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Change Management

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Lesson # 34
IMPLEMENTATION AND STRATEGIC CHANGE: CONSTRAINING FORCES IN
THE IMPLEMENTATION OF STRATEGIC CHANGE (CASE STUDY OF XYZ
COMPANY)
In this lesson we will continue our discussion about the implementation of strategic change. Again at
strategic formulation, one can get extraordinary type of vision and mission prototypes but at
implementation level the results are often quite otherwise. The recent surveys also exhibit the similar
conclusions about the success pattern of strategy formulation-execution mechanism. Therefore this is an
attempt for analyzing the situation realistically by dealing various scenarios in generic terms. According
to an author, the following variables hamper the execution of strategic change.
Systems
(a) Misdirected reward and evaluation
In organizations, the actions of change in strategies, particularly at operational level, depend on linkage
between performance and reward systems. One thing which happened in most cases is that the
organizations do not have suitable criteria for performance evaluation. It means the organizations do not
have a suitable portfolio of attributes at different hierarchical levels which could measure the
performances. In this scenario, organizations may face inequity and injustice which lead them into
anarchy and conflict. However we see various efforts that have been made to link reward with
performance and to induce managers to make decisions that are in the long-term interest of the
enterprise.
At Ford Company, for example, more emphasis is given to stock grants that reward the achievement of
5-year objectives. These criteria include not only return on equity but also measures such as customer
satisfaction, involvement of employees, and product quality. Furthermore, performance is compared
with that of competitors. For instance, even though quality may have improved at Ford, if more quality
improvements have been made by a competitor, this will be held against Ford's managers if their
quality improvements have not been sufficient.
(b) Oppressive control systems
Oppressive control system means a system which is tightly managed and where element of exploitation
is very high. The control system, in an organization, has several directions. In broad terms we can
divide them into two types; tangible control systems and intangible control systems. Most controls are
designed for specific things: policies, wages and salaries, employee selection and training, research and
development, product quality, costs, pricing, capital expenditures, cash, and other areas where an
organization wishes performance to conform to plans. These controls are tangible or visible in nature
where traditional approaches are to be applied such as budget summaries and other financial analyses.
Many other types of controls are dependent on intra-organizational relationships, leadership styles;
organizational learning and culture based established patterns. These are intangibles or invisible in
nature and where modern attitudinal and behavioral approaches are to be applied. For instance,
decentralization of authority - especially in product or territorial divisions - on the one hand creates
semi-independent units but also empowerment and smooth relationships between various levels in an
organizational hierarchy. The point here is that control should be on invisibles as equal as with visibles
which certainly is an important objective to gauge the success in change implementation. It must do
more than say that a management group has followed "generally accepted standards of management
control."
The concept of the modern organization as it exists today in the United States originated with Pierre S.
Du Pont and Alfred P. Sloan. It was Sloan who structured General Motors with an emphasis on
centralized staff and decentralized operation. Policy-making and operations were distinguished. Control
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was maintained through a number of control techniques and budgets. This kind of organization worked
remarkably well and is still the predominant way large enterprises are organized today. However, new
technology, new demands in the environment and a new work force call for a new kind of organization
based on information.
(c) Inflexible budgeting systems
Budgeting is the formulation of plans for a given future period in numerical terms. As such, budgets are
statements of anticipated results, either in financial terms - as in revenue and expense and capital
budgets or in non-financial terms such as in budgets of direct labor-hours, materials, physical sales
volume, or units of production. It has sometimes been said, for example, that financial budgets
represent the "dollarizing" of plans.
Perhaps inflexibility is the greatest danger in budgets. Even if budgeting is not used to replace
managing, the reduction of plans to numerical terms gives them a kind of misleading definiteness. It is
entirely possible that events will prove that a larger amount should be spent for this kind of labor or that
kind of material and a smaller amount for another or that sale will exceed or fall below the amount
forecast. Such differences may make a budget obsolete almost as soon as it is formulated; if managers
must stay within the straitjacket of their budgets in the face of events like these, the usefulness of
budgets is reduced or nullified. This is especially true when budgets are made for long periods in
advance.
