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 congruence among the organization’s strategy structure, human resource systems, and the larger environment.
Strategic change requires the management’s attention to an organization’s technical, cultural, and political aspects.
3 Types of Strategic Changes
They have discussed three major types of strategic change;
- Restructuring.
- Reengineering.
- Innovation.
Restructuring
Managers often choose ‘restructuring’ of the organization to implement strategic change. This they do to improve performance.
Researches imply that environment is an- important determinant of organization structure which is also subject to the ‘by-plays of interpersonal power and politics.’ In practice, the appropriateness of organizational structure is determined by situations.
In today’s turbulent environment that demands total customer satisfaction to be achieved through continuous quality improvement, the need for a new organizational structure can hardly be overemphasized.
Implementing strategic change requires a complete deviation from the traditional structure and a switchover to a dynamic design capable of dealing with the requirements of a constantly changing environment.
Changing organization structure alone, however, may not yield the desired results; changes need to be made in many other aspects of the organization, such as information systems, human resource policies, and corporate culture.
These changes should be made in such a way that they support the transition from the old to the new paradigm.
And the overall efficacy of the changes depends on how far senior managers of the organization lend their active support and participation.
To restructure an organization, managers;
- Reorganize the departments, make changes in the hierarchy, and
- Resort to downsizing. In restructuring programs, it is common among companies to bring changes in the relationship between departments or divisions to cut costs and develop speed in cooperation among various functions.
When companies undertake to downsize, they reduce the number of employees In a planned way to reduce costs and eventually be competitive in the marketplace.
Reengineering
In reengineering, the managers focus on the ‘business processes rather than on ‘business functions.’ What is done in reengineering is that managers radically redesign the business processes.
The objective is to reduce costs, improve quality, bring superior service, and achieve dramatic improvements in speed (of doing things throughout the organization).
A business process, such as product designing or inventory control, requires cross-functional coordination for success.
For example, you can think of a firm that produces cards – birthday cards, marriage cards, greetings cards, and valentines cards.
The company originally established the card-design process so that all workers (artists, writers, and editors) worked in different functions to produce all types of cards, as mentioned above. After reengineering, the workers are now working in cross-functional teams.
Each of them now works on a specific type of card. As a result, the firm can now introduce new cards in the market within a few weeks, compared with a few months before reengineering.
Innovation
innovation is primarily an improvement over existing products or services.
Thus, innovation requires extensive research and development efforts. Innovation implies that organizations use their existing skills, competencies, and resources to create new goods, services, or technology. This is what organizations do to better respond to the customers’ needs.
Innovation may be wonderful in achieving spectacular success, but it may lead to disaster if the research and development efforts fail to bring desired results. Although innovation involves high risks, it has the greatest prospects for long-term success.
8 Steps of Strategic Change Process
Organizations follow 8 steps process is followed for the implementation of strategic change programs:
Step-1: Diagnosing the Need for Change
This section will help you understand the major issues related to diagnosing a need for change.
Determining the Value of Diagnosis
Although some organizations are good at anticipating the need for change, many organizations fail to do it. Even some never recognize the problem or opportunity at all.
Organizations’ longterm survival is threatened due to such failures.
When organizations suffer from complacency for success, it: may sometimes set the stage for failure. This happens because successful companies’ managers become locked into behavior patterns that produce success, and these patterns are not usually questioned.
Such a ‘trap of success’ may become a ‘death spiral,’ as remarked by Nadler and Shaw.
In order to protect an organization from a death spiral, managers need to recognize the need for change, look to the outside world, since what is happening, anticipate the implications of the signals for change, and formulate change agenda.
Here begins the initial step in the entire change management process.
Initial preparation and planning for change management require a diagnosis for change in the organization. In diagnosis for change, usually, an analysis is made of;
- Organizational members’ readiness for change and
- Organizational members’ competency for change.
Organizational members’ readiness for change
The intervention’s success depends heavily on the organization is ready for planned change. Organization members’ readiness for change depends on creating a felt need for change.
