business 10 - managing strategic change

the value of change to a business

• helps firms stay competitive

• adapting to market change - new tastes, preferences, tech and laws

• continuous improvement

• driving innovation and growth

• managing risk

• engaging employees

incremental change def, and why it is used

a series of small, gradual improvements to process, rather tahn a single large overhaul

resons for its use:

1. lower risk - easier to reverse choices

2. staff acceptance - get time to adapt

3. cost-effective - small tweaks use exisitng resources

disruptive change - def and why it is used

a radical shift that transforms an industry / market by intorducing new model, tech, or ways of operating

why is it used:

1. first mover advantage = being the first in a major onnovation can secure market leadership

2. rapid growth potential -

3. outpacing rivals

   1. long-term resilience

internal causes of change

leadership change - often have different ideas and goals for the business

tech upgrade

poor performance - overhauling or closing parts of the business that keep loosing money to protect profits

employee-drive improvement

external causes of change

tech advances e.g. smartphones

competition - actions from rivals to stay competitive

economy - recessions and booms

legal changes - new laws require businesses to alter processes

social / cultural trends (consumer values and lifestyles)

enviornmantal / ethical concerns

Lewin’s force field analysis - image and summary

involves managers identifying the driving and restraining forces that surround a strategic change decision, helping decision making process

Lewin’s force field analysis - driving forces

factors that justify the need for change:

internal:

1. outdated machinery

2. declining team morale

3. need to increase profits

external:

1. violate market

2. disruptive tech change

3. demographic trends

Lewin’s force field analysis - restraining forces

factors that could prevent or limit change

internal:

1. fear of the unknown

2. the existing organisational structure

3. ‘that’s not how things are done here’ attitudes

external:

1. existing commitments

2. government legislation

3. obligations towards customers

Lewin’s force field analysis - strenghts and weaknesses of usign it

strengths:

• 1, simple and visual to show stakeholders

• comprehensive

• identifies and scales critical factors

weaknesses:

1. subjective - relies of judgements, leading to bias

2. lacks quantitative data

3. snapshot ideas

4. doesn’t provide solutions

why is flexibility valuable

1. rapid adaptation to change when needed

2. efficient use of resources

3. boosts innovation

4. stronger financial and staff resilience

aspects of restructing + definition

when a business makes significant change to its organisation, operation, or finance, intending to improve efficiency, cut cost or adapt to new circumstances

aspects:

1. redrawing organisation structures

2. outsourcing / insourcing functions

3. financial re-organisaiton workforce changes e.g. layoffs, redeployment

restructuring - adv and dis

adv:

1. improved efficiency

2. cost reduction

3. greater strategic focus

dis:

1. staff uncertainty

2. up-fron expenses

3. talent loss risk

delayering: def, adv, dis

the process of removing 1 or more teirs of management from the hierarchy

adv:

1. faster decision making

2. clearer communication

3. lower costs - overheads, managerial salaries

dis:

1. manager overload - too large spans of control

2. loss of experience

3. reduced morale - fear of redundancies

4 ways to develop / have a flexible workforce

1. multi-skilling - training workers to fulfill multiple job roles

2. outsourcing

3. part-time / temporary working - shows up when business needs them

4. flexible hours / home working -scheduling working hours to fit employees needs or locaiton

multi-skilling: adv, dis

adv:

1. improve outcomes in certain areas e.g. healthcare industries

2. utilise workforce more foten, improving their productivity

dis:

1. requires a high level of investment into training / development

2. may not be appropriate for low level jobs

part-time / temporary working: adv, dis

adv:

1. flexible working arrangements allows staff to be working at their most productive

2. improves staff loyalty and reputation, boosting morale

dis:

1. can create difficulties in communication and collaboration

2. monitoring is more difficult

outsourcing: adv, dis

adv:

1. . allow businesses to access specialist skills

2. reduce labour costs

dis:

1. loss of control over quality and delivery

2. ethical concerns

homeworking: adv and dis

1. commuting cost, stress and flexibility increased (employee)

2. smaller premises needed, workers more productive in isolation, high quality workers can be accessed anywhere (business)

dis:

1. staff can feel isolated, household costs increase, healthy work-home division can be lost (employee)

2. cost of equipping tech to employees, less opportunity for collaboration, harder to monitor (business)

mechanistic structures, def, adv, dis

rigid, hierarchical design where decision making is centralised, with everyone it every place having the same role as another location

adv:

1. clear authority

2. consistent quality

dis:

1. slow to change

2. low to change and innovation

organic structures: def, adv, dis

a flexible and adaptable structure, with decentralised decision-making with teams forming around tasks

adv:

1. quick adaptations

2. empowered employees

dis:

1. potential chaos

2. role uncertainty

Kotter & Schlesinger's four reasons for resistance to change

self interest - people worry abotu their job rather than the business overall

fear ad misunderstanding - may not know why it is happening

different assessment - not everyone agrees on what the problem is or how to fix it

prefer things how they are - prefer routine over new ideas

ways of overcoming resistance to change

1. education

2. participation

3. facilitation

4. negotiation

5. maniulation

6. explicity coercion

Charlies Handy organisational culture- summary

presents the 4 different cultures which are needed for different businesses and their situations:

1. power culture

2. task culture

3. role culture

4. person culture

Charlies Handy organisational culture- task culture

decisions are made up of employees with specific skills.

