and operational routine.
4. The strategic direction should be clearly related to achieving competition advantage or excellent performance, and internally it should be understood now this is so.
Overall this coherence means that there needs to be an ability to hold the organization together as an efficient, successful entity, while simultaneously changing it, many of the studies on the reasonably some organizations are more successful than others suggest that the clarity of strategy direction and its relevance to the changing environment are crucial.
Techniques of analysis, evaluation and planning can all help organization to understood the foundations of success; but it is the processes of management, the skills of mangers and their ability to relate to the external environment, their internal culture and the people around then that ensure success.
The starting point for a strategic change program is clarity regarding the changes required. This may relate back to the organization’s objectives, but also relates to what is possible.
The questions that have to be considered in the organization of program are-
1. What areas of change are available?
2. What areas are to be selected and why?
3. Who will resists change? How can this be overcome?
4. What are the effects on the culture and policies of the organization?
The area of change available include change in working arrangement, such as routines and organization, monitoring and control, organizational structure the introduction of new techniques. In terms of the areas to be selected areas will be chosen which can help to create the prime conditions change, such as recognition of the need for change, setting standards and monitoring performance. Teams that have achieved successful change can be highlighted and presided as role models, while individuals can be rewarded for their success.
It is virtually certain that there will be some opposition to change, so the process has to be managed. This can be helped by involving people who resists change in the change process itself and building support networks, particularly between those who support the change and those who are resistant.
At the same time, communication and discussions about the changes, encouragement and support can all help in the process, with extra incentives and the use of managerial authority. The culture and the policies of an organization have to be considered in the process of change.
A change program needs to be considered in the process of change- A change programs needs to identify potential and influential people and groups, and persuade then to support the new strategy. The main areas of opposition need to be identified and attempts made to change opinions or at least to neutralize them and to build the maximum consensus for the new strategy.
Hamel and Prahlad writing in the Harvard Business Review, have argued that organizational success arises from organization wide intention or strategic intent, which is based on a challenging shared vision of the future leadership position of the organization, on an obsession for wining which is not secured by long-term plans but by achieving a broad, stretching and challenging intention to build core competencies.
They considered that the gap between more successful and less successful company was the gap between the resource base and the aspirations of the company. This was the degree of ambition and aspiration, and the degree of ‘stretch’ in getting the most from their resources and capabilities.
They suggested that creating stretch is the single most important task of senior management, and this could be achieved by an accelerated product development cycle, tightly knit. Cross functional teams, a focus on a few core competencies, and programs of employee involvement and consensus.
Hamel and Prahlad argue that in the search for less resources intensive ways to achieve ambitious objectives, ‘leveraging’ resources provide a very different approach from downsizing, delaying, restructures and retrenchment. Strategic managers leverage resources by concentrating then more effectively on key strategic goals, accumulating then more effectively, and complementing one kind of resources with another to create higher order value, their conserving resources.
The role of strategic managers is not so much to stake out the future of an organization as to help accelerate the acquisition of market and industry knowledge. In this way risk will recede as knowledge grows and with it company’s ability to develop and succeed. The learning organization is an essential element in modern organization.
Whichever sector they are in, if they are faced with competition with improvement in the availability of information, competition has tended to become fiercer rather than less so in most areas of work and in order to cope with this, successful company employees need to embrace new technology, new ideas and the process of strategic change.
Strategic Change – Organizational Politics and Strategic Change
Organizational politics are tactics that strategic managers engaged in to obtain and use power to influence organizational goals and change strategy and structure to further their own interests.
Top management often conflict regarding the correct policy decisions. Power struggles and coalition building are a major part of strategic decision-making. In this political view of decision-making, obstacles to change are overcome and compromise, bargaining, and coalition of managers and settle conflicts over goals by the outright use of power.
This section will consider the relationship between strategic change and organizational politics and the process of political decision-making.
We will consider mainly three aspects of organizational politics:
(a) Politics is an essential part of managing the strategic change process.
(b) The managers and divisions can increase their power to influence the company’s strategic direction.
(c) The ways in which a company can manage politics to overcome inertia and implement change.
If an organization requires transformational change, the power structures in the organization will need to be reshaped. This may happen simultaneous with certain members of the organization who question the existing ways of operating. This momentum for change will require full support of the top management.
Not only the chief executive but also every manager involved in managing change needs to consider how it might be implemented from a political perspective. They should also realize that analysis and planning may themselves take on political dimensions. So managers should also be sensitive to the political dimensions of their activities for the simple reason that the political activity might itself help to effect change.
Strategic Change – Power and Strategic Change
The political systems of an organization play a significant role in the implementation of strategy. Some political mechanisms have identified that serve the purposes of building a power base, encourage support or overcome resistance, and achieve commitment.
