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Change Management

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Change Management ­MGMT625
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Lesson #. 40
IMPLEMENTATION: RADICAL OR TRANSFORMATIVE CHANGE
Dunphy used the following typology for the causation for revolutionary change
Environmental Creep:
The environment itself may be changing incrementally and in ways become imperceptible to managers.
Therefore the degree of change over time may be large and require major re-adjustment
Organizational Creep:
The organization itself may move out of strategic alignment with an environment which remain
relatively stable
Diversification, Acquisition, Merger, Shut downs:
Diversification, for example, often involves a major structural shift from a functional to a divisional
structure. Because the structures are radically different, incremental change over is often not a realistic
possibility. Same is the case with acquisition, merger and shut down as large scale additions or
subtractions also preclude incrementalist approach.
Industry Re-organization
An organization may be adjusting appropriately with an industrial structure but what if that structure
itself may be altered dramatically. For example deregulation or nationalization, opening of borders and
signing trade liberalization treaties like WTO are few examples of introducing discontinuity in industry
environment
Major Technological Breakthroughs
Organizations might have invested too much in current technology while major new technology break
through occurs; which may dramatically change production costs. This creates problems for old org
with older technology while creating potential for new investors e.g. mini-mills in the steel industry
Managerial implications (Managing Radical Organization Transformation by Francis & Bessant)
Transformation means profound fundamental changes in thought and an action, which creates an
irreversible discontinuity in the experience of a system in multiple dimensions of organization's
strategy, structure, culture and work processes.
Here three key variables are:
1. Thought and actions
2. Irreversible discontinuity
3. Multiple dimensions
Several factors create a transformational imperative. Of these the most ubiquitous is technical change.
Many but not all, organizations create value in ways that are defined through the exploitation of
technologies. Firms founded to exploit specific technologies are especially vulnerable when there are
discontinuous changes in the prevailing scientific paradigm, dominant technologies or other factors that
radically change the economics of the business. The principal reason for this vulnerability is that the
prevailing core values, routines, strategies, cultural imperatives and asset endowment were built on a
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Change Management ­MGMT625
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business model that has become competitively inferior, reactionary or obsolete. When this happens, a
firm's traditional competitive advantage ebbs away, but is, generally not lost overnight. In this
condition firms face a multi faceted strategic dilemma. A radical transition is required but firms can fail
to recognize the urgency of the challenge, lack understanding the scale of the destruction and
reconstruction required, or not possess the skills to handle the "jump". Hence a transformational
imperative presents particular problems for strategic managers.
Radical organizational transformation requires multiple changes. Strategies must be rewritten,
organizational culture realigned around different values, processes re-worked and value chains re-
designed. Managing transformation is confronting in the extreme for those who lead and manage
organizations. Some studies of corporate transformation hold that cumulative, incremental additional
capabilities need to be built progressively by firms in order to transform or rejuvenate themselves. The
study of Francis and Bessant shows that firms needs to have a set of different, distinctive (and possibly
temporary) new capabilities need to be acquired, generally from outside the firm and unleashed to make
a radical transformation. They proposed an analytical framework that identified five key organizational
and managerial competencies which are given as under:
The five organizational and managerial competencies are:
1. Recognize the challenge
2. Determine a transformational strategy
3. Require Extensive innovation
4. Manage Systemic change
5. Upgrade leadership process
Stage I: Recognize the challenge
Most organization faces strategic dilemmas in the sense that they are not in a state of readiness (or not
in a mood) to go for change. These dilemmas are identified by the manager as "we are in a wrong
place". This author has defined as that organization face "pre-action barriers" which are:
·
Avoidance
People in the organizations especially top managers cannot move away from their tested ways of doing
business as they do not believe that the world has changed. In other words this is a kind of success trap
for individuals who are unable to differentiate environment and situations and believe that with same
set of knowledge and skills they can counter each and every situation.
·
Indecision
Even when the need for change is understood no one may know what the best strategic direction to
follow is. This is the problem of too many options and alternative on one hand and the problem of
leadership and decision making amongst competing and splintered leadership.
·
Poverty
Firms may find themselves needing to undertake radical change at the same time as their financial
results are poor. At the same time the cost of investment is very high especially in going for technology
driven solutions. The other examples are licensing, maintenance, up gradation and training etc.