1. power lies with those with task-related skills e.g. finance specialist focuses in funding decisions

2. teams are formed and dissolved as projects start and finish

Adv:

1. encourages teamwork

2. adaptable strategy, promoting innovation and flexibility

dis:

1. can lack clear leadership

   1. teamwork can slow down processes due to negotiiation

Charlies Handy organisational culture - role culture

people have clearly delegated authorities on different levels, wit employees expected to understand their place in the heirchy, used on large scale public sector e.g. the NHS

adv:

1. clear structure helps staff understand positions

2. predictable environments leads to stability

dis:

1. can be inflexible, slowing decision making

2. stifles creativity and innovation

3. not responsive to market changes

Charlies Handy organisational culture - power culture

control radiates from the centre few individuals, with few rules and little bureaucracy.

adv:

1. faster decision making

2. clear and direct leadership roles

dis:

1. high staff turnover due to limited involvement and motivation

2. innovation suffer as employees fear questioning leadership

Charlies Handy organisational culture- person culture

individuals with extensive skills come together, and they themselves determine their own decision making, working autonomously

adv:

1. encourages creativity and individuality

2. good at attracting talented individuals who value freedom

dis:

1. lack direction or shared goals

2. difficult to manage / control

influence on the organisational culture used

1. leadership - values of attitudes of botht he manager and how they think of employees

2. performance - is there a need for change

3. history - is it how things are done there

4. society - impacts on people or sustainability

aspects which often change the culture in a business

1. business/ market performance - if not achieving goals, culture may change

2. new leaders - new values and ideas

3. mergers / takeovers - have to combine organisational cultures to unite employees

4. societal / ethical pressures

problems causes by changing the organisational culture

• resistance from employees

• high cost and disruption

• time-consuming

• incompatibility of cultures

• loss of key staff

key roles leaders play in strategic implementation (turning strategy into action)

1. vision setting - articulate a clear vision aligning with strategy

2. decision making process

3. changing managements

4. empowering others - delegate responsibility

5. role model - embody values and behaviours

key elements of strategic communication

1. clarity

2. consistency

3. creating a timeline

4. two-way communication

5. channel selection e.g. Gmail, talks

examples of internal communication tools:

1. team meetings

2. internal emails

3. portals . intranet

4. workshops

5. 1-1 reviews

importance of organisational structure in strategic implementation

1. clear roles and responsibilities

2. efficient communication / decision making

3. improved coordination and control

elements of a network diagram (critical path)

node - the circle which represents the activity, left halft is activity number, top right = EST, bottom right = LFT

activity - shown as the line between nodes, with the letter above showing what activity it is

Duration - shown below the line

calculating EST (earliest start time)

• top right

• trying to make the largest possible number

• shows the quickest time a taks can be finished in

calculating LFT (latest finish time)

• Bottom right

• subtracting the duration of each task

identifying and calculating float time

• where there is a difference between EST and LFT

• EST - LFT

what is strategic planning?

1. setting the mission, vision and objectives of a business

2. analysing internal and external environment (SWOT)

3. making choices around competitive strategy

4. creating a co-ordinated action plan

benefits of strategic planning:

1. provides clear direction

2. improves coordination

3. supports decision making / proactive thinking

4. builds stakeholder / investor confidence

difficulties of strategic decision making

2. internal and external obstacles

3. poor planning / execution

4. lack of flexibility / resistance to change

Planned strategy

the deliberate approach a business sets out in advance, involcing clear objectives, plans and actions intended to achieve goals

emergent strategy

and approach that develops overtime as a business adapts to changing circumstances

it isn’t deliberately planned from beginning but arises due to response to unexpected circumstances e.g. opportunities and challenges

how plans change from planned to emergent:

1. external environment - competition, tech change, shifts in customer behaviour

2. internal - leadership change, resource shortage

3. opportunities and innovation - shift away due to expanded opportunities

strategic drift - definition and stages

overtime, the external environment around a business and their strategy changes, and if the business fails to adapt effectively, it causes strategic drift

1. incremental - small changes barely notices

2. strategic drift - straying further from change required

3. flux - trying to take actions but often no decisive improvement

   1. transformational / demise - the business either makes steep change or strays to far away and dies

strategic drift - reasons for strategic drift

1. changing external and / or internal environment

2. competitive nature of markets

3. denying issues

4. tech advancements

5. globalisation

strategic drift - consequences

1. loss of competitive advantage

2. declining sales / market share

3. reduced profitability

4. business failure if drift is unchecked

strategic performance - definition

the process of measuring how well a strategy is doing to its intended outcome using both quantitative data and qualitative insights

strategic performance - why evaluate?

1. measure succes

2. inform future choices

3. identify strategy strengths and weaknesses

4. improve resource allocation

strategic performance - ways of measuring

1. financial data

2. market performance

3. benchmarking

4. stakeholder feedback

contingency planning

trying to predict risky or unwanted events, the developing a process of how it will deal with the event

contingency planning - time, adv, dis

adv:

1. helps respond immediately

2. resources identified and available

dis;

time-consuming

plans need to be revisited regularly

contingency planning - cost, adv, dis

adv:

1. reduce costs

2. emergency equipment brought in advance

dis:

1. difficult to budget unknown crisis

2. wasted if not needed

contingency planning - safety, adv, dis

adv:

1. keep stakeholders staff

2. legal safety measures met e.g. fire regulations

dis:

1. Bureaucratic and difficult to implement swiftly

contingency planning risk, adv, dis

adv:

1. most likely threats covered i detail

2. reduces legal risk

dis:

1. human reactions cannot be mitigated e.g. panic

2. requires up to date and complete information

crisis situations - definition and examples

the immediate handling of a disruptive and unexpected situation, which would cause significant disruption and often into survival

e.g.:

1. loss of key staff

2. IT failure / data loss

3. natural disasters

4. war / terrorism

5. fire

6. theft

factors effecting crisis management

speed - rapid response can contain or reduce damage

transparency - keeping customers informed and telling the truth to protect reputation

control - ensuring leaders have authority and resources

communication - reassure stakeholders and reduce recovery times