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Slide 10.1
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Strategic managament Strategic managament
Lecture 13 Lecture 13
Managing strategic change Managing strategic change
Slide 10.2
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Managing Strategic Change - OutlineManaging Strategic Change - Outline
Differences in scope of strategic changeDifferences in scope of strategic change Effect of organisational context on design of Effect of organisational context on design of
strategic change programmesstrategic change programmes ForceForce--field analysisfield analysis Role of change agents and styles of Role of change agents and styles of
managing changemanaging change Levers for influencing strategic changeLevers for influencing strategic change Unintended consequences of change Unintended consequences of change
programmesprogrammes
Slide 10.3
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Managing Strategic ChangeManaging Strategic Change
Tendency towards organisational Tendency towards organisational inertia and resistance to changeinertia and resistance to change
Top Top andand middle managers (and below) middle managers (and below) are responsible for strategic changeare responsible for strategic change
Need to link the strategic and the Need to link the strategic and the operational aspects of the organisationoperational aspects of the organisation
Managing change is context Managing change is context dependent dependent
Slide 10.4
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Key Elements in Managing Strategic ChangeKey Elements in Managing Strategic Change
Slide 10.5
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Diagnosing the Change SituationDiagnosing the Change Situation
Why is strategic change needed?Why is strategic change needed? Basis of strategyBasis of strategy
• Strategic purpose/strategic intentStrategic purpose/strategic intent• Bases of competitive advantageBases of competitive advantage
Specific possible directions and Specific possible directions and methods of strategy developmentmethods of strategy development
Changes in structures, processes, Changes in structures, processes, relationships, resources and activities relationships, resources and activities required required • To translate strategic thinking into actionTo translate strategic thinking into action
Slide 10.6
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Types of ChangeTypes of Change
Slide 10.7
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Influence of Context on Strategic ChangeInfluence of Context on Strategic Change
Slide 10.8
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Diagnosing context and change problems (1)Diagnosing context and change problems (1)
Cultural WebCultural Web• Diagnostic tool to understand cultureDiagnostic tool to understand culture• Covers hard and soft aspectsCovers hard and soft aspects
Structures and control systems (hard)Structures and control systems (hard) Symbols, routines, political processes (soft)Symbols, routines, political processes (soft)
• Can be used to analyse changes needed Can be used to analyse changes needed for strategic successfor strategic success
Map current and required cultureMap current and required culture
Slide 10.9
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Diagnosing context and change problems (2)Diagnosing context and change problems (2)
Forcefield AnalysisForcefield Analysis• Identifies forces for and against changeIdentifies forces for and against change• Provides an initial view of change Provides an initial view of change
problems that need to be tackledproblems that need to be tackled
Slide 10.10
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Forcefield AnalysisForcefield Analysis
Slide 10.11
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Styles of managing strategic change
Slide 10.12
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Styles of Managing ChangeStyles of Managing Change
StyleStyle Means/ContextMeans/Context BenefitsBenefits ProblemsProblems When effectiveWhen effective
Education/ Education/
CommunicCommunic-ation-ation
BriefingsBriefings
InternalisationInternalisation
TrustTrust
Overcome Overcome lack of lack of informationinformation
Time Time consumingconsuming
UnclearUnclear
Incremental Incremental change/long change/long duration/horizoduration/horizontal ntal transforma-transforma-tional changetional change
Collabora-Collabora-tion/Parti-tion/Parti-cipationcipation
Involve in Involve in developing developing strategystrategy
Ownership/Ownership/
improved improved qualityquality
Time/Within Time/Within currentcurrent
paradigm paradigm
Inter-Inter-
ventionventionChange agent Change agent coordinates/coordinates/
controlscontrols
Guided but Guided but with with involvementinvolvement
PerceivedPerceived
manipulatiomanipulationn
Incremental/Incremental/
non-crisis non-crisis transformationtransformation
DirectionDirection Use authority Use authority to set directionto set direction
Clarity and Clarity and speedspeed
No accept-No accept-ance/ill ance/ill conceivedconceived
Transforma-Transforma-tional changetional change
Coercion/Coercion/
EdictEdictExplicit use of Explicit use of power through power through edictedict