Budgeting is never more perfect than the planning behind it, and plans - especially long-range plans are
subject to the imperfections caused by change and uncertainty. Such uncertainty or sometimes change
in strategy can be incorporated if budgets are inflexible and easily be reorganized. However, this
phenomenon also depends on the degree of centralization.
(d) Arbitrary cost allocation systems
This variable, basically, relates to decision making pattern. The questions here are that whether cost
allocation is based on rational basis or emotional or political or either professional basis. So it is a
decision making phenomena either participative of limited to few organizational political elites. This
definitely leads the strategic change towards failure.
At rational and sometimes professional level we have cost valuation technique for efficient cost
allocation which is called cost-benefit analysis. It seeks the best ratio of benefits and costs; this means,
for example, finding the least costly way of reaching an objective or getting the greatest value for given
expenditures. The major features of cost effectiveness analysis are that it focuses on the results of a
program, helps weigh the potential benefits of each alternative against its potential cost, and involves a
comparison of the alternatives in terms of the overall advantages.
(e) Overly Rigid, formal planning system
Planning involves selecting missions and objectives and the actions to achieve them; it requires
decision making that is choosing from among alternative future courses of action. Plans thus provide a
rational approach to achieving pre-selected objectives. Planning also strongly implies managerial
innovation rather than rigidity and bases our decisions on purpose, knowledge, and considered
estimates.
Planning bridges the gap from where we are to where we want to go. Without plans, the organizations
are at high risk or chance. But without flexible planning system, an organization, if not in slump, is at
stagnation. The second thing is that planning and controlling are inseparable or plans thus furnish the
standards of control. So, efficient control system depends on flexible planning and decentralized
structure.
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Structures
(a) Too many hierarchical levels
Organization levels exist when there is a limit to the number of persons a manager can
supervise effectively, even though this limit varies depending on situations. In every
organization, it must be decided how many subordinates a superior can manage. When an
organization go for a large in size or for empire building, it often no longer be able serves his
target customer or stakeholders but in trying to serve itself. More broadly, there are three
problems associated with large hierarchical levels:
1. It is an expensive option
2. It complicates the communication process
3. Finally, it complicates the planning and control systems
Then what should be the ideals figures? For instance, the prominent British consultant Lyndall
Urwick found that "the ideal number of subordinates for all superior authorities ... to be four,"
while "at the lowest level of organization, where what is delegated is responsibility for the
performance of specific tasks and not for the supervision of others, the number may be eight or
twelve."
While, in a survey of 100 large companies made by the American Management Association,
the number of executives reporting to the presidents varied from one to twenty-four, and only
twenty-six presidents had six or fewer subordinates; the median number was nine. In forty-one
smaller companies surveyed, twenty-five of the presidents supervised seven or more
subordinates, and the most common number was eight. Comparable results were found in other
studies.
In our societal perspective, these figures are different from ideals and also form models of
developed societies. For instance at managerial stage, we have 6 hierarchical levels in our
public sector organizations as compared to 3 or 4 in average western models. And at non-
managerial stage, we have 16 hierarchical levels as contrast with western models that generally
have 6-8 levels. So, what the outcome is: mal-governance and least development. Therefore in
90's, we have seen the trend of rightsizing and downsizing with parallel of cost cuttings.
(b) Overly narrow span of control
According to classical school approach, the term span of management deals with specifying
numbers of subordinates for an effective span. In other words, there is a limit to the number of
subordinates a manager can effectively supervise, but the exact number will depend on the
impact of underlying factors. So, what should be the ideal? It depends upon some essential
factors like:
1.
Vision and Missions
2.
Strategic Change (Rate of Change)
3.
Hierarchical Levels
4.
Organizational Planning
5.
Training
6.
Technology
7.
Delegation of Authority and Responsibility
8.
Communication Practices and Techniques
9.
Organizational Culture, etc.