·
Insularity
The individuals in power in the organization are those whose life experience has been in creating that
which now has to be destroyed. High powered leadership (isolated from people) are least equipped to
be the leaders of transformation
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·
Inability
The management of major change programme or organizational transformation is a demanding task and
relatively few leaders have the necessary prowess. It is unlikely that managers who have spent years
managing steady-state organizations will have the appropriate skills and values to lead transformational
change.
Stage II: Determine a transformational strategy (TS)
For instance there are couples of generic TS, of which four have been identified here in the following
subsections:
TS 1. Reconfigure the value stream
Reconfiguring the value stream involves making major changes in the positioning of the firm with in a
web of suppliers, partners and/or down stream agents. For example, firms contemplating a value stream
transformational strategy may be able to change, upgrade or develop their suppliers and do the same
with downstream agents. They may be able to find new ways to meet supply needs or reposition
themselves within the value stream with advantage. This may facilitate the organization to train, impart
technology and even indoctrinate suppliers as per it needs. For example, Sun Micro systems developed
an extensive partnering network for service support that extended their reach and enabled them to
provide locally adapted services. Three key advantages are associated with re-configuration of the value
stream. First, it enables activities to be undertaken at rock-bottom costs since lowest cost providers are
selected (for so long as they remain the lowest cost provider). Second, a value stream can be
constructed so that it is inherently agile ­ resources can be "switched-on", reconfigured or "switched-
off" relatively easily thereby providing customers with what they value while not being locked-in
maintaining costly assets. Finally, visibility of the value stream as a whole provides an opportunity to
detect inefficient linkages and improve them ­ optimization take place at the level of the value stream
TS 2. Redefine the driving force of the business
Over a period of time organizations need to change their strategic orientation ­ must revise their
strategic driving force, and innovate their mission. This can be changed, although the risks of adopting
a new strategic driving force are high as the organization must abandon at least in part, what it knows
and enter a domain of ignorance, uncertainty and discovery. In stable times organization an
organization's routines are an asset as they encapsulate accumulated knowledge and eliminate the need
for learning afresh in repeating situations. For example a company in one of the Scandinavian countries,
back in 1865 was concerned with pulp and paper industry ­ after 100 years or so it entered
telecommunications and since late1990s is the industry leader outmaneuvering other leading telecom
players
TS 3. Reconstruct the competencies of the business
Competencies are underlying attributes that enables difficult things done in a reliably and economically.
In other words now body else can do the way you do is known as strategic competence. Critical Success
Factors (CSF) is an equivalent concept and is there in every industry. For instance, oil companies have
a competence in finding oil by interpreting complex geological data to reduce the risk of drilling at
wrong place. In Pharmaceutical industrial sector ­ spending on research and development (R&D) is a
norm to discover new compound. One computer firm transformed itself from Memory Company to a
Processor Company. Hence the development of new competence is essential given the perceived
change in environment.
TS 4. Redefine the value proposition to the existing and /or new customers
Competitive strategies are about meeting sufficient numbers of customers' need better than others,
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managing costs and innovating, and thereby providing a profit margin. Firms that understand their
existing customers well, and importantly, their potential customers, have an advantage. Intimacy with
the customer provides a form of learning that can be applied to design of the product/ service offer. As
such it is a factor of production as important as any tangible asset.
Many firms have a predisposition to know their customers well, at least at some point in their history.
They spend time with them and are influenced by their needs and wants. However , a focus on existing
customers can blinkers firm's decision makers since existing customers may not be lead users. Rather a
commitment to study potential and/or lead user customers is needed. This establishes flows of insight
that enable product and service development to take place with the whole potential market in mind, not
the firm's current market.
This theme is central to Christensen's (1997) analysis of the "innovators dilemma" where the weak
signals that indicate the emergence of new market opportunities, generally based on new technological
capabilities, are unlikely to be picked up by concentrating on existing core customers. Exploring
emerging opportunities spaces becomes a key strategy and requires the ability to maintain existing
customer links and, simultaneously, develop new and, sometimes, radically different ones.
The challenges of an uncertain environment or turbulent environment are such that unless organizations
change what they offer (product/service innovation) and the ways in which they create and deliver that
offering (process innovation) there is a probability that their survival will be in doubt.
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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