May May succeed in succeed in crisiscrisis
Least Least success success unless crisisunless crisis
Crisis/rapid Crisis/rapid transform/autotransform/auto-cratic culture-cratic culture
Slide 10.13
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Roles in Managing Change (1)Roles in Managing Change (1) Change AgentChange Agent
• Individual or group that effects strategic Individual or group that effects strategic change in an organisationchange in an organisation
Strategic leadershipStrategic leadership• The process of influencing an organisation The process of influencing an organisation
in its efforts towards achieving an aim or in its efforts towards achieving an aim or goalgoal
• Charismatic leadersCharismatic leaders• Instrumental or transactional leadersInstrumental or transactional leaders
Slide 10.14
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Roles in Managing Change (2)Roles in Managing Change (2)
Middle managersMiddle managers• Facilitators or blockers?Facilitators or blockers?• 5 roles in managing strategic change5 roles in managing strategic change
Implementation and controlImplementation and control Translators of strategyTranslators of strategy Reinterpretation and adjustment of Reinterpretation and adjustment of
strategystrategy Relevance bridge between top Relevance bridge between top
managers and lower managersmanagers and lower managers Advisors to senior management on Advisors to senior management on
blockages and requirementsblockages and requirements Outsiders, e.g. new CEO, new Outsiders, e.g. new CEO, new
management, consultants, key management, consultants, key influencers (stakeholders)influencers (stakeholders)
Slide 10.15
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Strategic leadership approaches
Slide 10.16
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Strategic Leadership ApproachesStrategic Leadership Approaches
Focus of Focus of attentionattention
Indicative Indicative behaviourbehaviour
Role of other Role of other managersmanagers
Implications for Implications for change mgtchange mgt
StrategyStrategy Strategy Strategy analysis/analysis/
formulationformulation
Scanning Scanning markets/markets/
technologytechnology
Day-to-day Day-to-day operationsoperations
DelegatedDelegated
Human Human assetsassets
Developing Developing peoplepeople
Right peopleRight people
Coherent cultureCoherent cultureStrategy Strategy development development devolveddevolved
Recruit/develop Recruit/develop people to manage people to manage locallylocally
ExpertiseExpertise Expertise as Expertise as source ofsource of
comp. adv.comp. adv.
Improve Improve expertise via expertise via systemssystems
Immersion in/Immersion in/
managemmanagemenent of t of expertise areaexpertise area
Change in line Change in line with expertise with expertise approachapproach
ControlControl Set Set procedures/procedures/measuresmeasures
Monitor Monitor performance for performance for uniformityuniformity
Ensure uniform Ensure uniform perf. vs. perf. vs. measuresmeasures
Change Change monitored and monitored and controlledcontrolled
ChangeChange Continual Continual changechange
Communication/Communication/motivationmotivation
Change Change agents/open to agents/open to changechange
Change central to Change central to the approachthe approach
Slide 10.17
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Levers for Managing Strategic ChangeLevers for Managing Strategic Change
TurnaroundTurnaround• Managing rapid strategy reconstructionManaging rapid strategy reconstruction
Challenging the taken for grantedChallenging the taken for granted Changing organisational routinesChanging organisational routines Symbolic processesSymbolic processes Power and political processesPower and political processes Communicating and monitoring Communicating and monitoring
changechange Change tacticsChange tactics
Slide 10.18
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Turnaround strategy (1)Turnaround strategy (1) Emphasis on speed of change, rapid Emphasis on speed of change, rapid
cost reduction and/or revenue cost reduction and/or revenue generationgeneration
Prioritisation of things giving quick and Prioritisation of things giving quick and significant improvementssignificant improvements
Crisis stabilisationCrisis stabilisation Management changesManagement changes Gaining stakeholder supportGaining stakeholder support Clarifying the target marketClarifying the target market Re-focusingRe-focusing Financial restructuringFinancial restructuring
Slide 10.19
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Turnaround strategy (2)Turnaround strategy (2)
Prioritisation of critical improvement Prioritisation of critical improvement areasareas
Focus on getting the business right, Focus on getting the business right, not look for new marketsnot look for new markets
Slide 10.20
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Turnaround: Revenue Generation and Cost Turnaround: Revenue Generation and Cost ReductionReduction
Slide 10.21
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Challenging the taken for granted (1)Challenging the taken for granted (1)
Need to change the paradigmNeed to change the paradigm• Get people to see the realitiesGet people to see the realities
