3.10 Strategic change FINAL

what is step change

significant and rapid change which happens in one act

what is incremental change

change involving many small changes as a business develops/responds to subtle changes in the external environment

what usually drives step change

strategic drift

what can step change often be met with - how can this be reduced

resistance which can be reduced using coercion

is incremental change often met with resistance

no

what is disruptive change

a form of step change caused by changes in the external environments

what does disruptive change impact

the market as a whole - challenges the business model (eg how products/services are sold)

what is the main driver of disruptive change - give examples

rapid improvements in technology
eg they provide new ways to deliver goods/services whilst reducing barriers to market

eg Netflix, Ocado, Asos, Deliveroo

what do internal causes of change arise from

factors within the business’ control (eg the decision taken by business management)that may influence its strategy, operations, or culture.

what do external causes of change arise from

factors outside of the business’ control

examples of internal change

new leadership

adjusting organisational structure

changes in objectives/strategic direction

examples of causes of external changes

political/legal changes

economy changes

changes in society - eg lifestyle

growth of tech

what are the benefits of businesses embracing change

competitive advantage

advancements in tech can be taken advantage of

stakeholders gain from improved productivity

what is a flexible organisation

one that’s able to adapt and respond relatively quickly to changes in its external environment in order to gain competitive advantage

give examples of flexible organisations

restructuring

delayering

flexible employment contracts

organic v mechanistic

knowledge and info management

what are the benefits of being a flexible organisation

more likely to be efficient/productive

capability to meet customer wants/needs

improved decision making

what does restructuring envolve

changing the organisational structure (type of structure and layers)

decisions about activities undertaken by the business and that are outsourced to external suppliers

whats delayering

removing a layer of management from the hierarchy

what does delayering aim to reduce

the height of a tall organisational structure - reducing communication time and reducing costs

what are the benefits of delayering

reduced communication time
reduced labour costs
faster decision making

negatives of delayering

significant one off cost making managers redundant

increased workloads for remaining managers

what does flexible employment involve - give examples

a variety of options offered to employees in terms of working time, location and patterns of working

• part time

• zero hours

• job sharing

benefits of flexible contracts

saved costs

helps reduce staff turnover

makes it easier for employers to meet legislation

what is an organic structure like

informal

flexible

favours verbal communication

finds changes easier to handle

what is a mechanistic structure like

more formal

often uses centralised decision making and autocratic management

formal communication methods

which 2 theorists suggested there are 4 main reasons for change resistance

Kotter and Schlesinger

what did Kotter and Schlesigner suggest are the 4 main reasons for resistance to change

self interest

different assessment of the situation

low tolerance for change and inertia (lack of change)

misinformation and misunderstanding

what does self interest as a form or resistance to change arise from

a perceived threat to jobs security, status and financial position

what do those feeling self interest resistance to change often do

put their own interests ahead of the organisations especially if they aren’t particularly loyal

what does misinformation and misunderstanding as a form or resistance to change arise from

people not understanding why change is needed possibly as they’re misinformed/given a lack of info about the real strategic position of the business

• some may think things are better then they are

what does different assessment of the situation as a form or resistance to change arise from

a disagreement about the need for change/what the change needs to be

different from self interest as resistance here is based on what they feel is best for the business

what does low tolerance/inertia as a form or resistance to change arise from

some people prefer things to stay the way they are

they need security, predictability and stability in their work

what are the six ways Kotter and Schelsinger suggest a business can overcome resistance to change

education/communication

participation/involvement

facilitation/supprot

manipulation/co-option

negotiation/bargaining

explicit/implicit coercion

how can education and communciation be used to overcome resistance to change

needs to be delivered consistently and long term for best impact

people will be able to see the logic behind he change

misconceptions/misinformation/inaccuracies can be addressed

how can participation and involvement be used to overcome resistance to change

people will be brought on board

participation often leads to commitment, not just compliance

Delays and obstacles with change should be avoided

how can manipulation and co-option be used to overcome resistance to change

by bringing specific individuals into manager roles a part of the change management they may be forced to go along with the change instead of resisting it

manipulating people also means only selective use of information is shared which encourages people to behave in a particular way

how can negotiation and bargaining be used to overcome resistance to change

people who resist the change are incentivised to stay or leave

it might involve offering better financial rewards for those who accept the requirements of the change programme

commonly used when a business needs to restructure the organisation

what is explicit coercion - resisting change

people being told exactly what the implications of resisting change will be

what is implicit coercion - resisting change

suggesting the likely negative consequences for the business of failing to change, without making explicit threats

what is the main negative of cercion

it almost inevitably damages trust between people and can lead to damaged morale

what does lewins force field analysis provide

an overview of the balance between forces driving change in a business and the forces resisting changeIt helps identify and evaluate these forces to inform strategic decision-making.