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We have two schools of thoughts about the optimality of span of control. One is the classical
school of thought which prescribed that at upper and top levels the span is from three to seven
or eight subordinates. However, more recent views come from operational-management
theorists who have beloved on open ended approach that are based many underlying variables
in a management situation. But in a very real sense, none of these studies is truly indicative of
the actual span of management. For one thing, they measure the span only at or near the top of
an enterprise. Secondly, it is probable that spans below the top executive are much narrower.
According to a study of more than 100 companies of all sizes revealed a much narrower span
in the middle levels of management than at the top.
While, in broader term we can divide the management span into two types: one is wide and the
other is narrow. A wide span of management is associated with few organizational levels; a
narrow span, with many levels. The advantages and disadvantage of the both categories are
given in the following table:
Organization with Narrow Span
ADVANTAGES
DISADVANTAGES
· Close supervision
· Many levels of management
· Close control
· High costs due to many levels
· Fast communication between
· Superiors tend to get too involved in
subordinates and superiors
subordinates work
· Excessive distance between lowest
level and top level
Organization with Wide Span
ADVANTAGES
DISADVANTAGES
· Superiors are forced to delegate
· Danger of superior's loss of control
· Clear policies must be made
· Requires exceptional quality of managers
· Subordinates must be carefully selected
· Tendency of overloaded superiors to
become decision bottlenecks
(c) Responsibility without authority
Although research still does not address all key the key managerial activities such as
structuring the organization or clarifying of authority-responsibility relationships because of
person-to-person variability and that require a comprehensive look at what successful and
effective managers really do. But in general, the authority responsibility mismatch has
considered one of biggest hindrance in managerial success. It has normally considered more as
structural phenomena rather than individualistic. For instance, in most of the cases managers
are assumed to be responsible instead of appropriately authoritative. One reason for that is the
geographical dispersion between authority structure and responsibility structure. So, the point
is that there must be equilibrium between manager's functional authority and perceived
responsibility. Some recent research studies have focused this phenomenon under the domain
of total managerial job.
(d) Top down management system
It is the most traditional and oldest style of management where management flows from people
at higher levels to those at lower levels in organizational hierarchy. This kind of management
exists especially in organizations with an authoritarian atmosphere. Therefore in today's
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context, it has been much disliked form of organizational structure. Most of the time, the
strategy, goals, and objectives manipulation is retained at the higher level of organization.
Even middle level managers are working as operators. In fact, it is commonly argued that
effective management has to start with subordinate otherwise problem will develop.
In top down communication, information is often lost or distorted as it came down the chain of
command. Top management issuance of policies and procedures does not ensure prompt
communication. Consequently, an effective feedback system is required for finding out
whether information was perceived as intended by the top management. The possible
consequences are:
1.
Least motivated and least involved employees
2.
Mechanistic organizational environment
3.
Stagnant efficiency
4.
Poor coordination between operation of functional level and higher level etc..
(e) Restricted communication channels
It is generally considered in traditional communication structures that top management is the
most informed segment in an organization. Is this assumption, particularly in modern context,
is a myth or reality? Modern research now argued that middle level and operational level
managers are the more informed people in an organization. Because they are getting
information simultaneously from multiple channels such as backward channels, forward
channels, and also through organizational hierarchical channels. Therefore, the point here is
that, an open ended organization is more intelligent and interactive with the environment.
(f) Lack of accountability
Although employees are empowered to make decisions they believe will benefit the
organization, they must also be held accountable and responsible for results. Accountability
phenomena works at two levels: at extraneous level and at internal level.
At extraneous level, the organization held accountable to individual, to a group or groups of
people, to government, and ultimately to society. This is reactionary and legal way of
accountability. At intra-organizational level, there must be some restraints or checks that can
held accountable to individual level and department's level, at business level and at corporate
level. The objective here is that, morality should be generated form within the organization.
J. O. McKinsey came to the conclusion that a business enterprise should periodically make a
"management audit," an appraisal of the enterprise in all its aspects in the light of its present
and probable future environment. Although McKinsey called this appraisal a management
audit, it is actually an audit of the entire enterprise.
