MANAGEMENT OF STRATEGIC CHANGE
Many business strategies involve a change of some type. Managing the change aspects successfully during the implementation stage can often be critical to the success of the strategy itself
Types of strategic change /Classification of change
Change can be classified the extent of the change required, and the speed with which the change is to be achieved:
- Transformation entails changing an organization’s culture. It is a fundamental change that cannot be handled within the existing organizational paradigm.
- Realignment does not involve a fundamental reappraisal of the central assumptions and beliefs.
- Incremental change can take a long period of time, but results in a fundamentally different organisation once completed.
- BigBang change is likely to be a forced, reactive transformation using simultaneous initiatives on many fronts, and often in a relatively short space of time
Triggers of change
When a firm is under intense competitive pressure and its market position starts to erode quickly, a rapid and dramatic response might be the only approach possible. Especially when the organisation threatens to slip into a downward spiral towards insolvency, a bold turnaround can be the only option left to the firm.
Firms can also be put under pressure the government or regulatory agencies to push through major changes within a short period of time. Such externally imposed revolutions can be witnessed among public sector organisations (e.g. hospitals and schools)
First mover advantage
A more proactive reason for instigating revolutionary change, is to be the first firm to introduce a new product, service or technology and to build up barriers to entry for late movers.
Change in consumer taste and preferences
When consumers demand better products and services and organization might be forced to change.
Economic factors like inflation increase in tastes and preferences and increased cost of borrowing forces firms to change the way they do business.
Trade union pressure
Trade union demands like minimum wage rates can force a firm to change their way of doing business.e.g from hiring full time employees to outsourcing cheap labor.
Strategic leadership means having the ability to anticipate, prepare and get positioned for the future.
Strategic leaders include:
a) Middle managers
Middle managers are the linking pin between the senior management team and the rest of the organisation.
They have four roles to perform. They need to:
- undertake personal change
- help their teams through change – build up and maintain the momentum of change until the change is completed and act as facilitator
- implement the necessary changes in their parts of the business – encourage individuals to use their initiative and put emphasis on teamwork
- Keeps the business going in the interim
b) The change agent
Change agents are individuals charged with the responsibility of taking the firm through a moment of change.
Whether internal or external, the change agent is central to the process, and is useful in helping the organisation to:
- define the problem and its cause
- diagnose solutions and select appropriate courses of action
- implement change
- Transmit the learning process to others and the organisation overall.
Leadership skills – Kanter
Kanter identified the skills that leaders must have if their organizations are to be able to manage change:
Theories of change
1. The change process-Kurt Lewin.
The process of change, shown in the diagram below, includes unfreezing habits or standard operating procedures, changing to new patterns and refreezing to ensure lasting effects.
- Unfreezing – create the initial motivation to change convincing staff of the undesirability of the present situation.
- The change process itself – mainly concerned with identifying what the new behaviour or norm should be. This stage will often involve new information being communicated and new attitudes, culture and concepts being adopted.
- Refreezing or stabilizing the change – implying reinforcement of the new pattern of work or behaviour rewards (praise, etc).
2. Force field analysis
It argues that managers should consider any change situation in terms of:
- the factors encouraging and facilitating the change (the driving forces)
- The factors that hinder change (the restraining forces).
If we want to bring about change we must disturb the equilibrium by:
- strengthening the driving forces
- weakening the restraining forces
- Or both.
The model encourages us to identify the various forces impinging on the target of change, to consider the relative strengths of these forces and to explore alternative strategies for modifying the force field.
- Kotters’ 8 step to change management
- Establishing a Sense of Urgency
During this first step it is essential to acquire the cooperation of many individuals and to ensure they are motivated to participate
- Forming a Powerful Guiding Coalition
- Form a powerful coalition is terms of titles, information and expertise, reputations, and relationships.
- Operate outside of the normal hierarchy definition, outside of formal boundaries, expectations, and protocol.