what did Lewin argue

that successful businesses tend to be constantly adapting to their environment and changing, rather than being inflexible

what must be the case for change to occur

the driving force of change must exceed the restraining force

Give examples of internal forces driving change

Need for higher profits

Poor efficiency

Lack of innovation

Need to change culture

Change of leadership

Give examples of external forces driving change

Changes in the market

Competition

Legislation/taxes

Political environment

Ethics & social values

Technological change

what is business culture

the set of shared values, beliefs and behaviours that define how work is done and how people behave within a business

what are Handy’s four classes of culture

power

role

task

person

what is power culture

power is held by just a few individuals in the center whose influence spreads throughout the organisation

there are few rules and regulations

a strong culture but can quickly turn toxic (eg decisions go unchallenged)

what is role culture

a culture where people have very clear roles and responsibilities within a defined hierarchy

Power derives from a persons position

Typically part of a tall organisational structure with a long chain of command

what does it mean if a business is bureaucratic

its formal, rule-based, and hierarchical

decisions often follow strict procedures and go through many levels of approvalstructures that prioritize rules and regulations over individual discretion.

what is task culture

teams are formed to solve particular problems

any power will derive from expertise as long as it requires it

There is no single power source

the task is the important thing so power within the team will often shift depending on the mix of the team members and the status of the problem or project

what is person culture

when people believe themselves to be superior to the business (their expertise is what brings in clients and revenue so they see themselves as the core of the business)

Everyone has similar training, background & expertise

It’s common in firms of professionals eg accountants, lawyers

give examples of sources of culture

rules/regulations

organisational structure

management

decision making

recruitment

give examples of factors which may influence the culture of an organisation

• Influence of the founder

• Size & development stage of the business

• Leadership & management style

• Organisational structure/policies & practices

• their reward structures

• The industry it operates in

• Working environment & nature of tasks eg office/remote working/flexible working

• External environment

• Attitude of organisation to risk-taking & innovation

give examples of signs that organisational culture may need changing

Internal fighting

management criticism

High levels staff turnover

Increased absenteeism

Increased bureaucracy

Innovation’s no longer valued

declining customer service

what about business performance would suggest there needs to be a culture change

• Declining profits and sales

• Inadequate returns on investment

• Low quality or poor customer service

what is a planned strategy

an intended formal strategy influenced by corp objectives and supported by traditional planning tools (eg SWOT)

what is a emergent strategy

a strategy which responds to events as they arise often involving challenges but not restricted by formal planning tools and methods

what is strategic drift

when the strategy of a business is no longer relevant to the external environment facing it

give examples of causes of strategic drift

when a business doesn’t adapt to a change in external environment

What worked before doesn’t work now

Complacency has set in – often built on previous success

senior management deny there is a problem

give examples of how a business could prevent strategic drift

Strong leadership

Marketing information

Measuring performance against targets

Assessing their culture

Bench marking

what are the steps to strategic planning

Set corporate objectives

Determine what should be done to accomplish them

Implement the plan

Monitor and evaluate the results

what is a strategic plan

a plan which sets out the overall direction for the business in broad scope

what is a business plan

a plan which sets out the actions that a business will take to to achieve corporate objectives

what is an operational plan

a plan which details how each objective is to be achieved and specifies what senior management expects from specific departments

what are the benenfits of effective strategic planning

provides clarity on directions

ensures the efficient use of business resources

Provides a way of measuring progress

Support effective decision-making

Co-ordinate activities

Allocate responsibility

Motivate & guide people

what are key factors of a business plan

budgeting and variance analysis

regular performance reviews

monitoring external environment

financial analysis

bench marking

what is contingency planning

planning for unforeseen events

give examples of the different ways businesses can deal with risks

ignore it

reduce the probability of it occurring

share or deflect it (insurance)

make a contingency plan for it

treat risks as an opportunity (eg it may also effect competitors)accept it and manage consequences

what is done during contingency planning

the risk is identified

an understanding of the potential effects of the risk is taken

a coping plan is devised

the plan is put in place to deal with it

evaluate the need for contingency planning

risks vary in significance and likelihood

its not required for every event

however risks of significance cant be ignored