Unit 10 Flashcards
Managing strategic change (23 cards)
Internal causes of change
- New leadership (new CEO or changes in leadership following a takeover)
- Significant investment decisions (e.g. to invest in IT to become capital intensive instead of labour intensive)
- Changes in corporate objectives (e.g. from growth to retrenchment & business unit closures)
- Change in strategic direction (e.g. to pursue a strategy of market development)
- Adjusting the organisational structure (e.g. delayering)
External causes of change
- Significant competitor actions (e.g. new products, innovation, disruptive technology, takeovers)
- Significant changes in economic environment (e.g. post Brexit for UK firms)
- Longer-term changes in society (e.g. lifestyles, demographics)
- Political & legal changes (e.g. de/regulation or new taxes)
- Technological change (e.g. rapid growth or mobile device usage, AI or e-commerce)
What is incremental change?
Making small-scale improvements to business processes (e.g. from Kaizen suggestions).
- It will use existing structures & processes and cause little disruption.
- As a result, it is relatively low risk.
What is disruptive change?
Transformational change which is likely to involve radically rethinking or redesigning a major business process with the objective of making large-scale improvements quickly.
- As a result, it may change the existing structures & processes and is relatively high risk.
- May arise from changes in the external environment which impact the market or industry as a whole (e.g. disruptive innovation).
What is Lewin’s Force Field Analysis model?
Provides an overview of the balance between forces driving change in a business (in favour of the change) & the force resisting change (against the change).
What is suggested by Lewin’s force field analysis model regarding decisions for implementing change?
- If the resisting forces are greater than the driving forces, change would not be successful.
- If the driving forces are greater than the resisting forces, change is likely to be successful.
If: driving forces > restraining forces = change
Examples of driving forces for change
- Increased competition
- Poor financial performance
- Poor HR performance
- Dissatisfied customers
Examples of resisting forces for change
- Shareholders’ response
- Employee resistance
- Lack of finance
- Existing power & organisational structure
What are barriers to change?
Obstacles that obstruct the smooth implementation of change.
Kotter & Schlesinger developed theories to explain which two key areas of change?
- WHY change is resisted
- HOW to overcome resistance to change
What are the 4 main reasons why change is resisted that Kotter & Schlesinger suggested?
- Low tolerance of change
- Misunderstanding
- Different assessments of the situation
- Self-interest
Explanation of ‘parochial self-interest’ as a reason why change is resisted
Individuals with a narrow focus prioritise the impact of change on themselves over its effect on the business as a whole.
- They lack a broader organisational perspective.
Explanation of ‘misunderstanding’ (or trust issues) as a reason why change is resisted
Employees resist change due to a lack of trust in the management’s assessment or a misunderstanding of the communicated information.
- This can stem from pre-existing trust issues or ineffective communication strategies surrounding the change initiative.
Explanation of ‘different assessments of the situation’ as a reason why change is resisted
Stakeholders disagree with management’s assessment of the situation & proposed changes.
- This involves a difference in perspective based on individual interpretations of available evidence & contrasts with parochial self-interest, which centres solely on personal impact.
- Stakeholder analysis is relevant here.
Explanation of ‘low tolerance of change’ as a reason why change is resisted
Resistance arises from an inherent aversion to change, often coupled with a fear of lacking necessary skills to adapt.
- Employees may be unwilling to re-skill or doubt their ability to do so.
- This can create friction & hinder implementation, especially within departments accustomed to established routines.
What are the 6 solutions to overcome resistance to change suggested by Kotter & Schlesinger
1) Education & communication
2) Participation & involvement
3) Facilitation & support
4) Negotiation & agreement
5) Manipulation & co-option
6) Coercion
Explain ‘education & communication’ as a solution to overcome change
Focuses on addressing misunderstandings & lack of information among employees.
- It involves explaining the reasons behind the change & its necessity.
- Relies on trust between management & employees.
- HOWEVER, it’s a long-term strategy & may not be suitable when rapid change is required.
- Therefore, consider the time available for convincing employees & the urgency of the change before opting for this solution.
Explain ‘participation & involvement’ as a solution to overcome change
Involves engaging stakeholders who perceive the change differently or disagree with management’s perspective.
- By involving them in the change process, a sense of ownership is fostered, potentially increasing their willingness to cooperate & contribute valuable insights.
- HOWEVER, this can slow down the process.
- A stakeholder analysis is crucial to identify the key individuals with high power & high interest whose involvement is most beneficial.
Explain ‘facilitation & support’ as a solution to overcome change
Addresses resistance stemming from employee’s fear of change or low tolerance for it.
- Providing support & training helps them cope with the change.
- HOWEVER, the cost of training & support can be significant.
- Therefore, consider the number of employees requiring training, the potential for automation, and the necessity of their buy-in.
- This approach may promote compliance rather than genuine acceptance & might indicate a paternalistic management style.
Explain ‘negotiation & agreement’ as a solution to overcome change
Involves bargaining & compromising with stakeholders who have different assessments of the situation.
- While this can lead to agreement, the resulting change might deviate from the original plan.
- Careful consideration is needed to ensure that the compromised outcome aligns with the overall objectives.
Explain ‘manipulation & co-option’ as a solution to overcome change
Focuses on winning over key influential individuals, often those with high power, by offering rewards.
- This can be effective in managing resistance from powerful stakeholders & influencing their subordinates.
- HOWEVER, it carries the risk of creating “mischief” and potentially undermining trust & morale in the long run.
Explain ‘coercion’ as a solution to overcome change
This is the last resort when other methods have failed. It involves forcing the change through regardless of resistance, potentially by distracting or sidelining those who oppose it.
- While effective in the short term, this approach can damage relationships & create long-term resentment.
- Kotter suggests that changed behaviours & eventual acceptance may follow, but the potential negative consequences should be carefully weighed.
