Managing strategic change - the process dynamic Flashcards
THE CAUSE OF & NEED FOR CHANGE - ELEMENTS OF CHANGE - UNDERSTANDING WHAT WE MEAN BY CHANGE
What are the 2 things that need to be understood and how do they relate to a strategic perspective?
What is meant by strategic change according to Johnson et al. 2017?
What is limiting about this definition?
What is the reality of strategic change?
(1) we participate in change, but we can also be the originators of change e.g., become the implementors and the initiators/drivers of the change that we perceive as necessary
(2) we can be the recipients of change, but we also have the ability to recognise change e.g., we can recognise what has changed since we last assessed a particular situation (from the previous ‘today’ position)
Johnson et al. 2017 = a change in the direction and scope of an organisation over the long term
suggests that all strategic change is deliberate and planned to have a lasting impact = denies the ongoing shorter-term social and political processes through which an organisation will decide the ultimate long-term scope.
Reality = a mixture of rational, considered and proactive strategy, combined with emergent and often reactive strategic decisions
THE CAUSE OF & NEED FOR CHANGE - ELEMENTS OF CHANGE - RECOGNITION & AWARENESS OF CHANGE
Today’s 21st-century reality is that of instant communication, which creates the risk of instant reaction. It could be argued that this creates what?
How can the company secretary/governance professional help?
What is this underpinned by?
creates a more reactive and therefore emergent approach to strategy
try to help those who run the organisation to take a step back and still operate from a rational perspective, while recognising the need to be able to amend the vision, based upon each new emergence
underpinned by a stakeholder requirement for increased transparency, understanding and integrity from those running an organisation
THE CAUSE OF & NEED FOR CHANGE - ELEMENTS OF CHANGE - PRESSURE POINTS & REQUIREMENT
Aside from the recognition that change is a perpetual requirement, throughout the lifecycle of any organisation there will be points that bring a particular pressure for change.
What are the 4 pressures?
Each such pressure will have an impact upon what?
What is therefore a need for?
(1) Process = the need to adapt and amend the core operational function of the organisation.
(2) Product = the need to ensure that the output of the organisation continues to meet the changing demands of the customer, both internal and external.
(3) Position = the need for a constant awareness of the strategic and economic positioning of the organisation against its competition.
(4) People = the need to include the right people in the right way within all change processes
each such pressure will have an impact upon the whole rather than just standing in isolation
Need for an organisation to think holistically about the strategic impact of all change
THE CAUSE OF & NEED FOR CHANGE - ELEMENTS OF CHANGE - PRESSURE POINTS & REQUIREMENT
Kaufman et al. (2003) suggest that the biggest single mistake that is often made in managing and creating strategic change is what?
What did Kaufman et al. (2003) mean by ‘change is a process not an event’?
is the attempt to implement a change too quickly, without the appropriate buy-in from stakeholders, and without integrating the change with everything else that is going on in the organisation at that point
= it is probably better to be conservative during the first initiation, rather than to be too aggressive
THE CAUSE OF & NEED FOR CHANGE - ELEMENTS OF CHANGE - PRESSURE POINTS & REQUIREMENT
What are the 3 levels of change that Kaufman et al. (2003) introduce?
Name an example for each.
Strategically these differing levels can work in what?
(1) Mega level (holistic, profound and deep) = changes involving a LT perspective, including future generations and their survival, self-sufficiency and their overall quality-of-life
E.g., a company is acquired by a different, perhaps overseas owner – e.g. when Jaguar Land-Rover became part of Tata Group this was a mega-level change.
(2) Macro level = changes involving the inputs and outputs of the main organisational system, affecting and being affected by a wide range of different external stakeholders
E.g., a company changes its production lines from manual to robotic.
(3) Micro level = changes to the key results and performance indicators that can be achieved by individuals, teams and processes within an organisation
E.g., a company needs to drive higher profitability to meet increasing wage costs
work in both directions, with the micro ultimately affecting the mega level and vice versa
THE CAUSE OF & NEED FOR CHANGE - CIRCUMSTANCES OF CHANGE
Martin (2001) suggested that there are what 4 differing ways in which change can be recognised and controlled within an organisation? (Scale of impact and degree of planning matrix)
Name an example for each.