The mechanisms include:
(a) The manipulation of organizational resources,
(b) The relationship with power groups and elites,
(c) Activity with regard to subsystems in the organization, and
(d) Symbolic activity.
Strategic Change – Leadership and Change Agent
For a successful implementation of change, it is essential that various components of change agency are in place or can be developed.
A number of these components are:
1. Clarity of direction or vision- A clarify of direction and vision develops a clarity of strategy.
The change agent must clearly identify the:
(a) The type of change required,
(b) The nature of obstacles that exists, and
(c) The opportunities for change.
“The successful change agent, then, is someone, who can perceive the nature of required change and the opportunities for change, and turn these into triggers for change”.
3. Style of Managing Change- A successful change agent will be able to employ an appropriate style of managing change. It is necessary that this style is adapted to the circumstances rather than imposing without regard to the specific context of change.
4. Political and Symbolic Processes- The change agent must be able to use the political and symbolic processes that provide the levers and mechanisms of change.
5. Endowed Authority- A successful change agent must be able to build large on the extent to which those influenced by or following the change attribute the authority for change to the change agent, or endow him with the qualities of leadership.
6. Personal Traits of Change Agent- Leaders have special qualities such as visionary capacity, team-building and team playing, self-analytical ability, self-learning, mental agility and constructive restlessness, self-confident and self-directed and are able to concentrate for long periods.
Strategic Change – Managing and Evaluating Change
Who should carry out the change- internal managers or external consultants?
There are advantages of internal managers. They may have the most experience or knowledge about a company’s operations. But they may lack perspective because they are too much a part of the organization’s culture. They appear to be politically motivated and a personal stake in the changes they recommend.
Companies often look for external consultants. They view a situation more objectively. But they spend a lot of time learning about the company and its problems before they can propose a plant of action. It is for both these reasons that many companies have brought in new CEOs from outside the company to spearhead their change efforts. In this way, companies can get the benefits of both inside information and external perspective.
A company can use two main approaches to manage change:
(a) Top-down change, and
(b) Bottom up change
In this approach, a strong CEO or a top management team analyzes means to change strategy and structure, recommends a course of action, and then moves quickly to restructure and implement change in the organization. The emphasis is on speed of response and management of problems as they occur.
Bottom up change is much more gradual. Top management consults with managers at all levels in the organization. Then, over time, it develops a detailed plan for change, with a timetable of events and stages that the company will go through. The emphasis in bottom-up change is on participation and on keeping people informed about the situation, so that uncertainty is minimized.
This approach removes some of the obstacles to change by including them in the strategic plan. Furthermore, the purpose of consulting with managers at all levels is to reveal potential problems. But this approach is slow.
Companies can manage overall change with an approach called dynamic stability.
Dynamic stability is a process of continual but relatively small change efforts that involve the reconfiguration of existing practices and business models rather than the creation of new ones.
Dynamic stability requires that the changes must be implemented at the right interval. Dynamic stability to be achieved involves processes of tinkering and kludging. Tinkering is where someone is always making things, fiddling with odd nuts and bolts and pieces of old machines.
Companies such as 3M and Hewlett Packard are world-class tinkerers. They go into the corporate basement, where they rapidly pull together inspired solutions to their problems. Dow Chemical, for example, developed Saran Wrap for an industrial coating application.
With a little tinkering- and a lot or experience in marketing and branded consumer products—Dow successfully aimed the product at consumers, an entirely different market. Tinkering, of course, do not guarantee successful change. But it is less costly, less destabilizing, and quicker than creative destruction and invention.
Kludging is tinkering supported by college education. It takes place on a larger scale and involves many more parts. Some of the parts can come from outside a company’s existing portfolio—as they do in mergers and acquisitions. Skills in particular functions or standard technologies or models are the components of a kludge.
These are assets lying around an organizations backyard. Because they are so large, kludges can result in the creation of a division or an entire business. For example, GKN, a British industrial conglomerate, faced with a problem of contract cancellations. The organizations would contracts and then find engineers to staff the projects, but sometimes contracts would get postponed or cancelled, leaving engineers idle.
To deal with this recurrent situation, GKN’s units started to rent out their idle engineers for short assignments elsewhere, pulling them back in to the organization as needed. The units started the practice on an informal basis, but it proved so successful that GKN created a new company to manage the hiring out of its own- and other companies’ engineers on short-term contracts.
The new company, CEDU, was for all intents and purposes a sophisticated employment agency. The business model had been known in the organization for years. To make more money from it, GKN had to do was formalize the practice in a new economy.
Old economy companies that to adapt to the new economy can use kludging very effectively.
Abrahamson emphasized that big and small change must be implemented at the right intervals. Because the companies that already have been changing rapidly face a different challenge of learning to shift down from highly destabilizing and disruptive change to tinkering and kludging.