This involves making members so dissatisfied with the status quo that they are motivated to try new things and ways of behaving; indicators of readiness for change include sensitivity to, pressure for change, dissatisfaction with the status quo, availability of resources to support change, and commitment of significant management time.
When these conditions are present, interventions can be designed to address the organizational issues uncovered during diagnosis. When readiness for change is low, however, interventions need to focus on increasing the organization’s willingness to change.
Organizational members’ competency for change
Managing planned change requires particular knowledge and skills. These include the ability to motivate change, lead change, develop political support, manage the transition, and sustain momentum.
If organization members do not have these capabilities, a preliminary training intervention may be needed before members can engage in intervention design.
The results of the diagnosis are used as basic information to develop a change management plan. The tool widely used for diagnosis of the need for change is known as the RWA Scale (see Annex at the end of the book).
Here R stands for readiness, N stands for will, and A stands for ability. It is a 5-point Likert-type scale. In the RWA Scale, item numbers 1-4 represent preparation for change, item numbers 5, 9, and 10 indicate a willingness to change, and item numbers 6-8 indicate changeability/capacity.
Diagnosis of the need for change is primarily essential for the basic reason that unless you know clearly the change situations, you will feel shattered while dealing with changes in your organization. When you understand the need for change management, you will be able to successfully exploit the change situation.
And successful exploitation of change situations requires;
- knowledge of the circumstances surrounding a situation,
- understanding of the interactions, and
- awareness of the potential impact of associated variables.
Diagnosis helps predict the future.
However, at best, predictions produce a blurred picture of what might be, not a blueprint of future events or circumstances. The effective and progressive management of change can assist in shaping a future that may better serve the organization’s survival prospects.
Diagnosing the Organization (Organizational Diagnosis)
Diagnosing an organization is a major phase in the model of planned change.
In general terms, diagnosis is the process of understanding the organization’s functioning. It provides the information necessary to design change interventions.
Diagnosis can focus on understanding organizational problems, including their causes and consequences, or on identifying the organization’s positive attributes.
It includes choosing an appropriate model for understanding the organization and gathering, analyzing, and feeding back information to managers and organization members about the problems or opportunities.
Thus, diagnosis can be either problem-oriented or development-oriented.
Diagnosis is problem-oriented, where organizations do have specific problems. It seeks reasons for the problems. Diagnosis is development-oriented when organizational leaders/managers are interested in improving the overall effectiveness of their organization.
It assesses the current functioning of the organization to discover areas for future development.
Whatever the orientation, diagnosis provides a systematic understanding of organizations so that appropriate interventions may be developed for solving problems and enhancing effectiveness.
The milieu of any organization is the world in which it exists.
Changes in this world discipline the organization. The organization is either rewarded for adapting well or penalized for adapting poorly or not at all. The organizational analysis aims to steer the organization toward tomorrow’s opportunities and welfare.
Sometimes it happens that the opportunities and threats in the external environment and the weaknesses within the organization go unnoticed or are inadequately assessed.
Although eminently important, the managerial processes, methods, and techniques are for naught if the world around the organization changes and the organization is not poised to adapt to the changes.
As Peter Drucker arid others have astutely observed, it is far more important to do the right things than to do things right.
An organization’s ability to achieve the desired levels of performance can be enhanced or diminished by its environment. To be on track, the organization needs to have the ability to minimize threats and capitalize on opportunities.
However, this ability depends on the organization’s actions in the face of environmental trends.
It is impossible to consider an organization’s fitness for the future without enumerating tie an organization’s strengths and evaluating the significance of those strengths. It is also necessary to determine areas of vulnerability.
The methods for analyzing organizations such as PESTLED and SWOT have been discussed in the earlier chapters.
Collecting and Analyzing Diagnostic Information
When you are involved with the process of diagnosing a need for change, you need to collect, analyze/interpret information and, finally, give feedback on the information to those concerned.
The quality of information gathered plays an important role in developing appropriate interventions to deal with changes.
