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Managing Strategic Change Aspects

 

The most commonly recognized signal of a need for strategic
change is an acute crisis signalled by financial losses, a significant fall
in market share and a rapidly falling share price. In the case of many
companies, poor financial performance is the outcome of poor quality
of product or service, lack of true employee commitment, uninspiring
leadership from the top and a traditional culture inhibiting creativity
and innovation. In such cases tinkering with the organization by such
means as improvements in communications, introducing suggestion
schemes or introducing a new incentive scheme is rarely enough to
turn the business round. The increasingly common approach of down-
sizing the organization has been shown by research as seldom leading
to lasting performance improvement.

The most common strategic change objective  in recent years has
been to achieve a step change in competitiveness by means
of radical improvement in standards of quality of product and
customer service. This is often referred to as reaching world-class
standards. This approach also frequently includes achieving a more
competitive cost base and building greater flexibility or capacity for
innovation.
Sometimes the need for change is associated with the reorgani-
zation and the merging of corporate cultures that is called for
following a major acquisition. In other instances the focus is on the
In practice the actual changes that take place can be grouped under
the headings of adoption of a new approach to mission and purpose,
structural change, adoption of new systems and processes, and culture
change.

Changing mission and purpose
Under the heading of mission and purpose, more and more companies
have been moving recently from statements of objectives focusing
exclusively on the creation of shareholder value to statements that
acknowledge responsibilities to society and to the organization’s stake-
holders or to ‘aspirational’ mission statements.

This  involves the following aspects:

– A clearly stated, widely communicated and shared purpose or
mission, together with a vision of the company’s future, couched
in other than purely financial or commercial terms. In particular,
creating shareholder value is not seen as the sole raison d’être of
the enterprise.

A set of shared values, which form the basis for the actions and
decisions of the company and its agents.

A success model, which is based on a deep understanding of the
drivers of long-term business success, and a balanced process of
measurement of performance based on this, which is forward-
looking not merely historical.

The building of mutually trusting relationships with the company’s
business partners and key stakeholder groups, such as investors,
employees, customers, suppliers and the community. (The nature
and number of stakeholder groups will vary from one company to
another.)

Acceptance of the need to win ‘a licence to operate’in the context
of a society increasingly demanding in terms of ethical standards
and corporate social responsibility.
Structural changes
These include:

– moving from a functional structure to one based on products or
market segments;

– flatter structures – removing layers of management;

– the creation of highly autonomous, multi-skilled work teams;

– the introduction of more project-based, cross-functional work groups;

– changes in the role of the first-line manager or supervisor;

– greater delegation – pushing decision making closer to the shop
floor or the customer interface (often referred to as ‘empowering’);

– smaller organizational units;

– breaking down functional ‘silos’, creating internal profit centres.
The process of changing an organization structure inevitably involves
bestowing position power, status and potentially high financial
rewards on some individuals, while diminishing the power, status or
potential earnings of others. This is one reason why changing the
structure arouses much more interest and involvement by top
management than redesigning business processes or the intangibles
associated with culture change. The members of top management who
are in a position to influence the change process may be tempted to put
their own interests and career prospects first and the achievement of a
structure fully aligned with strategy second. This is a powerful
argument for involving external consultants in the decision-making
process. It also emphasizes the importance of the consultant’s ability
to remain objective and to be politically adept.

Changes in processes and systems
The redesign of processes is often referred to as ‘business process
reengineering’.
Among the most common changes are the following:

– seeking accreditation for the achievement of internationally
accepted standards in such fields as quality and environmental
management;

– the introduction of ‘just-in-time’inventory control;

– the identification and elimination of activities along the value
chain that do not add value.
Changes to systems or the introduction of new ones can include:

– changes in payments systems;

– launching employee share ownership schemes;

– introducing regular employee attitude surveys;

– continuous monitoring of customer satisfaction and service levels.

Cultural change programmes
These involve a quite different set of actions and usually include some
combination of the following:

– developing fresh statements of mission, vision and values;

– designing training focused on changing values and attitudes, eg
achieving a commitment to total quality;

– team-building processes;

– relaunching corporate identity.

To change the corporate culture involves persuading people to
abandon many of their existing beliefs and values, and the behaviours
that stem from them, and to adopt new ones.

The first difficulty that arises in practice is to identify the principal
characteristics of the existing culture. The process of understanding
and gaining insight into the existing culture can be aided by using one
of the standard and properly validated inventories or questionnaires
that a number of consultants have developed to measure character-
istics of corporate culture. These offer the advantage of being able to
benchmark the culture against those of other, comparable firms that
have used the same instruments. The weakness of this approach is that
the information thus obtained tends to be more superficial and less
rich than material from other sources such as interviews and group
discussions and from study of the company’s history.

 

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