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
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

  1. Systemic resistance
  2. 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

  1. Individuals
  2. Employees
  3. Managers in other departments
  4. Collective resistance
  5. Managers who share common tasks
  6. Coalitions and power centers within the organization

Reasons for resistance by individuals

  1. Parochial self interest
  2. Though of loss of something of value as a result
  3. Political camps in organizations fighting each other (power struggle)
  4. Misunderstanding and lack of trust
  5. Implications not understood
  6. Lack of trust of those in authority or in other departments.
  7. Resist in order to save face – accepting may mean admitting past mistakes
  8. Low tolerance for change
  9. Fear of not being able to develop skills/behaviors required
  10. Different assessments
  11. Different view from managers
  12. Some may see more costs than benefits
  13. May be good if based on full information as it may point to some potential problem
  14. Threat to Job Status/Security
  15. Employees worry that any change may threaten their job or security.
  16. Breakup of Work Group
  17. Changes can tear apart established on-the-job social relationships.
  18. Competing Commitments
  19. 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

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