MNG3702_EXAM PACK_2ND_SEMESTER.

MNG3702_EXAM PACK_2ND_SEMESTER. MNG3702 - Strategic Implementation And Control IIIB. Explain the various types of strategic change. (SLIDE 2018)  Venter gives four types of changes listed below. (i) Adaptation: This is change that can be accommodated within the current business model and within the current culture with the aim to realign strategy. This is the most common change in organisations and occurs incrementally. Adaptive work is required when our deeply held beliefs are challenged, when the values that made us successful become less relevant, and when legitimate yet competing perspectives emerge. We see adaptive challenges every day at every level when companies restructure or reengineer, develop or implement strategy, or merge businesses. 13 Mobilizing an organization to adapt its behaviours to thrive in new business environment is critical. Without such change, any company today would falter. This also relates to the integration of mergers and acquisitions (ii) Reconstruction: This is change that does not fundamentally alter the culture but it may involve a great deal of disruption in an organisation. It could be a rapid change that needs to be implemented such as a turnabout strategy which requires major cost-cutting measures or even a major structural adjustment because of a declining financial situation or changes in the market conditions. (iii) Revolution: This type of change requires rapid and major strategic and cultural transformation. (Could occur because of a potential takeover that threatens the continued existence of an organisation). FROM CASE STUDY: However, the new CEO had a plan which entailed a complete overhaul of the way the company did business, including corporate culture and leadership However, in order to be successful, Tom Boardman and Nedbank understood that, in order to realise the vision, the bank needed to change, undergo a learning process. In addition, they also realised that this new vision needed to be supported by a strong strategy and a uniting set of values. The outcomes of Nedbank’s turnaround strategy were remarkable. STUDY GUIDE PAGE 64 Revisit the Nedbank case in activity 4.2 and 4.3. Critically evaluate the cultural change effort in Nedbank. Feedback Given the external pressures Nedbank faced when it started the change process, it could be argued that the change eff ort was a revolution (change that requires rapid and major strategic and cultural change, and that normally occurs where external pressures threaten the continued existence of an organisation). From the data we have, it would seem that Nedbank’s leadership created the vision first and then put in place the “power tools” such as measurement and performance management. 14 Overall there is a sense that there is a good balance between the soft and hard elements of change, and a good balance between management and leadership, in line with Denning’s recommendations. (iv) Evolution: This is a change in strategy that requires cultural change, but happens over time. Since there is no urgency for this change it is the most difficult to change. 2.7 BARRIERS TO STRATEGIC CHANGE /35 SG 10.6 Venter, 2014:212  WHY CHANGE PROGRAMMES FAIL What this means is that forces especially internal force such as resistance to change, political and political agendas are working against one another.  Death by planning: Venter 2014 states that some executives spend most of their time on the planning stage of the change programme. They go about preparing continuous streams of proposals and reports, new committee, sub-committees and task teams are constituted to examine potential problems and achieve buy-ins. The result of all of this a called ‘analysis paralysis’ and the focus is on discord instead of the actual delivery of change.  Loss of focus: often change is incremental and constitutes a series of initiatives over many years. The risk is that these initiatives are seen as change rituals with little significance as the original intentions (and significance) of the change programme was never clearly communicated or understood. It is therefore important that objectives are set with the necessary action plans, time dates and individual responsibilities.  Reinterpretation: The existing paradigm of the organisation may be so strong that the interpretation of the new change initiatives may be interpreted as been the same as the old ones to fit in with expected norms, behaviour and conduct.  Disconnectedness: Organisational members both executives and employees affected by the change may not see as relevant nor applying to them. A typical response is that this “does not affect me and my department so why waste time on it.”  Behaviourial compliance: Some organisational members may comply with the changes but never fully integrate them so their commitment becomes superficial and not sustainable. This means that 15 individuals in the organisation only “pay lip service.” If there is no momentum or energy put into the change initiatives they will surely die an early death.  Misreading scrutiny and resistance: Change agents often consider resistance to change or critical scrutiny as negative or destructive behaviour. If this happens then concerns are ignored which will increase further resistance. This resistance should be channelled into a basis for further engagement.  Broken agreements and violations of trust: If the strategic leaders fail to honour undertaking to employees, they will lose the trust and respect of their employees and this will increase the resistance to change.  