(g) Bloated (over-fed) staff functions
In management literature, still there are number of obstacles which require some deep
extrication like the problem of semantics. The terms such as "organization," "line and staff,"
"authority," "responsibility," and "policies," are exemplified by variety of meanings. And much
confusion also has among managers as to what these terms are. So, what the roles of line and
staff are? This is one of several areas of management that causes more difficulties, more
friction, and more loss of time and effectiveness.
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1One widely held view of line and staff is that line functions are those that have direct impact
on the accomplishment of the objectives of the enterprise. On the other hand, staff functions
are those that help the line persons work most effectively in accomplishing the objectives. The
people who hold to this view almost invariably classify production and sales (and sometimes
finance) as line functions and purchasing, accounting, personnel, plant maintenance, and
quality control as staff functions. According to an another classification, purchase, production,
sales departments are under line authority domain and accounting, finance, personnel, plant
maintenance, and quality control are under staff authority domain.
The point here is that, the organization should go first to differentiate between line authorities
and staff authorities and form an appropriate model so that the problems of overlapping and
over feeding could be avoided.
Strategic Direction
(a) Absence of innovation goals
Usually, innovation means the creation and usage of the ideas. In an organization, this can
mean a new product, a new service, or a new way of doing things as Peter Drucker regards the
two basic business functions as innovation (for example, the creation of new goods or services)
and marketing. A business can scarcely survive without at least one of these functions and
preferably both. On contrary, innovations may be very risky and are, at times, not successful.
Organizations fostering innovation are attributed with the following ways:
1.
Appreciation and rewarding for new ideas
2.
Development of tolerance for failure
3.
Operate with few and simple rules
4.
Hampers to innovation, such as excessive planning or intolerance of mistakes is
eliminated
5.
Information sharing is greatly encouraged
6.
Processes, Procedures, and guidelines foster innovation.
7.
Establish close relationships with customers
8.
Technology sharing with others in the company
9.
Keeping the project alive by allocating time or financial grants
10.
Keeping the divisions small
As James Brian Quinn found in his research that successful large companies are listening
carefully to the needs of their customers. They establish teams that search for creative
alternatives to serve their customers but within a limiting framework and with clear goals in
mind. And Peter Drucker suggests that innovation applies not only to high-tech companies but
equally to low-tech, established businesses. According to him, worthwhile innovation is not a
matter of sheer luck; it requires systematic and rational work, well organized and managed for
results. Following some success stories attribute innovation as a matter of survival.
General Electric's ambitious plans for the "factory of the future" may have been a costly
mistake. These plans may have been based on unrealistic forecasts and GE's unrealistic
expectations to automate industry. The concept of the new factory expressed the wish of the
chairperson, who wanted to promote entrepreneurship in an organization that was known to be
highly structured. At Johnson & Johnson, autonomous operating units are encouraged to
innovate. The organization culture allows failure to occur. Hewlett-Packard encourages re-
searchers to spend 10 percent of their time on their pet projects, and Merck allocates time and
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resources to its researchers for working on high-risk products with a potential for high payouts.
Dow Corning and General Electric engage in joint projects with customers to develop new
products.
(b) No formal strategy for entrepreneurship
Gifford Pinochet makes a distinction between the intrapreneur and the entrepreneur.
Specifically, an intrapreneur is a person who focuses on innovation and creativity and who
transforms a dream or an idea into a profitable venture by operating within the organizational
environment. In contrast, the entrepreneur is a person who does similar things, but outside the
organizational setting. Entrepreneurs have the ability to see an opportunity; to obtain the
necessary capital, labor, and other inputs; and to put together an operation successfully. They
are willing to take the personal risk of success and failure.
Organizations that have entrepreneurial like orgonomics or attributes ­ develop ability to see
an opportunity, willingness to take risk and commitment to systematic innovation are
progressive, dynamic and long lasting structures. For instance, When Steve Wozniak could not
get his dream of building a small computer fulfilled at Hewlett-Packard, he left that prestigious
firm to form - together with another entrepreneur, Steve Jobs - Apple Computer.