MechanismsMechanisms• Evidence from strategic analysisEvidence from strategic analysis• Analysing what people take for grantedAnalysing what people take for granted
Workshop sessionsWorkshop sessions Bring into openBring into open Debate and challengeDebate and challenge
Slide 10.22
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Challenging the taken for granted (2)Challenging the taken for granted (2)
MechanismsMechanisms• Scenario planning to overcome bias and Scenario planning to overcome bias and
cultural assumptionscultural assumptions• Bringing managers face to face with Bringing managers face to face with
reality (customers)reality (customers)
Slide 10.23
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Changing organisational routines (1)Changing organisational routines (1)
Routines are the “way we do things Routines are the “way we do things around here”around here”• Can become core rigiditiesCan become core rigidities• Difficult to adapt to new strategiesDifficult to adapt to new strategies
MechanismsMechanisms• Identify critical success factors and underlying Identify critical success factors and underlying
competencescompetences• Bring strategy down to operational levelsBring strategy down to operational levels• Changes in routines make strategy meaningfulChanges in routines make strategy meaningful• Doing is better than thinkingDoing is better than thinking
Slide 10.24
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Changing organisational routines (2)Changing organisational routines (2)
MechanismsMechanisms• Education/communication less powerful Education/communication less powerful
than involving people than involving people • Persistent extending and bending existing Persistent extending and bending existing
ways of doing thingsways of doing things
Slide 10.25
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Symbolic Processes (1)Symbolic Processes (1)
Symbols are objects, events, acts or Symbols are objects, events, acts or people which express more than their people which express more than their intrinsic contentintrinsic content• Changing symbols helps reshape beliefs Changing symbols helps reshape beliefs
and expectations, as meaning is apparent and expectations, as meaning is apparent in day to day experiencesin day to day experiences
MechanismsMechanisms• Introducing new rituals/abolishing old Introducing new rituals/abolishing old
onesones• Change systems and processesChange systems and processes• Change physical work environmentChange physical work environment
Slide 10.26
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Symbolic Processes (2)Symbolic Processes (2)
MechanismsMechanisms• Behaviour of change agentsBehaviour of change agents
Language – metaphors to galvanise changeLanguage – metaphors to galvanise change StoriesStories
ProblemsProblems• Symbolic levers may be misinterpretedSymbolic levers may be misinterpreted
Slide 10.27
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Organisational rituals and culture change
Exhibit 10.8
Slide 10.28
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Organisational Rituals and Culture ChangeOrganisational Rituals and Culture Change
Types of ritualTypes of ritual RoleRole ExamplesExamples
Rites of passageRites of passage Promote social roles/Promote social roles/interactioninteraction
Induction/training Induction/training programmesprogrammes
Rites of Rites of enhancementenhancement
Recognise effortRecognise effortMotivate othersMotivate others
Awards ceremoniesAwards ceremoniesPromotionsPromotions
Rites of renewalRites of renewal Reassure about actionReassure about actionFocus on issuesFocus on issues
Appoint consultantsAppoint consultantsProject teamProject team
Rites of integrationRites of integration Push shared commitmentPush shared commitmentReassert normsReassert norms
Christmas partiesChristmas parties
Rites of conflict Rites of conflict reductionreduction
Reduce conflict/Reduce conflict/aggressionaggression
Negotiate commitmentNegotiate commitment
Rites of degradationRites of degradation Acknowledge problemsAcknowledge problemsWeaken political rolesWeaken political roles
Fire top execsFire top execs
Demote/pass overDemote/pass over
Rites of sense-Rites of sense-makingmaking
Share interpretationsShare interpretations Rumours, surveysRumours, surveys
Rites of challengeRites of challenge Throw down the gauntletThrow down the gauntlet New CEO behaviourNew CEO behaviour
Rites of counter- Rites of counter- challengechallenge
Resist new waysResist new ways Grumble, work to ruleGrumble, work to rule
Slide 10.29
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Political mechanisms in organisational
Slide 10.30
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Political Mechanisms in OrganisationsPolitical Mechanisms in Organisations
ActivitiesActivities
MechanismsMechanismsBuilding the power Building the power basebase
Overcoming Overcoming resistanceresistance
Achieving Achieving compliancecompliance
ResourcesResources Control resourcesControl resourcesAcquire expertise & Acquire expertise & resourcesresources
Withdraw Withdraw resources/resources/counter-counter-intelligenceintelligence
Give resourcesGive resources
ElitesElites Sponsored by/Sponsored by/associated with eliteassociated with elite
Division of elitesDivision of elitesAssociate with Associate with change agentchange agent
