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Managing strategic change
Chapter 15
Managing change
Managing strategic change
External or Internal
Types of Change:
Rapid
– e.g. bad weather conditions disrupting coffee + agricultural industries.
Long term
– e.g. shift in economic power to China or ageing populations. These are
predictable, therefore, managers have time to prepare.
Incremental
– Step-by-step change. Most businesses improve their processes over
time. Staff or customers suggest changes.
Disruptive
– ‘Game changing’ developments in an industry. E.g. Dyson’s bagless
vacuum, Uber on the taxi industry, Airbnb on hotels. New businesses,
technologies + ways of meeting customer needs are creating changes
disrupting industries.
Future disruptive change:
– Apps that track health + flag necessary action.
– 3D printing. This will speed up product development + lower costs - can
make one-off products.
– The Internet of Things - technology in items with the ability to collect,
send + receive info. In 2020: +26bn connected devices.
Lewin’s force field analysis
Managers should monitor changes in their industry, as well as facing
internal pressures for changes. Because of conflicting stakeholder views
not all ideas go through - stays in equilibrium.
Forces of change Current state Forces resisting change
Forces for change:
– Competition
– Complaints
– New owners
, – Poor performance
Forces resisting change:
– Lack of finance
– Reluctance from staff
– Resistance from stakeholders
For change to occur, the balance must alter:
– Drivers for change get stronger e.g. falling behind rivals.
– Forces resisting change may be reduced e.g. employees become more
open.
Pressures for change:
– Internal e.g. employees may be eager for change - learnt from other
employment. Or they anticipate change + want to be ready for this.
– External - change in PEST-C
When a business changes its strategy there has been a shift in the balance
of forces.
The value of change
Change can be scary. If not keeping up changes can be seen as
threatening.
– Some changes can bring positive benefits e.g. economic recovery
– Some change may be predictable e.g. ageing population.
– Some businesses may lead change. Change is embraced.
Change is inevitable, so managers need to anticipate + react. It may bring
threats + opportunities. Successful businesses have exploited
opportunities of change; poor performers failed to change.
Reactions to change vary within an organisation. Some divisions may
benefit, whilst others may suffer.
The value of a flexible organisation
Managers seek to build an agile business, that can adapt to internal +
external change.
To be flexible may require a restructure, delayer, flexible contracts,
develop an organic structure and emphasise knowledge + info
management.
Restructuring
May be initially organised in functional areas. As it expands internationally
- geographical regions - quicker responses to local changes.
, Delayering
Remove levels of hierarchy to cut costs + for faster and local decision
making.
Using flexible employment contracts
Flexibile to switch between tasks or move locations to match demand.
Tightly defined contracts can argue ‘it is not my job’. Temporary
employees can increase or decrease the labour force when needed.
Developing an organic structure rather than a mechanistic
structure
A mechanistic structure is formal - clear rules and procedure, many levels
of hierarchy, close control over employees + predictable performance with
consistent outputs. This is desirable for e.g. insurance companies.
Organic structures have fluid teams for projects with new teams set up for
new challenges - no fixed set of reporting relationships. Involve people
based on contribution rather than job title.
A formal structure limits creativity. Concepts such as span and hierarchy
are out of date in creative businesses.
Emphasising knowledge and information management
Flexibility relies on managers knowing what to do + employees knowing
the strategy. This involves gathering data effectively. Gathering + sharing
knowledge is a challenge for large organisations.
The value of managing information and knowledge
Info is a key resource. Technology has made more data available. By
managing data effectively managers can:
– Identify changes before they happen
– Develop suitable strategies to respond or prepare for change
– Evaluate the effectiveness of the strategies
– If not - make decisions in the dark. Sharing knowledge between
employees often involves investing in info systems + databases.
Resistance to change
Kotter and Schlesinger: 4 main reasons
1. Self-interest. They think they will be worse off. They may lack the skill
required. Worried they will lose their bonuses, jobs or status.
2. Prefer the present situation. Change may be seen as a hassle + stay
within their comfort zone.
3. Differing assessment of the situation. Some may think they have a better
idea or disagree with the strategy.