(1) Surprise = adaptive scale of impact and unplanned degree of planning = by its nature the change is unplanned, but the organisation is able to adapt to the emerging requirement
E.g., If a small customer of an organisation goes into liquidation, owing a small amount of money, then the organisation is able to adapt to this unexpected event
(2) Crisis = fracturing scale of impact and unplanned degree of planning = change that is unplanned and then has a potentially fracturing impact upon the organisation
E.g., If a larger customer of the organisation goes into an unexpected liquidation owing a significant amount of money, then the organisation will be at least partially fractured and have to manage a potential liquidity gap
(3) Incremental = adaptive scale of impact and planned degree of planning = change that results from the building of small, planned changes in the gradual evolution of the organisation
E.g., there is concern over the potential future liquidity of a significant customer (no immediate panic), organisation can reduce the funds outstanding or balance the material significance by developing a wider customer base = then adjust financial projections accordingly
(4) Strategic = fracturing scale of impact and planned degree of planning = change that is as a result of planning but has a fundamental impact upon the organisation (requires potentially significant change in process and people)
E.g., organisation becomes reliant upon 1 major customer - organisation recognises the risk and implements a plan to increase both product range and customer range
THE CAUSE OF & NEED FOR CHANGE - ORGANISATIONAL DRIVERS & FORCES OF CHANGE
Balogun and Hope Hailey (2004) extended the concepts considered by Martin (2001)
to suggest what?
The reality being that, in any organisation, change will be driven from what 2 different perspectives?
What matrix do they use? (4) (nature of change and extent of change)
Name an organisation where the strategic journey has changed from E to R.
suggest more radical ways in which the differing types of change might be managed
- Evolution = steady incremental change = a gradual strategic approach and enabling the organisation to develop and adapt with rare transformational changes
- Revolution = the occasional ‘big bang’, which will require significant structural reorganisation (fracturing)
(1) Adaptation = incremental nature of change and realignment extent of change
(2) Reconstruction = big bang nature of change and realignment extent of change
(3) Evolution = incremental nature of change and transformation extent of change
(4) Revolution = big bang nature of change and transformation extent of change
WPP Plc
UNDERSTANDING THE CONTEXT & PROCESS OF CHANGE
Balogun and Hope Hailey (2004) suggest that all organisational change needs to be considered within 8 differing contexts. What are they?
What should be noted?
- Time = How urgent is the change? Is there time for lengthy consideration or is there the need for immediate action?
- Scope = Will the change impact the entire organisation, or initially only a small part?
- Preservation = Does everything need to change?
- Diversity = Have sufficient different and relevant opinions been explored?
- Capability = Are the people within the organisation able to deliver the required change or are new people or external consultants required?
- Capacity = Does the organisation have sufficient accessible resources, in particular financial, to implement the required change?
- Readiness = Has the appropriate level of preparation been undertaken?
- Power = Where does the power lie to drive the perceived change? Is it dependent upon one or more people acting appropriately?
Not all of these will apply in all instances, but the strategist will need to ensure that they have been considered when developing a programme of change (the specific type and context of the organisation will have a significant influence on any change programme)
UNDERSTANDING THE CONTEXT & PROCESS OF CHANGE - INTERNAL & EXTERNAL DRIVERS OF CHANGE
To enable us to manage change effectively, from a process perspective, we need to understand what?
What are the 3 models that when combined provide a wide, if not exclusive, range of perspectives of the forces that really affect organisational change from a generic perspective?
understand at which point the organisation as a system is being pressured to change and therefore both the originating cause and the potential impact of the need for change
(1) Tichy (1983), (2) Kanter et al. (1992), (3) Robbins and Judge (2016)
UNDERSTANDING THE CONTEXT & PROCESS OF CHANGE - INTERNAL & EXTERNAL DRIVERS OF CHANGE
Tichy (1983) identified what 4 main triggers for strategic change?
Nine years later, Kanter et al. (1992) recognised the influence of the environment but suggested that what 2 different dynamics existed to drive real strategic change within organisations?
(1) Environment = the need to adapt to differing economic conditions, legislation and new or changing competition.
(2) Business relationships = the need for frequent review of customer and supplier impact and their respective competence.
(3) Technology = the need to decide how rapidly, or otherwise, to follow and lead the technological revolution
(4) People = the recognition of how it can sometimes require only one person to change the organisation and also to require the organisation to change
- Lifecycle differences = nature of change in consumer demand at the ultimate end of all supply chains, intrinsically linked to the changes in individual people’s expectations.