- Emphasis team work and whilst recognizing the power of a strong line management leadership within the coalition.
- Creating a Vision
- A vision beyond the numbers that clearly defines where the organization is going.
- Clear and precise project plans that take the organization in the direction it needs to move to achieve the vision.
- Communicating the Vision
- Brighten up the company’s existing communications methods. Try new and different methods for sharing the vision.
- Use every vehicle possible to communicate the strategies for achieving it.
- Emphasize and teach new behaviors the example of the guiding coalition.
- Empowering Others to Act on the Vision
- Empower people to maintain the credibility of the change effort as a whole, to try new approaches, to develop new ideas, and to provide leadership.
- Change Systems and structures that seriously undermine the vision.
- Encourage risk taking and nontraditional ideas, activities, and actions.
- Planning for and Creating Short-Term Wins
- Develop clear performance improvements goals and measurement systems and reward the people involved when they are achieved.
- Maintain commitments to achieve short term goals to help maintain a high urgency level and force deep thinking that can clarify visions.
- Consolidating gains and producing more change
Look back and enjoy what you have already achieved. This gives you more strength to want to continue..
- Institutionalizing New Approaches
- Communicate frequently how the new approaches, behaviors, and attitudes have improved performance.
- Create leadership development and succession plans consistent with the new approach.
Push and Grow Theory
Push model is also referred to as the ‘top-down’ model or the “mainstream” approach. Leaders who lead change from the top are ones who set goals and objectives based on expectations of financial markets, and they do not involve employees at lower levels in decision-making processes. It explains that long lasting changes come from the top where the perspective is fuller and allegiance to local loyalties is less constraining. In this model, a major lever for change is the executive authority to make changes to organizational structures and policies, which in turn can have large-scale effects in shaping the behavior of members. It’s a traditional model whose main concepts about change are:
- Change is pushed from the top level and is initiated management.
- Change program presents a full set of answers
- Visions are imposed not discussed.
- Behavior is believed to change through changing policies and reward systems
- Leadership behavior is that of exhortation, encouragement, pushing and threatening
- There is created urgency to show clear tangible results
- Setting a tough mandate and deadline from the top
The “ten commandments for executing change According to Kanter
- Analyze the organization and its need for change.
- Create a shared vision and common direction.
- Separate from the past.
- Create a sense of urgency.
- Support a strong leader role.
- Line up political sponsorship.
- Craft an implementation plan.
- Develop enabling structures.
- Communicate, involve people, and be honest.
- Reinforce and institutionalize change.
The grow model
This model is also known as the Learning Based Change Model..
Main ideas behind the model:
- Change bubbles up from mid-level and grass roots
- Change approach offers some key answers plus opportunity to learn together what is needed
- Gives employees the chance to ‘know’ how to develop to the vision
- Develop new thinking to develop new behavior
- Grow roots, spread and cultivate them
- Works on several local level areas of improvement & what arises
- Emphasizes on building a foundation for sustained change and improvement
- Mc Kinsey 7S Model
Developed in the early 1980s Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful.
The McKinsey 7-S model involves seven interdependent factors which are categorized as either “hard” or “soft” elements:
- “Hard” elements are easier to define or identify and management can directly influence them:.
- “Soft” elements, on the other hand, can be more difficult to describe, and are less tangible and more influenced culture.
Figure 1 below depicts the interdependency of the elements and indicates how a change in one affects all the others.
- Strategy: the plan devised to maintain and build competitive advantage over the competition.
- Structure: the way the organization is structured and who reports to whom.
- Systems: the daily activities and procedures that staff members engage in to get the job done.
- Shared Values: called “superordinate goals” when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic.
- Style: the style of leadership adopted.
- Staff: the employees and their general capabilities.
- Skills: the actual skills and competencies of the employees working for the company.
- Placing Shared Values in the middle of the model emphasizes that these values are central to the development of all the other critical elements.
- The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing.
- So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change.
- ADKAR Model.