The last step in the change process is to evaluate the effects of the changes in strategy and structure on organizational performance. A company must compare the way it operates after implementing change with the way it operated before. Changes in stock market price or market share are the measures to assess the effects of change in strategy. To assess the effects of changes in structure on a company’s performance is more difficult to measure.
Strategic Change – Barriers to Change: Behavioral Resistance, Resources Constraints, Environmental Barriers and Organizational Obstacles
Behavioral resistance is one of the important barriers to change. Fry and Killing discussed two types of behavioral resistance viz. inertial resistance and conscious resistance. “Inertial resistance to change arises from the existing perceptions, beliefs, and habits of work in the organization. Inertial obstacles are critical factors whenever the strategic requirements call for changes of culture, management style, and management preferences. The impact of inertial forces is to delay or distort awareness, understanding and response to strategic requirements.”
“Conscious resistance on the part of individuals or groups consists of deliberate actions or inaction that is intended to delay or deny change. Conscious resistance may be covert or overt, it may range from foot dragging to outright organized challenge, and it may spring from a variety of motives.”
In many cases, resource constraints prove to be an important barrier to change. For example, change strategy may involve large investment that the organization finds very difficult to mobilize. Some firms may even by human resource constraint.
For example, an organization in a bad shape may experience the light of talented personnel and it may be difficult to make up the deficiency by new appointments, as people may be hesitant to join such organization.
Environmental factors may also create an obstacle in the way of change. For example, many government policies affect adversely strategic change. Sometimes a company also has to face opposition from the public on account of the technology adopted, ecological, product mix, labor policy etc.
Strategic managers must also analyze the factors that cause organizational inertia. Hill and Jones have identified obstacles to change at four levels in the organization.
i. Corporate Obstacles:
The present structure and strategy of a company may become powerful obstacles to change at the corporate level. They create a large amount of inertia to overcome before change can take place. This is why strategic change is usually a slow process. The type of structure a company uses and the corporate culture can also cause obstacles to change.
ii. Divisional Obstacles:
If divisions are highly interrelated, change is difficult at the divisional level. If a company is pursuing a strategy of related diversification, a shift in one division’s operations is likely to affect operations of other divisions and so it becomes more difficult to manage change. Changes in strategy affect different divisions in different ways, because change generally favors the interests of some divisions over those of others.
Managers in the different divisions may thus have different attitudes to change, and some will be less supportive than others. Existing divisions may resist establishing new product divisions, for example, because they will lose resources and their status in the organization will diminish.
iii. Functional Obstacles:
Similarly different functions have different strategic orientations and goals and react differently to the changes management proposes. Differences in functional orientation make it hard to formulate and implement a new strategy and slow a company’s response to change in the competitive environment.
iv. Individual Obstacles:
People simply resist change as it involves uncertainty that breed insecurity and fear of the unknown. This individual resistance reinforces the tendency of each function and vision to oppose change that may have uncertain effects on him or her.
All these obstacles make it difficult to change organizational strategy or structure quickly.
Strategic Change – Success of a Change Program: A Political Drive, Marketing Drive and Army Drive
Successful change agents employ three distinct but linked drives in their initiatives:
1. A Political drive
2. A Marketing drive
3. An Army drive
1. A political drive creates a coalition strong enough to support and guide the initiative. Without a political campaign, ah initiative risks being undermined.
2. A marketing drive taps into employees’ thoughts and feeling and also effectively communicates messages about the prospective program’s theme and benefits. Without a marketing campaign, a leader will be dismissed as a social engineer out of touch with employees.
3. An Army drive deploys executive’s scarce resources of attention and time as well as manages resistance. Without a military campaign, a program can stall even after a successful pilot project.
These three interlinked campaigns are all essential to the success of a change program. They can turn ineffective change initiative into winning ones.
Corporations have become so complicated and resistant to change that no leader, however, powerful can implement a major change alone. Successful executives forge coalitions to lead and sustain change initiatives just as winning politicians create coalitions. A census builder is better suited to lead when corporate policies are being changed to accommodate new work practices.
The political campaign also requires changes to the organizational structure in the form of either new political coalition, formal structure of the corporation. In other cases, the informal networks are the best ways in. And in still other cases, executive use temporary counter structures to support their change initiatives.
Business executives use marketing campaigns to communicate the benefits of their change initiatives. They use elements of marketing to sell their initiatives to employees as they deploy these elements to promote products to customers.
Hirsch-horn suggests executives to use three important elements:
(a) Listening in
(b) Working with Lead Customers
(c) Developing a Theme
(a) Listening in:
It should be realized that ideas for change efforts are stimulated by thoughts emerging from the field rather than from the corporate center. For example, Novotel, the European hotel chain, was enjoying high profits when its occupancy rates began to decline. Its headquarters would not have woken up the underlying problem if the individual hotel managers had not pointed it out.