- Political power changes = largely within an organisation, as individuals and stakeholders compete for the ability to make and implement strategic decisions to suit their own particular ambitions and vision
UNDERSTANDING THE CONTEXT & PROCESS OF CHANGE - INTERNAL & EXTERNAL DRIVERS OF CHANGE
In a fuller study, Robbins and Judge (2016) regrouped the external environmental forces of change into what 6 categories?
- People = a significant people issue is increased longevity = ageing workforce with an expectation to be required to be working longer, and to have benefits (retirement income of some kind) for a markedly longer period of time
- Technology = impact of the Fourth Industrial Revolution has to be considered when planning any sort of strategic change
- Economy = the financial crisis of 2008 has had a significantly longer strategic impact upon the world economy than originally expected
- Competition = all organisations now operate within a global market, driven not least by the immediacy of knowledge that is available through the internet.
- Social = growing awareness of environmental issues has led to a greater demand and expectation that action will be taken by governments, companies and individuals.
- Politics = traditional economies of the world are being challenged by the rapidly developing size and significance, the differing political beliefs and economies, and the challenging cultures and expectations of the BRIC (Brazil, Russia, India, China) and MINT (Mexico, Indonesia, Nigeria, Turkey) economies.
UNDERSTANDING THE CONTEXT & PROCESS OF CHANGE - LEWIN: FORCE-FIELD ANALYSIS
Lewin (1951) provides a simple methodology to help in our consideration of change.
What did he research?
Describe the difference between the ‘driving forces’ and the ‘restraining forces’ in Lewin’s theory of force-field analysis.
What does his theory of force-field analysis argue? (Restraining forces need to be what to enable what?)
What does the model recognise?
What is Lewin’s concept? (By understanding both we can do what?)
researched the forces that restrain desired change within organisations, and contrasted these with the forces that drive the desired change
Driving forces = will be a mixture of external and internal forces that want to influence the strategic direction – stakeholders, systems, market potential, etc.
Restraining forces = will be a mixture of external and internal forces that want to prevent change – competitors, markets, legislation, etc.
Argues that restraining forces need to be reduced to enable the desirable change to happen naturally; this requires a mapping of both dimensions
Recognises that we are on a journey from today into the future and that the driving forces will be a mixture of external and internal forces that want to influence the strategic direction, however there is an equal likelihood that there will be external and internal forces that are restraining the strategic change that is required
Lewin’s concept is that by understanding both driving and restraining forces we are able to offset the restraining forces by use of the driving forces (= not radically different to the practical use of a SWOT analysis)
UNDERSTANDING THE CONTEXT & PROCESS OF CHANGE - CULTURE CHANGE
When we are planning strategic change, it is essential that we consider the impact of such change upon the varying aspects of culture within the organisation.
Pettigrew and Whipp (1991) recognised that what 5 core factors were at play in the management of cultural change?
What is it important to note?
- Environmental assessment = strategic change always needs to be placed within the setting of the macro and micro environment
- Leading change = leadership will be driven by and drive the context of strategic change
- Strategy and operation = an organisation can be viewed as a complete entity in itself
- Human resources as assets and liabilities = strategic change requires the effective oversight and control of the strengths and weaknesses of people and their often seemingly irrational behaviour
- Coherence in the management of change = the strategic change needs to be characterised by consistency, advantage and feasibility
These 5 factors interrelate, and effective strategic change requires an understanding of the impact of all 5
UNDERSTANDING THE CONTEXT & PROCESS OF CHANGE - ECONOMIC & POLITICAL CHANGE
Unless an organisation is prepared to be entirely reactive to economic and political change, it is necessary to create what?
Successful strategic change requires an organisation to what?
Name an organisational example.
a deliberate radar to recognise, assess and understand the likely impact of external forces upon the strategy of the organisation
(models such as PESTEL and scenario planning)
to track such forces
Santander established a stronghold in the UK banking sector recognising the opportunities that might be available after the reputational damage suffered by the major UK banks following the 2007 ‘financial crisis’
UNDERSTANDING THE CONTEXT & PROCESS OF CHANGE - STAKEHOLDER COMMUNICATION
In the context of process change, stakeholders need to be aware of what?
It is essential, other than in instances of extreme confidentiality, or if facing the risk of unacceptable market disclosure, that what?
need to be aware of and be able to anticipate likely strategic changes within the organisation where they hold a stake
(owners, employees, customers, other supply-chain stakeholders)
that these stakeholders have an awareness of the potential impact of strategic change upon their respective stakes in the organisation
