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BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 1
Lecture Week 12
Managing Strategic Change
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 2
Learning Outcomes Week 12• Be able to• Understand the differences in the scope of strategic
change• Explain how different aspects of organisational context
might affect the design of strategic change programmes• Undertake a force field analysis to identify forces blocking
and facilitating change• Explain the role of change agents• Explain the steps in managing turnaround strategies• Explain how different levers might be employed to influence
change• Understand possible unintended outcomes from change
programmes
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 3
Managing Strategic Change - Outline
• Differences in scope of strategic change
• Effect of organisational context on design of strategic change programmes
• Forcefield analysis
• Role of change agents and styles of managing change
• Levers for influencing strategic change
• Unintended consequences of change programmes
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 4
Managing Strategic Change
• Tendency towards organisational inertia and resistance to change
• Top and middle managers (and below) are responsible for strategic change
• Need to link the strategic and the operational aspects of the organisation
• Managing change is context dependent
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 5
Key Elements in Managing Strategic Change
Exhibit 10.1
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 6
Diagnosing the Change Situation• Why is strategic change needed?• Basis of strategy
– Strategic purpose/strategic intent– Bases of competitive advantage
• Specific possible directions and methods of strategy development
• Changes in structures, processes, relationships, resources and activities required – To translate strategic thinking into action
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 7
Types of Change
Exhibit 10.2
Source: Adapted from J. Balogun and V. Hope Hailey, Exploring Strategic Change, Prentice Hall, 1999.
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 8
Influence of Context on Strategic Change
Exhibit 10.3
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 9
Diagnosing context and change problems
• Cultural Web– Diagnostic tool to understand culture– Covers hard and soft aspects
• Structures and control systems (hard)• Symbols, routines, political processes (soft)
– Can be used to analyse changes needed for strategic success
• Map current and required culture
• Forcefield Analysis– Identifies forces for and against change– Provides an initial view of change problems that need to
be tackled
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 10
Forcefield Analysis
Exhibit 10.4
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 11
Styles of Managing ChangeStyle Means/Context Benefits Problems When effective
Education/
Communic-ation
Briefings
Internalisation
Trust
Overcome lack of information
Time consuming
Unclear
Incremental change/long duration/horizontal transforma-tional changeCollabora-
tion/Parti-cipation
Involve in developing strategy
Ownership/
improved quality
Time/Within current
paradigm
Inter-
vention
Change agent coordinates/
controls
Guided but with involvement
Perceived
manipulation
Incremental/
non-crisis transformation
Direction Use authority to set direction
Clarity and speed
No accept-ance/ill conceived
Transforma-tional change
Coercion/
Edict
Explicit use of power through edict
May succeed in crisis
Least success unless crisis
Crisis/rapid transform/auto-cratic culture
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 12
Roles in Managing Change (1)
• Change Agent– Individual or group that effects strategic change
in an organisation
• Strategic leadership– The process of influencing an organisation in its
efforts towards achieving an aim or goal– Charismatic leaders– Instrumental or transactional leaders
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 13
Roles in Managing Change (2)• Middle managers
– Facilitators or blockers?– 5 roles in managing strategic change
• Implementation and control• Translators of strategy• Reinterpretation and adjustment of strategy• Relevance bridge between top managers and lower
managers• Advisors to senior management on blockages and
requirements
• Outsiders, e.g. new CEO, new management, consultants, key influencers (stakeholders)
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 14
Strategic Leadership ApproachesFocus of attention
Indicative behaviour
Role of other managers
Implications for change mgt
Strategy Strategy analysis/
formulation
Scanning markets/
technology
Day-to-day operations
Delegated
Human assets
Developing people
Right people
Coherent culture
Strategy development devolved
Recruit/develop people to manage locally
Expertise Expertise as source of
comp. adv.