The process begins by establishing an effective relationship between the data collector/change agent and those from whom data will be collected and then choosing data collection techniques. You can use four methods to collect data: questionnaires, interviews, observations, and unobtrusive measures (e.g., data from an organization’s records and archives).
Data analysis organizes and examines the information to make clear the underlying causes of an organizational problem or to identify areas for future development.
For data analysis, you can use quantitative techniques such as mean, standard deviation, correlation coefficient, difference tests, or qualitative techniques.
However, of the several methods for summarizing diagnostic data in qualitative terms, you can use ‘Content Analysis’ and ‘Force-Field Analysis.’
The content analysis attempts to summarize contents into meaningful categories; force field analysis organizes information pertaining to organizational change into two major categories; forces for change and forces for maintaining the status- quo or resisting change.
Because diagnosis is an important step that frequently occurs in the planned change process, a working familiarity with these techniques is essential.
Feeding Back Diagnostic Information
In the diagnostic process, feedback on diagnostic information is crucially important. After the information has been collected and analyzed, this must be fed back to the organization’s management.
The information or data can impact organizational change only if organization members can use the information to devise appropriate action plans.
A key objective of the feedback process is ensuring that the organization’s management owns the data. If organizational members own the data, they will be motivated to solve the organizational problems.
The success of data feedback depends largely on its ability to mouse organizational action and to direct energy toward organizational problem-solving.
Whether feedback helps to energize the organization depends on the content of the feedback data and on the process by which they are fed back to organization members.
Step-2: Stakeholder Analysis
An organization’s challenge is to balance the needs of the different persons, groups of people, and organizations that have some kind of stake or interest in the organization. They are called stakeholders.
They each have a stake in the success and actions of the organization.
While each organization will have its cast of specific stakeholders, the generic stakeholder groups Or categories remain fairly similar within industries.
An organization needs to attempt to create a desirable outcome for each stakeholder. This is what stakeholder analysis is.
Since different groups have different agendas, an organization must strive to understand the various stakeholder desires and expectations. Management’s job is to balance the ways in which the organization creates value for its stakeholders.
Step-3: Igniting Change
Igniting change is stimulating organizational people and other stakeholders for change to happen. Stimulation is done through empowerment, education, and motivation of the stakeholders.
You can do all these through various initiatives. You can hold various workshops, seminars, or ‘symposiums. You can also organize different types of awareness and empowerment events as well as skill training programs.
To ignite change in your organization, you need to:
Establishing a Sense of Urgency
Organizations may fail to recognize the need for change because the people of the organization do not pay enough attention to what is happening in the wider environment.
Sometimes, they feel what is happening outside their organization, but they fail to recognize its implications in the future.
Organizational people generally feel safe living in a ‘comfort zone.’ This feeling makes it difficult for the change agents to convince the people about the need for change in their domain of activities – in John Kotter’s language, ‘hard to drive people out of their comfort zones.’
People don’t like to opt for change mainly because of the history of past success and the lack of an immediate crisis.
That’s why Kotter has suggested unfreezing’ which involves alerting organizational members to the need for change and motivating them to let go of the status quo.
To establish urgency, it is essential to critically examine the service quality, client satisfaction, and the like. To establish a sense of urgency, you may follow the following steps:
- Identify the forces driving the need for change.
- Link the driving forces to customers and broader organizational challenges.
- Highlight that the price of staying the same is higher than the price of change.
- Compel action.
Forming a Powerful Change-Coalition
Organizational people may form coalitions for varied reasons. The most common purpose is to combat a common threat or to take – advantage of a certain opportunity. The common threat or existence of opportunity is what gives rise to the coalition and allows it to exist.
Such collaborative processes can gain political influence and potentially initiate social movements. Four elements are necessary to maintain a coalition:
- Members must frame the issue that brings them together with a common interest.
- Members trust in each other and believe that their peers have a credible commitment to the common issue(s) and/or goal(s).
- The coalition must have a mechanism(s) to manage differences in language, orientation, tactics, culture, ideology, etc., between and among the members.