Entrepreneurship, in general, is thought to apply to managing small businesses, but some
authors expand the concept so that it applies also to large organizations and to managers
carrying out entrepreneurial roles through which they initiate changes to take advantage of
opportunities. For instance, Progressive companies, such as IBM or 3M, consciously try to
develop an organizational environment that promotes entrepreneurship within the company.
(c) No vision from the top
If the top executive of an organization is visionless or retained them on existing level of
achievements then organization suffers immobility, and lacks strategic direction for long term
survival as a very famous English quotation delegate that `fish stings from the head'. An ideal
organization's leaders or top management has known about how to form a plan that constitutes
a standard and ordinate it to vision of the organization. He also has the ability to compare it
with the present structure and execute changes should be made when possible.
(d) Lack of commitment from senior executives
Similarly, senior executives must be committed, meaningful and incorporate with the
objectives, mission, and purpose of the organization. They must also have clear understanding
about their area or intentional structure of roles for better serving in today's highly infiltrated
environment. But we have seen different scenarios in organizations. For instance, one survey
of CEOs in Fortune 500 enterprises indicated that executives spend little time with lower-level
employees. Professor Henry Mintzberg, who previously studied the activities of executives,
interpreted the findings as showing that "management by walking around" is not very prevalent
in these large companies. Managers spend a lot of time with those who are at similar
organizational levels. Yet by wandering around, managers could obtain a great deal of
information not available through formal communication channels.
(e) No entrepreneurial role-model at the top
In a learning environment, employees at the lower level learn from the middle level and from
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the top level management. If there are no such role models in an organization then it suffers
asymmetry, communication gaps, and perhaps leadership vacuum.
Policies and Procedures
(a) Long complex approval cycles
It is a typical area of Office Management Study or OM study in which we analyze day-to-day
procedures and conventions in office environment. For instance, in public sector organizations
we have seen that the approval of a document require dozens of signature and other
complexities. So if an organization has this kind of old and classical system that creates
problem of efficiency, effectiveness and disorder in organizational outcomes.
(b) Extension documentation requirements (even problem with iso-9000)
Over-documentation is other hindering phenomena that affect the efficiency and effectiveness
in an organization. This is even not a local phenomenon in developing countries' business and
organizational environments but at international level too. For instance, ISO certifications
require documentation over documentation that creates an abnormality in organizations. This is
because we are overly relaying on visibles rather than on invisibles that led an organization to
mechanistic and spiritless structure. The point here is that every organization should determine
its own formality and informality levels according to their operational size and industry norms.
(c) Over-reliance on established rules of thumb
It means the over-reliance on past patterns experiences, norms, and conventions. This approach
creates hindrance to value-addition and creativity and makes an organization a stagnant body.
(d) Un-realistic performance criteria
The unachievable or unrealistic performance criteria also create constraint during
implementation of strategic change. This thing creates de-motivation in organizations.