Improve expertise via systems
Immersion in/
managem’t of expertise area
Change in line with expertise approach
Control Set procedures/measures
Monitor performance for uniformity
Ensure uniform perf. vs. measures
Change monitored and controlled
Change Continual change
Communication/motivation
Change agents/open to change
Change central to the approach
Source: Adapted from Farkas & Wetlaufer 1996
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 15
Levers for Managing Strategic Change
• Turnaround– Managing rapid strategy reconstruction
• Challenging the taken for granted
• Changing organisational routines
• Symbolic processes
• Power and political processes
• Communicating and monitoring change
• Change tactics
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 16
Turnaround strategy (1)
• Emphasis on speed of change, rapid cost reduction and/or revenue generation
• Prioritisation of things giving quick and significant improvements
• Crisis stabilisation• Management changes• Gaining stakeholder support
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 17
Turnaround strategy (2)
• Clarifying the target market• Re-focusing• Financial restructuring• Prioritisation of critical improvement areas• Focus on getting the business right, not look
for new markets
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 18
Turnaround: Revenue Generation and Cost Reduction
Exhibit 10.7
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 19
Challenging the taken for granted• Need to change the paradigm
– Get people to see the realities• Mechanisms
– Evidence from strategic analysis– Analysing what people take for granted
• Workshop sessions• Bring into open• Debate and challenge
– Scenario planning to overcome bias and cultural assumptions
– Bringing managers face to face with reality (customers)
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 20
Changing organisational routines
• Routines are the “way we do things around here”– Can become core rigidities– Difficult to adapt to new strategies
• Mechanisms– Identify critical success factors and underlying competences– Bring strategy down to operational levels– Changes in routines make strategy meaningful– Doing is better than thinkin– Education/communication less powerful than involving people – Persistent extending and bending existing ways of doing things
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 21
Symbolic Processes• Symbols are objects, events, acts or people which
express more than their intrinsic content– Changing symbols helps reshape beliefs and
expectations, as meaning is apparent in day to day experiences
• Mechanisms– Introducing new rituals/abolishing old ones– Change systems and processes– Change physical work environment– Behaviour of change agents
• Language – metaphors to galvanise change• Stories
• Problems– Symbolic levers may be misinterpreted
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 22
Organisational Rituals and Culture ChangeTypes of ritual Role Examples
Rites of passage Promote social roles/interaction
Induction/training programmes
Rites of enhancement Recognise effortMotivate others
Awards ceremoniesPromotions
Rites of renewal Reassure about actionFocus on issues
Appoint consultantsProject team
Rites of integration Push shared commitmentReassert norms
Christmas parties
Rites of conflict reduction
Reduce conflict/aggression
Negotiate commitment
Rites of degradation Acknowledge problemsWeaken political roles
Fire top execs
Demote/pass over
Rites of sense-making Share interpretations Rumours, surveys
Rites of challenge Throw down the gauntlet New CEO behaviour
Rites of counter- challenge
Resist new ways Grumble, work to rule
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 23
Political Mechanisms in Organisations Activities
Mechanisms
Building the power base
Overcoming resistance Achieving compliance
Resources Control resourcesAcquire expertise & resources
Withdraw resources/counter-intelligence
Give resources
Elites Sponsored by/associated with elite
Division of elitesAssociate with change agent
Remove resistant elites. Visible change hero
Subsystems Alliance buildingTeam building
Foster change momentum/change agent
Part implementation/Disciples/‘Young Turks’
Symbolic Build on legitimation Attack legitimation/Fosterconfusion/conflict
Applause/rewardReassuranceSymbolic confirm
Key Problems Time requiredDuality of idealsThreat to elites
Too low power base/potentially destructive
Converting the body of the org.Slipping back
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 24
Communicating and Monitoring Change
• Effective communication possibly single most important factor for overcoming resistance
• Importance of clarity of vision and strategic intent• Choices of media – effectiveness depends on
complexity of change• Involvement of members of organisation in
strategy development process• Two-way process – feedback is important• Emotional aspects important – emotions can
induce negative or positive responses• Need to monitor change programmes
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 25
Effective and Ineffective Communication of Change
Exhibit 10.10
Source: Adapted from R.H. Lengel and R.L. Daft, ‘The selection of communication media as an executive skill’, Academy of Management Executive, vol. 2, no. 3 (1998), pp. 225–232.
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 26
Change tactics (1)
• Timing– Use crisis as catalyst for change– Windows of opportunity, e.g. post take-over,
new CEO– Symbolic signalling of timeframes– Choose time for promoting change to avoid
unnecessary fear and nervousness
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 27
Change tactics (2)
• Job losses and de-layering– Tactical choice, e.g. remove blockers of change
or senior managers to give signal
– Avoid creeping job losses – reduce insecurity– Demonstrate visible, responsible, caring
approach to those who lose their jobs
• Visible short-term wins
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 28
Potential Pitfalls of Change Programmes (1)
• Unintended outcomes (Harris & Ogbonna 2002)
– Ritualisation of change and “initiative overload”– Hijacked processes of change– Erosion– Reinvention– Ivory tower change– Inattention to symbols of change– Uncontrolled and uncoordinated efforts– Behavioural compliance
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 29
Potential Pitfalls of Change Programmes (2)
• Managerial implications
– Monitor the change– Understand the culture– Involve people– A major challenge
BLB10089-3 Tutor Peter Considine. (Core Text Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2008) 30
Key Points• Need to tailor approaches, styles and means
of change to context• Strategic change differs in scope and nature• Diagnosis of organisational context• Cultural web and force-field analysis to
identify blockages and levers• Different roles and styles for managing
change• Levers for strategic change depend on type
and context of change
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