Remove resistant Remove resistant elites. Visible elites. Visible change herochange hero
SubsystemsSubsystems Alliance buildingAlliance buildingTeam buildingTeam building
Foster change Foster change momentum/momentum/change agentchange agent
Part Part implementation/Diimplementation/Disciples/sciples/‘Young Turks’‘Young Turks’
SymbolicSymbolic Build on Build on legitimationlegitimation
Attack Attack legitimation/Fosterlegitimation/Fosterconfusion/conflictconfusion/conflict
Applause/rewardApplause/rewardReassuranceReassuranceSymbolic confirmSymbolic confirm
Key ProblemsKey Problems Time requiredTime requiredDuality of idealsDuality of idealsThreat to elitesThreat to elites
Too low power Too low power base/potentially base/potentially destructivedestructive
Converting the Converting the body of the org.body of the org.Slipping backSlipping back
Slide 10.31
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Communicating and Monitoring ChangeCommunicating and Monitoring Change
Effective communication possibly single most Effective communication possibly single most important factor for overcoming resistanceimportant factor for overcoming resistance
Importance of clarity of vision and strategic intentImportance of clarity of vision and strategic intent Choices of media – effectiveness depends on Choices of media – effectiveness depends on
complexity of changecomplexity of change Involvement of members of organisation in Involvement of members of organisation in
strategy development processstrategy development process Two-way process – feedback is importantTwo-way process – feedback is important Emotional aspects important – emotions can Emotional aspects important – emotions can
induce negative or positive responsesinduce negative or positive responses Need to monitor change programmesNeed to monitor change programmes
Slide 10.32
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Effective and Ineffective Communication Effective and Ineffective Communication of Changeof Change
Slide 10.33
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Change tactics (1)Change tactics (1)
TimingTiming• Use crisis as catalyst for changeUse crisis as catalyst for change• Windows of opportunity, e.g. post take-Windows of opportunity, e.g. post take-
over, new CEOover, new CEO• Symbolic signalling of timeframesSymbolic signalling of timeframes• Choose time for promoting change to Choose time for promoting change to
avoid unnecessary fear and nervousnessavoid unnecessary fear and nervousness Job losses and de-layeringJob losses and de-layering
• Tactical choice, e.g. remove blockers of Tactical choice, e.g. remove blockers of change or senior managers to give signalchange or senior managers to give signal
• Avoid creeping job losses – reduce Avoid creeping job losses – reduce insecurityinsecurity
Slide 10.34
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Change tactics (2)Change tactics (2)
Job losses and de-layeringJob losses and de-layering• Demonstrate visible, responsible, caring Demonstrate visible, responsible, caring
approach to those who lose their jobsapproach to those who lose their jobs Visible short-term winsVisible short-term wins
Slide 10.35
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Potential Pitfalls of Change Programmes (1)Potential Pitfalls of Change Programmes (1)
Unintended outcomesUnintended outcomes (Harris & Ogbonna (Harris & Ogbonna 2002)2002)• Ritualisation of change and “initiative Ritualisation of change and “initiative
overload”overload”• Hijacked processes of changeHijacked processes of change• ErosionErosion• ReinventionReinvention• Ivory tower changeIvory tower change• Inattention to symbols of changeInattention to symbols of change• Uncontrolled and uncoordinated effortsUncontrolled and uncoordinated efforts• Behavioural complianceBehavioural compliance
Slide 10.36
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Potential Pitfalls of Change Programmes (2)Potential Pitfalls of Change Programmes (2)
Managerial implicationsManagerial implications• Monitor the changeMonitor the change• Understand the cultureUnderstand the culture• Involve peopleInvolve people• A major challengeA major challenge
Slide 10.37
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Main steps of strategic changeMain steps of strategic change
1. Strategic diagnosis, 1. Strategic diagnosis,
2. Find change agent, 2. Find change agent,
3. Levers for strategy, 3. Levers for strategy,
4. Education, participation and 4. Education, participation and communicationcommunication
Slide 10.38
Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005
Key PointsKey Points
Need to tailor approaches, styles and means Need to tailor approaches, styles and means of change to contextof change to context
Strategic change differs in scope and natureStrategic change differs in scope and nature Diagnosis of organisational contextDiagnosis of organisational context Cultural web and forcefield analysis to Cultural web and forcefield analysis to
identify blockages and leversidentify blockages and levers Different roles and styles for managing Different roles and styles for managing
changechange Levers for strategic change depend on type Levers for strategic change depend on type
and context of changeand context of change