The study guides focuses on some the key reasons which they think why change programmes fail. UNIT 3 UNISA DISCUSSION SLIDES APRIL 2018  Define the term absorptive capacity • Explain the four dimensions of absorptive capacity Dynamic capabilities: These are geared towards effecting and driving organisational change. They are strategic in nature and accordingly define the firm’s path of evolution and development. It is those capabilities that help organisations to learn the new capabilities they require to adapt to environmental changes. Capabilities which allow the organisation to learn new capabilities. Three dynamic capabilities are necessary in order to meet new challenges. Organizations and their employees need the capability to learn quickly and to build strategic assets. New strategic assets such as capability, technology, and customer feedback have to be integrated within the company. Existing strategic assets have to be transformed or reconfigured. Teece’s concept of dynamic capabilities essentially says that what matters for business is corporate agility: the capacity to (1) sense and shape opportunities and threats, (2) seize opportunities, and 16 (3) maintain competitiveness through enhancing, combining, protecting, and, when necessary, reconfiguring the business enterprise’s intangible and tangible assets. STUDY GUIDE In much the same way, organisations cannot only depend on what they are good at today; they also have to change and acquire new capabilities that will ensure their future success. Whether or not an organisation possesses dynamic capabilities essentially determines its ability to learn and to change. In fact, the word “dynamic” refers to “constant change, activity or progress” (Concise Oxford Dictionary, 1999). Without dynamic capabilities, organisations will not be able to adapt to drastic changes in their environment, or be able to benefit from innovation. Just as individual learners differ in their ability to learn, we can argue that organisations differ in their ability to acquire new capabilities. Organisations that can learn and adapt will be capable of dealing with change, and will accordingly be better able to survive and prosper in the long term. In fact, we could take this argument one step further and argue that the only sustainable competitive advantage over the long term is the ability to learn and adapt. In the activity that follows, we explore this idea in greater depth with the help of the Kodak case study. 16 2Whereas planned change management is an ad hoc activity performed as and when needed, organisational learning refers to the dynamic capability of being able to learn and adapt continuously. Organisational learning is thus embedded in the “DNA” of the organisation and forms part of the culture, as well as the structures and processes that encourage and enable it.  There are four dimensions that determine absorptive capacity of an organisation.  See figure 6.2 the elements of absorptive capacity page 102 1. Acquisition of external information: This refers to the ability of an organisation to gather relevant external information. This may be due to dominant logic in that managers will restrict information relevant to what they think is important. (speed is an important element in acquiring information because the quality will be better) 2. Assimilation of acquired information: This relates to the ability of the organisations to make sense of the acquired information. It is crucial that this new information is interpreted and understood as this information has to be shared across the organisations. 17 3. Transformation of knowledge: This refers to the ability of the organisations to combine the new knowledge with existing knowledge and to develop new insights. 4. Applying new knowledge: The real benefit of absorptive capacity occurs when organisations use the transformed knowledge and new insights to improve their business operations and to develop new innovations and business ventures.  Note: Organisations with a high level of, absorptive capacity will be able to develop competitive advantage.  It should also be noted that organisations learning hinges on the ability of individuals in the organisations to learn.  3.5 6.2 BARRIERS TO ORGANISATIONAL LEARNING (SG 45/ VENTER ET. AL. (2014:101) 3.5 6.2 BARRIERS TO ORGANISATIONAL LEARNING (SG 45/ VENTER ET. AL. (2014:101) (i) DOMINANT GENERAL MANAGEMENT LOGIC :  This stems the way managers conceptualise their business.  It is a set of broad (often flawed) assumptions that can be thought of as a structure (in the case of diversified businesses, there may be dominant logics)  Managers then make critical decisions about strategy allocation and resources and the more ‘dominant’ the logic the more it acts as a barrier. (Managers and decision makers will only focus on those aspects of the environment that fit their dominant management logic.  Venter et. Al (2014) points out that the more successful the organisation the more difficult it is to change its dominant logic. (Executives assume that the future will just be an extension of the past and will ignore any information to the contrary). (Few of the leading film camera manufacturers such as Polaroid are also market leaders in the digital camera age because their dominant logic would not believe that they needed to make the transition to a new technology) (ii) MANAGEMENT IGNORANCE:  Managers often believe that they know all that there is to know about the business and the industry and that there is nothing left for them to learn.  