- The shared incentive to participate and, consequently, benefit.
Forming a change coalition important, tor such a coalition plays the role of the change management team. A change initiative will never take off the ground unless the organization can put together a strong team to direct the change process.
Change coalition should behave like one body with the CEO.
It should share the CEO’s willingness to change and vision. You may follow the criteria mentioned below for the selection of people in the change- coalition:
- A person of reputation in the organization.
- A person who knows change and innovation well.
- A person who knows how to motivate others.
- A person who can challenge a stereotyped way of thinking, culture, and customs.
- A sympathetic person and an articulate communicator.
- A person who has spiritual strength with flexibility.
- A person who can secure sponsorship from stakeholders inside and outside the organization.
- A person who is a hard worker and wants to succeed.
Communicating Changes
Change-coalition needs to create a vision for change and develop communication tools for change.
For vision communication, it would be wise to use easy words, avoid jargon, avoid specialized terms, utilize metaphor/analogy/case, and use multiple channels and methods (such as hard copy, email, telephone, video-conferencing, audio-conferencing, face-to-face communication on a one-to-one or one-to-group or group-to-group basis), provide a logical description, and listen first god explain.
Explaining and Asking
Be direct in stating the change and explaining the rationale for the change in relation to the overall goals you wish to achieve. Ask people for their opinion before you implement change. In addition to encouraging them to participate in the implementation of the change, listen to what they have to say.
Spraying arid Praying
Shower employees with all kinds of information in the hope that they will feel informed and have access to all the information they require.
Telling and Selling
Tell the employees/organization members about the key issues related to the proposed change. Then sell them the wisdom of your approach.
For this to be successful, plan your presentations well in advance, encourage meaningful dialogue, and provide the people with the opportunity to discuss their concerns.
Underscoring and Exploring
Tell the people about a limited set of fundamental issues linked to the change. Listen attentively to them for avoiding potential misunderstandings. Then give them the freedom to explore the implications of these issues.t
Familiarity and Language
Be thoroughly familiar with what you are communicating. Explain the change in language people understand to avoid any kind of semantic barriers.
Identifying and replying
Involve yourself in lots of listening to identify employees’ concerns and then respond to these concerns.
Withholding and updating
When confronted by rumors, your strategy may be to uphold the ‘party line.’ if you are a believer that information is power. If you also assume that most employees are not sophisticated enough to grasp the ‘big picture,’ you may withhold information until necessary.
Anticipating
Anticipate how people will react, the questions they will raise, and the issues that may result. Design your communication to answer those concerns immediately.
Updating
Keep your personal key communicators up-to-date regularly.
Appreciation and Solicitation
Expect the change to generate a corps of resisters and appreciate them. Solicit ideas that will strengthen what you want to do.
Continuing Process
Keep communicating about the change after it has been made. Recognize and celebrate its successful implementation.
Step-4: Creating Change Network and Building Teams
It is important to build a change network by identifying change sponsors, advocates, change management teams, change- agents, and targets. The members of the change network perform a number of activities to bring in change to the organization:
Creating Change Network by Change-sponsors
As ‘change effort champions’ within an organization, they initiate/sponsor the change, provide adequate resources, develop management support, and support the goals with words and deeds. They take up responsibility for change management actions.
The change management team leaders and the change sponsors are willing to give visible and active commitment and support to the change management project. They can direct resources to the project and are willing to institute leadership by example.
Change sponsors can be ‘initiating sponsors’ or ‘sustaining sponsors’. The initiating sponsors are key decision-makers and have the power and resources to penalize those who resist initiative and have the power to maintain focus.
Their responsibilities include; championing the importance and value of the transition to the initiative with stakeholders and providing feedback, committing time to stay in touch with status & communicating.
The sustaining sponsors are influential individuals, and they have the power to help sustain transition and enforce consequences.
Their responsibilities include
- championing the importance and
- value of transition across leadership.