ADKAR change management model is a bottom-up method that focuses on the individuals behind the change. Rather than being a sequential method, ADKAR is a set of goals to reach (with each letter of the acronym representing one of these goals).
By focusing on achieving the following five goals, the ADKAR model can be used to effectively plan out change on both an individual and organizational level:
- Awareness (of the need to change):
Your employees need to understand why the change is happening, but this step isn’t about simply dictating what they need to do. Use evidence to back up your plan and convince them the change is positive.
- Desire (to participate and support the change):
Awareness is good, but it’s nothing if people don’t want to change. This will be a true test of your skills as a leader since you will literally need to win the hearts and minds of your employees.
- Knowledge (on how to change):
Make sure everyone knows what their role in the change will be. People dislike change because of the uncertainty; a clear plan of the steps, expected results, and parts they need to play will help alleviate some of that anxiety.
- Ability (to implement required skills and behaviors):
Knowing what needs to be done is just one side of the coin. Employees may need extra training or coaching in order to fulfill their responsibilities. Again, if people feel prepared and confident in their abilities to handle change, they are less likely to resist it.
- Reinforcement (to sustain the change):
After you’ve done the heavy lifting, you need the change to stick. Performing regular reviews and offering incentives are great ways to help employees establish new habits and provide accountability (for you, too).
Reasons for resisting change
- Parochial self-interest (some people are concerned with the implication of the change for themselves and how it may affect their own interests, rather than considering the effects for the success of the business).
- Misunderstanding (communication problems; inadequate information).
- Low tolerance to change (certain people are very keen on security and stability in their work).
- Different assessments of the situation (some employees may disagree on the reasons for the change and on the advantages and disadvantages of the change process).
- Fear of the unknown.
Overcoming resistance to change
Kotter and Schlesinger set out the following change approaches to deal with resistance:
- Participation – aims to involve employees, usually allowing some input into decision making. This could easily result in employees enjoying raised levels of autonomy, allowing them to design their own jobs, pay structures, etc.
EBooksKenyaand communication – used as a background factor to reinforce another approach. This strategy relies upon the hopeful belief that communication about the benefits of change to employees will result in their acceptance of the need to exercise the changes necessary.
- Power/coercion – involves the compulsory approach management to implement change. This method finds its roots from the formal authority that management possesses, together with legislative support.
- Facilitation and support – employees may need to be counseled to help them overcome their fears and anxieties about change. Management may find it necessary to develop individual awareness of the need for change.
- Manipulation and co-optation – Manipulation is wherethe information that is disseminated is selective and distorted to only emphasize the benefits of the change. Co-optation involves giving key people access to the decision-making process.
- Negotiation – is often practiced in unionized companies. Simply, the process of negotiation is exercised, enabling several parties with opposing interests to bargain. This bargaining leads to a situation of compromise and agreement.
Strategic change is the movement of a company away from its present state toward some desired future state to increase its competitive advantage. It is an approach to bringing about congruence among the organization’s strategy structure and human resource systems and the larger environment.
Levers of Strategic Change.
The change levers set employee engagement in motion and give it momentum. Using them well demonstrates commitment from leaders. It ensures employees have the necessary tools and skills, and provides support and rewards for the change.
The Seven Levers of Change are:
- fostering personal contacts between advocates of the change and others,
- prudently using mass exposure,
- hiring expertise only when required,
- listening to resisters and shifting resistance, if necessary,
- providing the requisite tools and infrastructure,
- leading example or “walking the talk”, and
- rewarding successes in implementing the change.
Methods of introducing strategic change.
- Step-1: Diagnosing the Need for Change.
- Step-2: Stakeholder Analysis.
- Step-3: Igniting Change.
- Step-4: Creating Change Network and Building Teams.
- Step-5: Preparing and Executing Change Management Plan.
- Step-6: Identifying and Managing Resistances to Change.
- Step-7: Institutionalizing Successful Change Programs.
- Step-8: Evaluating the Effects of Changes.