Listening to voices from the field is an important part of any internal marketing campaign. Executives use techniques to observe how people go about their everyday work to identify their hidden strengths and weaknesses. They discover a number of things that they would not find out if they simply interview employees.
In many effective offices executives hold informal meetings at the beginning and end of each day, that brings people together, alert everyone to urgent issues, and allow them to anticipate concern that would emerge over the next week.
These informal gatherings prove practical ways everyone to get-to-gather and share intelligence within the office. Indeed the best work practices do not announce themselves because they are so integrated into everyone’s work habits.
(b) Working with Lead Customers:
Executives who have successfully conducted change initiatives work with lead customers. “Lead customers are employees who step forward to try out a new practice, or, as often happen, have invented one themselves.” They often help design or modify a program, subsequently leading to a more rapid spread of a new practice. They raise problems that other users have not yet confronted. They help speed up the implementation of the change initiative.
Changed based on vague promises of future benefits is difficult to communicate. Effective leaders find users who already believe in the need for a change initiative, develop it with their help, and learn from their comments and insights.
(c) Developing a Theme:
Change initiatives need a clearly articulated, high-level theme that employees’ at all organizational levels can respond to. Jack Welche’s “Work-out” theme conveyed the need to eliminate work and to build organizational muscle, is a classic example. Effective themes are accessible but also contain a good deal of complexity, and paradox. The paradox embodied in a campaigns theme often indirectly refers to a tension that the change initiative promises to resolve.
Business executives describe their business strategy as well as the approach for changing an organization as a military campaign. They believe that lasting changes can be brought about by deliberately engaging in and overcoming resistance to change. Resistance can be perfectly rational. It arises from peoples’ habits, personal relationships, political alliances, and the feeling of doubt with which change initiatives are viewed.
Three military tactics are suggested that can help executives overcome organizational resistance to change:
(a) Securing Supply Lines
(b) Choosing Beachheads
(c) Creating a War Room
(a) Securing Supply Lines:
Supply lines are critical to every change initiative. Continual attention to change initiative is a must. In fact, change initiatives usually fail not because of active resistance or insufficient funds but because of a lack of attention. John Darragh and Andrew Campbell found that nearly 50% of all corporate change initiatives are delayed and no progress made because people stop paying attention to them.
Successful executives known that everyone’s time and energy for transformational efforts are scarce, and thus they secure their supply lines before starting their campaigns. Supporting people in issues in which they have shown their interest, produces good results.
It is common that a change initiative is already being carried on secretly by some ‘passionately committed people’ Executives, in order to make further progress, take advantage of such initiatives and the passions that feed them.
They are thus able to rapidly turn resistance into cooperation, and the chances of success are far higher than if they started from the scratch. Executives, in order to gain attention and overcome resistances, can make careful use of meeting.
(b) Choosing Beachheads:
Executive often set up pilot projects to test new ideas or practices, in order to minimize challenges in implementation but they do not prepare executives to the difficult dynamics involved in the change processes.
(c) Creating a War Room:
A war space, in this context, refers to a space dedicated for change implementation. This provides a signal to people to focus on a single issues and ‘can help screen out many day-to-day organizational distractions. Such a setting can house shared materials, documents, charts, and maps for everyone’s use.
If the war is located near a CEO’s office, it provides significance to the issue of change initiative. For example, Jurgen Schrempp, as a CEO of Daimler-Benz, worked from a war room to facilitate the company’s important strategic initiative.
The room was wall-to-wall high technology- banks of computer screens, videoconferencing equipment, a big-screen television, monitors that flashed the latest news and stock quotes from wire services around the world.
The war room provided executives with “access to 2,000 commercial databases and every budget item and sales report in Daimler’s far flung operations”. In fact, Daimler-Benz’s war room played a key role in helping Schrempp identify Chrysler as a potential merge target.
A war room also has a symbolic purpose. For example, GM used its environmental- strategy war room, set up in 2001 to organize its efforts for tracking fuel efficiency, for public relations. News reporters were often invited to see the war room so they would tell the world that GM was seriously tackling the issue. Any organization determined to implement a change initiative should create a war room.
This, the three campaigns are used simultaneously rather than sequentially. However, one campaign may be more necessary than the others at some point during the life of the change initiative. In case the top management supports and provides the necessary resources for a change, but excitement or commitment from employees is lacking, it requires a focus on marketing campaign.
The change agent must understand wheat different constituents are thinking and feeling and then refashion the initiative so that it draws on their passions. Successful executives manage the three campaigns simultaneously by identifying and removing the current bottlenecks. The three campaigns are interrelated and feed on one another.
“Successful campaigns building winning coalitions, tape into people’s thoughts and feelings, and deeply scarce resources at the right beachheads and at the right time. If any one of these campaigns is lacking, the change initiative is bound to fail.”