MANAGING STRATEGIC 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 Environmental Turbulence

  1. Predictable
  2. Forecastable extrapolation
  3. Predictable threats and opportunities
  4. Partially predictable opportunities
  5. 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.
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