Managing strategic change
Chapter 15
Managing change
Managing strategic change
External or Internal
Types of Change:
Rapid
– e.g. bad weather conditions disrupting coffee + agricultural industries.
Long term
– e.g. shift in economic power to China or ageing populations. These are
predictable, therefore, managers have time to prepare.
Incremental
– Step-by-step change. Most businesses improve their processes over
time. Staff or customers suggest changes.
Disruptive
– ‘Game changing’ developments in an industry. E.g. Dyson’s bagless
vacuum, Uber on the taxi industry, Airbnb on hotels. New businesses,
technologies + ways of meeting customer needs are creating changes
disrupting industries.
Future disruptive change:
– Apps that track health + flag necessary action.
– 3D printing. This will speed up product development + lower costs - can
make one-off products.
– The Internet of Things - technology in items with the ability to collect,
send + receive info. In 2020: +26bn connected devices.
Lewin’s force field analysis
Managers should monitor changes in their industry, as well as facing
internal pressures for changes. Because of conflicting stakeholder views
not all ideas go through - stays in equilibrium.
Forces of change Current state Forces resisting change
Forces for change:
– Competition
– Complaints
– New owners
, – Poor performance
Forces resisting change:
– Lack of finance
– Reluctance from staff
– Resistance from stakeholders
For change to occur, the balance must alter:
– Drivers for change get stronger e.g. falling behind rivals.
– Forces resisting change may be reduced e.g. employees become more
open.
Pressures for change:
– Internal e.g. employees may be eager for change - learnt from other
employment. Or they anticipate change + want to be ready for this.
– External - change in PEST-C
When a business changes its strategy there has been a shift in the balance
of forces.
The value of change
Change can be scary. If not keeping up changes can be seen as
threatening.
– Some changes can bring positive benefits e.g. economic recovery
– Some change may be predictable e.g. ageing population.
– Some businesses may lead change. Change is embraced.
Change is inevitable, so managers need to anticipate + react. It may bring
threats + opportunities. Successful businesses have exploited
opportunities of change; poor performers failed to change.
Reactions to change vary within an organisation. Some divisions may
benefit, whilst others may suffer.
The value of a flexible organisation
Managers seek to build an agile business, that can adapt to internal +
external change.
To be flexible may require a restructure, delayer, flexible contracts,
develop an organic structure and emphasise knowledge + info
management.
Restructuring
May be initially organised in functional areas. As it expands internationally
- geographical regions - quicker responses to local changes.
, Delayering
Remove levels of hierarchy to cut costs + for faster and local decision
making.
Using flexible employment contracts
Flexibile to switch between tasks or move locations to match demand.
Tightly defined contracts can argue ‘it is not my job’. Temporary
employees can increase or decrease the labour force when needed.
Developing an organic structure rather than a mechanistic
structure
A mechanistic structure is formal - clear rules and procedure, many levels
of hierarchy, close control over employees + predictable performance with
consistent outputs. This is desirable for e.g. insurance companies.
Organic structures have fluid teams for projects with new teams set up for
new challenges - no fixed set of reporting relationships. Involve people
based on contribution rather than job title.
A formal structure limits creativity. Concepts such as span and hierarchy
are out of date in creative businesses.
Emphasising knowledge and information management
Flexibility relies on managers knowing what to do + employees knowing
the strategy. This involves gathering data effectively. Gathering + sharing
knowledge is a challenge for large organisations.
The value of managing information and knowledge
Info is a key resource. Technology has made more data available. By
managing data effectively managers can:
– Identify changes before they happen
– Develop suitable strategies to respond or prepare for change
– Evaluate the effectiveness of the strategies
– If not - make decisions in the dark. Sharing knowledge between
employees often involves investing in info systems + databases.
Resistance to change
Kotter and Schlesinger: 4 main reasons
1. Self-interest. They think they will be worse off. They may lack the skill
required. Worried they will lose their bonuses, jobs or status.
2. Prefer the present situation. Change may be seen as a hassle + stay
within their comfort zone.
3. Differing assessment of the situation. Some may think they have a better
idea or disagree with the strategy.