Ignorance and arrogance present a barrier to learning. (iii) ABSORPTIVE CAPACITY  This refers to the ability of an organisation to recognise the value of new, external information, to assimilate it and address business problems.  Venter et. Al (2014:101) states that it is a strategic capability as with all resources and capabilities 18  It differs from organisation to organisation so that some have higher absorptive capacity that others will be able to learn much faster and to adapt quickly to their environments or to innovate. 1.6 (6.5 Venter (2014:105/SG 46) BECOMING A LEARNING ORGANISATION  Venter (2014) points out that the following are proposed mechanisms, to be used in combination, to assist an organisation to become a learning one. i. Leadership commitment to learning: In order to generate a culture of organisational learning, leaders should demonstrate their own commitment by being models of learning, championing learning and using learning strategically for business results. FROM THE CASE STUDY: Tom Boardman and Nedbank understood that, in order to realise the vision, the bank needed to change, undergo a learning process. The management of Nedbank showed their commitment to learning by displaying that they were models and champions of learning by adopting accepting and living the Nedbank values “In order to create a ‘High Performing Culture’ and pass it onto their subordinates. “ it was critical these values were adopted, accepted and lived by all employees and be seen to exist with top leadership”, “Using regular Cultural Values Assessments, Nedbank is able to gauge the effectiveness of their various initiatives. They use the assessment, in conjunction with an additional employee satisfaction survey, to listen to their employees. This helps to point the organisation in the right direction and understand what shifts in priorities might be needed to improve performance.” ii. Building shared visions: Visions cannot be dictated to employees they need to believe in them and buy into them. Genuine shared visions will inspire employees in good times and bad and have the power to bind an organisations together for the long term. FROM THE CASE STUDY: Nedbank included their employees in developing the vision and values for the future. For the final value, Nedbank’s employees were encouraged to offer their input. The employees wanted an added value to be s “people-centred” which reflected Nedbank’s efforts to become more client driven and employee focused. From the involvement with all employees and management a vision-led, values-driven organisation was encapsulated in 19 what is referred to at Nedbank as the "Dagwood" - an overall one-page strategic summary of the issues important to the rebuilding of Nedbank. iii. Encouraging diversity: People from similar backgrounds and cultures tend to see the same way. When the top management team is too similar they fall prey to the dominant management logic and find it much more difficult to change. This is the reason why diversity should be encouraged. FROM THE CASE STUDY THERE IS NO MENTION OF DIVERSITY BUT NEDBANK IS ONE OF THE FORERUNNERS IN IMPLEMENTING DIVERSITY INTO ITS ORGANISATION. THEY ABIDE BY THE FINANCIAL CHARTERS SECTOR IN TRANSFORMATION. FROM INFORMATION OBTAINED FROM GOOGLE SEARCH. STATES THAT THE SUCCESS OF THE TRANSFORMATION OF THE EMPLOYEES COMPOSITION OF NEDBANK CONTRIBUTES GREATLY TO IT BEING NAMED AS THE THIRD MOST EMPOWERED COMPANY IN SOUTH AFRICA IN 2008 ND AHEAD OF ITS OTHER ‘BIG 4 ‘ COMPETITORS. iv. Encourage double – loop learning:  Single –lop learning occur when individuals or organisations strive to achieve a goal and when they do not success they evaluate what went wrong. They might try again and again and when they go wrong they try something else.  This persisting failure may push the individual or the organisations into a situation where the fundamental elements or rules governing the situation are questioned.  They then evaluate their own mental models, the goals, values and beliefs that they hold. This questioning of the underlying fundamental assumptions is known as double-loop learning.  Challenging existing mental models is critical to being a learning organisations since our mental models can prevent new powerful insights and organisational practices from becoming a reality.  The process of unlearning begins with self-reflection to develop an understanding of our deeply held beliefs and generalisations and how they influence the way we do things.  Real change cannot take place until we are prepared to challenge our own mental models. FROM THE CASE STUDY: However, in order to be successful, Tom Boardman and Nedbank understood that, in order to realise the vision, the bank needed 20 to change, undergo a learning process. Tom Boardman analysed the problems that beset Nedbank when he took over as CEO, he ound that the overriding problem was staff morale. Inderloll (2010) points to the results of his study on Nedbank that issues such as a silo mentality, excessive bureaucracy, and politics came strongly to the fore as well as the relationships between employee satisfaction and client satisfaction. Tom Boardman stood back and realised that previous single loo thinking was no longer the answer and he had to implement a total transformation in how its Brand was perceived and it attitude towards its employees and clients.