Advocates
They want the change efforts to succeed but lack the power and/or resources to implement the change. Their responsibilities include;
- maintaining a consistent understanding of the initiative, status and issues, and
- advising on ways to address issues and Champion the initiative to sponsors and stakeholders.
Change management team
The change management team comprises organizational members who carry out the change efforts. Their responsibilities include;
- maintaining liaison with the sponsors,
- change-agents,
- advocates, and
- other stakeholders.
Change-agents
They implement the change and remain accountable for their success. Their responsibilities include;
- maintaining an understanding of the project plan & status, and
- providing content expertise, working with the project team to help effectiveness & assist in meetings.
Targets
The initiative directly impacts them. Their responsibilities include;
- understanding the objectives of the project,
- maintaining open communication,’ and
- providing feedback.
Implementation of a change program requires team building in the organization. Team building refers to a broad range of planned activities. It helps groups improve how they accomplish tasks and helps group members enhance their interpersonal and problem-solving skills.
Team building is an effective approach to improving teamwork and task accomplishment.
A team can facilitate various organization-development interventions such as organizational restructuring, work design, and strategic change. These change programs are typically designed by the change management team and implemented through various committees and workgroups.
Indeed, most technostructure, human resource management, and strategic interventions depend on some form of team building for effective implementation.
Management of the organization forms teams composed of key organizational members. Support from outside consultants can be solicited in the process.
The cross-sectional tasks have to be reviewed by change management teams. It is essential to bind the members together to work on the task.
Team-building Activities
Team-building activities may take any or all of the following forms:
- Activities relevant to one or more individuals,
- Activities specific to the group’s operation and behavior, and
- Activities affecting the group’s relationship with the rest of the organization.
Usually, a specific team-building activity will overlap these three categories. On occasion, a change in one area may have negative results in other areas
Step-5: Preparing and Executing Change Management Plan
Once you have diagnosed the need for change management, completed the stakeholder analysis, undertaken the initiatives for igniting change, built up to change network, and determined the team activities related to change, you are now ready to develop a change management plan for your organization.
This plan will provide you and others involved with change management with the directions for implementing the change with the necessary resources and assistance.
Organizational change management encompasses activities aimed at helping an organization successfully accept and adopt new technologies and ways to serve its customers.
Effective change management enables the transformation of strategy, processes, technology, and people to enhance performance and ensure continuous improvement in an ever-changing environment.
A comprehensive and structured approach to organizational change management is critical to the success of any project that will bring about significant change.
Characteristics of an Effective Change Management Plan
- Purposeful: The planned activities are clearly linked to the change goals and priorities.
- Task-specific: The types of activities involved are clearly identified rather than broadly generalized.
- Integrated: discrete activities are linked.
- Temporal: Events and activities are timetabled;
- Adaptable: There are Contingency plans for adapting to unanticipated opportunities and problems.
- Agreed: Senior managers and other stakeholders support the plan.
- Cost-effective: Unnecessary waste is avoided.
Key Elements of Change Management Plan
Most organizations Include the following elements in the change management plan. These are broad; usually, each element contains more specific sub-elements.
- The goal of the change.
- Scope and schedule.
- Strategy and methods.
- Design of change management system.
- Institutionalization.
Step-6: Identifying and Managing Resistances to Change
Ample evidence indicates that people and organizations seek to preserve the status quo and thus create resistance to any kind of change in normal functions.
Also, people are willing to change only when there are compelling reasons to do so. This warrants the necessity to find out the resistance created by people in organizations. You can adopt several ways to find resistance in your organization.
Identifying Resistances
- Try to understand first the major sources of resistance. In practice, you will find two sources of resistance to change – personal-level sources and opganizationaHevel sources. Personal level resistances emanate from:
- anxiety about letting go of the known and moving to the uncertain future;
- being unsure whether their existing skills and contributions will be valued in the .future; and
- The felt tension regarding whether they could leam to function effectively and achieve benefits in the new situation. At the organizational level, resistance to change may come from 3 sources;
- the habit of following common procedures and the sunk cost of resources invested in the status quo – called technical resistance;
- the potential threat of calling into question the past decisions of the top-level leaders/officials— called political resistance; and
- systems and procedures of the organization that reinforce the status quo, promoting conformity to existing values, norms, and assumptions about how things should operate – called cultural resistance.