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Table of Contents:
  1. COURSE ORIENTATION:Course objectives, Reading material, Scope of the subject
  2. BENEFITS AND SIGNIFICANCE OF CHANGE MANAGEMENT:Traditional management domain
  3. KURT LEWIN MODEL: ASSUMPTIONS AND IMPLICATIONS:Change Movement, Refreeze
  4. IMPLICATIONS OF KURT LEWIN MODEL:Sequence of event also matters, A Critical Look
  5. SOME BASIC CONCEPTS AND DEFINITIONS:Strategic change, Logical incrementalism
  6. TRANSACTIONAL VS. TRANSFORMATIONAL LEADERSHIP:Micro-changes, Organisation Development
  7. THEORIES OF CHANGE IN ORGANISATIONS
  8. LIFE CYCLE THEORY:Unit of Change, Mode of change, Organisation death
  9. TELEOLOGICAL THEORIES OF CHANGE:Unit of change, Mode of Change, Limitations
  10. DIALECTICAL THEORIES OF CHANGE:Unit of Change, Strategic planning
  11. A DIALECTICAL APPROACH TO ORGANISATIONAL STRATEGY AND PLANNING:
  12. LIMITATION OF DIALECTICS; DA AND DI:Overview of application of dialectics
  13. THEORIES OF CHANGE IN ORGANISATIONS
  14. APPLICATION OF EVOLUTIONARY THEORY:Managerial focus
  15. FURTHER APPLICATION OF EVOLUTIONARY THEORIES:Criticism
  16. GREINER’S MODEL OF ORGANISATIONAL– EVOLUTION AND REVOLUTION
  17. GROWTH RATE OF THE INDUSTRY:CREATIVITY, DIRECTION, DELEGATION
  18. COORDINATION:COLLABORATION, The Crisis
  19. ORGANISATION ECOLOGY:Structural Inertia, Internal Structural Arrangements, External Factors
  20. CLASSIFICATION OF ORGANIZATIONAL SPECIES:Extent of Environmental Selection, Determinants of Vital Rates,
  21. FOOTNOTES TO ORGANISATIONAL CHANGE:Stable Processes of Change, Rule Following, Conflict
  22. SOME COMPLEXITIES OF CHANGE:Superstitious Learning, Solution Driven Problems
  23. ORGANIZATIONAL ADAPTATION:The Entrepreneurial problem, The Administrative Problem
  24. PROSPECTORS:Analyzer, Reactors, Adaptation and Strategic Management
  25. SKELETAL MODEL OF ADAPTATION:Determinants of Adaptive ability, The Process of Adaptation
  26. STRATEGIC CHANGE:Nature of Change, The Importance of Context, Force field Analysis
  27. Management Styles and Roles:Change Agent Roles, Levers for managing strategic Change
  28. SYMBOLIC PROCESSES:Political Processes, COMMUNICATING CHANGE, Change Tactics
  29. STRATEGIC CHANGE:Pettigrew & Whipp’s Typology, Context on X-axis (Why of change)
  30. STRATEGIC CHANGE:Attributes of SOC Model, Implications for Management
  31. STRATEGIC CHANGE:Flow of Information, Recruitment, SOC Process
  32. Determinants of a Successful Change Management:Environmental, Management Orientation, Management Orientation
  33. Higgins 08 S Model – An Adaptation from Waterman’s Seven S model:Strategy, Systems and Processes, Resources
  34. IMPLEMENTATION AND STRATEGIC CHANGE: CONSTRAINING FORCES IN THE IMPLEMENTATION OF STRATEGIC CHANGE (CASE STUDY OF XYZ COMPANY)
  35. IMPLEMENTATION AND STRATEGIC CHANGE: CONSTRAINING FORCES IN THE IMPLEMENTATION OF STRATEGIC CHANGE (CASE STUDY OF XYZ COMPANY)
  36. WHY IMPLEMENTING STRATEGIC CHANGE IS SO DIFFICULT?:Change Typology, Technical Change
  37. IMPLEMENTATION APPROACHES:Attributes of incremental change,
  38. IMPLEMENTATION: RADICAL OR TRANSFORMATIVE CHANGE
  39. IMPLEMENTATION: RADICAL OR TRANSFORMATIVE CHANGE:Definition of Leadership, Follower Work Facilitation
  40. IMPLEMENTATION: RADICAL OR TRANSFORMATIVE CHANGE:Recognize the challenge
  41. IMPLEMENTATION: RADICAL OR TRANSFORMATIVE CHANGE
  42. IMPLEMENTATION: PUNCTUATED EQUILIBRIUM MODEL:Features of Radical Change, Theory of P-E model
  43. CHANGE IMPLEMENTATION: OD MODELS:The Transactional Factors
  44. CULTURE, VALUES AND ORGANIZATIONAL CHANGE:Significance and Role of Values, Values Compete
  45. ORGANIZATIONAL VALUES, CULTURE AND ORGANIZATIONAL CHANGE:Issues in Change Management