value insights

Diagnosis of Strategic Change- Valutrics

How change is managed will depend on the magnitude of the challenge faced
in trying to effect strategic change. To understand this it is useful to consider
the type of change required, the wider context in which change is to occur,
the specific blockages to change that exist and forces that exist to facilitate the
change process.

Typically strategy development is incremental in nature. It builds on prior strategy; it is adaptive in the way it occurs, with only occasional more transformational changes.

It is beneficial for change in an organization to be incremental since
such change should build on the skills, routines and beliefs of those in the organ-
ization. Change is therefore more likely to be understood and win commitment.
However, a big bang approach to change might be needed on occasions, for
example if an organization faces crisis or needs to change direction fast. In terms
of the extent of change, the question is whether change can occur within the
current culture as a realignment of strategy. Or does it require culture change?

This is more transformational change. Combining these two axes suggests four
types of strategic change:
● Adaptation is change that can be accommodated within the current culture and
occur incrementally. It is the most common form of change in organizations.
● Reconstruction is change that may be rapid and involve a good deal of upheaval
in an organization, but which does not fundamentally change the culture. It
could be a turnaround situation where there is need for major structural
changes or a major cost-cutting program to deal with a decline in financial
performance or difficult or changing market conditions.
● Revolution is change that requires rapid and major strategic but also culture
change. This could be in circumstances where the strategy has been so
bounded by the existing culture that, even when environmental or competitive
pressures might require fundamental change, the organization has failed to
respond. This might have occurred over many years  and resulted in circumstances where pressures for change are extreme – for example, a takeover threatens the continued existence of a firm.

● Evolution is change in strategy that requires culture change, but over time. It may be that managers anticipate the need for transformational change. They may then be in a position of planned evolutionary change, with time in which to achieve it. Another way in which evolution can be explained is in terms the idea of the learning organization  where an organization continually adjusts its strategy as the environment changes.
The sort of cultural analysis  can be useful as a means of considering whether the change envisaged could be accommodated within the bounds of the culture as it is, or whether it would require a really significant cultural shift. For example, a business may launch new products without requiring fundamental changes in the assumptions and beliefs of the organization. On the other hand, some changes in strategy, even if they do not take the form of dramatic product changes, may require fundamental changes in core assumptions in the organization. For example, the shift from a production focus for a manufacturer to a customer-led, service ethos may not entail product changes, but will very likely require significant culture change.

Managing change in a small entrepreneurial business, where a motivated team
are driving change, would be quite different from trying to manage change in a
major corporation, or perhaps a long-established public sector organization, with
set routines, formal structures and perhaps a great deal of resistance to change.
Moreover, assuming that approaches to change are readily transferable between
contexts is problematic.
Approaches to managing change therefore need to be differ according to
context. Contextual features that need to be taken into account in designing change programs:
● The time available for change could differ dramatically. A business facing
immediate decline in turnover or profits from rapid changes in its markets has
a quite different context for change compared with a business where the man-
agement may see the need for change coming in the future, perhaps years
away, and have time to plan it carefully as a staged incremental process.
● The scope of change might differ in terms of either the breadth of change
across an organization or the depth of culture change required. The scope of
change in an organization such as the MOD  is wholly dif-
ferent in terms of both breadth and depth and, in consequence, likely to be a
much bigger challenge than, for example, adaptive change in a successful
small business.

● Preservation of some aspects of an organization may be needed: in particular,
competences on which changes need to be based. Suppose, for example, that
a computer software business needs to become more formally organized
because of its successful growth. This could well upset technical experts who
have been used to ready access to senior management, but it could be vital to
preserve their expertise and motivation.
● A diversity of experience, views and opinions within an organization may help
the change process. However, if an organization has followed a strategy for
many decades, this may have led to a very homogeneous way of seeing the
world. Change could be hampered by this. So gauging the nature and extent of
diversity is important.
● Is there capability or experience of managing change in the organization?
There may be managers who have managed change effectively in the past, or
a workforce that have been used to and have accepted past changes, whilst
another organization may have little experience of change.
● Capacity for change in terms of available resources will also be significant. For
example, change can be costly, not only in financial terms, but also in terms of
management time.
● What is the readiness for change? Is there a felt need for change across the
organization, widespread resistance, or pockets or levels of resistance in some
parts of the organization and readiness in others?

● Who has the power to effect change? Often it is assumed that the chief execu-
tive has such power, but in the face of resistance from below, or perhaps resist-
ance from external stakeholders, this may not be the case. It may also be that
the chief executive supposes that others in the organization have the power to
effect change when they do not.

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