- Carefully evaluate the negative and positive factors related to employees’ desire for change. These include;
- fear of losing something of value (fear of job loss, fear of losing control over one’s situation, which contributes heavily to the human motivation to avoid significant system change),
- threats to power and influence,
- misunderstanding about the implications of the change,
- lack of trust between the persons initiating the change and the stakeholders,
- stakeholders’ assessment of the situation differently,
- imminent negative consequences,
- enhanced job security,
- affiliation and sense of belonging,
- career advancement,
- acquisition of power or position,
- ownership for the future state,
- incentive or compensation,
- trust and respect for leadership,
- hope in a future state, and more.
- Assess the resisters’ (employees’) personal and family situation (health, financial position, stability, mobility, relationships, etc.)
- Explore the resisters’ professional career history and plans (successes, failures, promotions, aspirations, years left before retirement, 2nd Career potential, etc.).
- Identify the degree that this change will affect them personally (in some cases, even large changes can have only a minimal impact on some employees).
- Evaluate your organization’s history with change (past change success or failure, the likelihood that this change will really happen, consequences for employees that have resisted change in the past).
- Assess your organization’s values and culture (how the organization treats employees and how employees treat one another).
Overcoming Resistance to Change
It is important to remember that resistance to change may not be resistance to the change itself.
Rather it may be a reaction to how change is introduced and the levels of consultation and information provided related to that change.
Keeping this in mind, you need to consider how resistance can be overcome. The possible strategies for overcoming resistance are:
- When you find that the resisters have no adequate skills or knowledge to cope with the changing scenarios, and as a result, they are resisting the change, you can overcome this problem by providing training and positive reinforcement.
- When you find that misunderstandings might arise about the processes and procedures that will apply in the changed situation, you can educate and persuade them by helping them understand the consequences that these new processes and procedures may have for their ability to deliver a performance. Also, you can involve them in the planning of the change.
- When you find that the resisters lack the motivation to apply the skills they have and consequently resist the change, you can deal with such a situation by providing negative consequences and stalling with hassles and remedies.
- When you find that people resist change because they are uncertain about the consequences due to a lack of information that fuels rumors and gossip, you should undertake effective communication programs to inform the employees about the possible change programs. Such a step can help employees realistically prepare for change.
- You can also follow one of the most effective but oldest strategies for overcoming resistance to change. It is about involving employees directly in planning and implementing change. Participation can lead you and the employees to design high-quality changes and overcome resistance to implementing them.
Step-7: Institutionalizing Successful Change Programs
This is the last stage in the process of change management.
At this stage, the managers or consultants appointed for the purpose conduct an evaluation of the effects of the change program. They carry out the evaluation to understand the effects of changes made in the strategy and structure on organizational performance.
They compare the present way of doing things (that is, altering the change that has been implemented) with the way of doing things before implementation. They use the information of evaluation for undertaking another change program if needed. Information is also used % to decide on institutionalizing the change program if successful.
Step-8: Evaluating the Effects of Changes
Once it is determined that a change program (intervention) has been implemented and is effective, attention is directed at institutionalizing the successful change program.
Institutionalization of change programs concerns refreezing. Successful change programs are made a permanent part of the organization’s normal functioning through institutionalization. Just recall that change occurs in three stages – unfreezing, moving, and refreezing.
It involves the long-term persistence of organizational changes. Changes can be said to be institutionalized to the extent that they persist.
Such changes exist as a part of the culture of the organization.
Conclusion
The elaborate discussions on strategic change indicate that change implementation is not easy.
It requires the careful articulation of the changes that the organization wants to implement. At the same time, it is mandatory for the managers to prepare a sound change implementation plan and develop strategies to overcome the possible obstacles to implementing strategic changes.
