10. Managing Strategic Change

Internal Causes of Change

Change occurs due to internal factors in the organisation's environment, which involve people, processes, and softer factors like motivation.

External Causes of Change

Changes in legislation, the environment, competition or new technology that can have an impact on the success of a small business.

Incremental Change

The way in which an organisation makes changes is through a series of small steps.

Disruptive Change

Occurs because of innovation in industries, change in the company's structure, or transformation in business models.

Factors of Internal Change

Technology, Human Resources, Organisational Structure, Profitability, Objectives and Vision of Owners

Factors of External Change

Competition, Economic climate, Political and legal environment, Technological advances, Major global events

Leadership changes:

A new CEO or manager often brings new strategies and visions, necessitating organisational adjustments.

Economic External Change

Interest rates, inflation, recession, consumer spending power, currency fluctuations.

Technological External Change

New software, automation, emerging technologies, digital disruption.

Political External Change

Government policies, regulations, tax laws, and trade agreements.

Environmental External Change

Climate change, sustainability concerns, resource scarcity.

Incremental Change

A number of small changes take place as a business develops and responds to subtle changes in the external environment

Step Change

Significant and occurs rapidly

Disruptive Change

A form of step change that arises from changes in the external environment.

Benefits of Change

Helps sustain a competitive advantage, Aligns business strategy with changing customer needs & wants, and Take advantage of developing technologies

Lack of Adaptability

Failing to adapt to changing circumstances can lead to outdated practices and products, making it difficult to stay relevant in the market.

Lewin’s Force Field Analysis

Force field analysis provides an overview of the balance between forces driving change in a business and the forces resisting change

Driving Force

The key factor or element that propels a company forward, motivating its decisions, actions, and strategies, essentially acting as the core reason behind its growth and success

Restraining Force

Any factor that actively opposes or hinders change within an organisation, essentially working to maintain the status quo by preventing the implementation of new ideas or initiatives

Self-Interest

Individuals are concerned with the implications for themselves

Flexible Organisation

A flexible organisation is one that is able to adapt and respond relatively quickly to changes in its external environment in order to gain an advantage and sustain its competitive position

Restructuring

Restructuring requires new ways of working and organising responsibilities

Shadow of the Leader

A phenomenon where the organisational culture is the reflection of the founder or senior team

Toxic Culture

A toxic culture in an organisation creates an environment that can damage the emotional, physical or financial wellbeing of employees, customers and those associated with that organisation

Influence of the Founder

The influence of the founder of Ikea, Ingvar Kamprad, is perhaps one of the best examples of how organisational culture can be shaped by the founder of a business.

Business Size and Complexity

A small or start-up business is likely to have a more informal approach to "how things are done", while a larger, more complex business is likely to have a more formal approach.

Successful Culture Change (Netflix)

Netflix shifted from a hierarchical model to one that is agile and innovative, emphasising freedom and responsibility.

Problems with Changing Organisational Culture

The key problem facing management wanting to change organisational culture is that the culture will usually be deeply embedded or ingrained in the organisation.

Strategic Planning

Process for Strategic Planning, Set mission and business objectives, Plan how to achieve the objectives, Implement the plan, Monitor and Evaluate the results

Risk in a business

The possibility of loss or business damage

Different ways businesses deal with risk

Ignore it, Reduce the probability of risk, Share or deflect the risk, Make contingency plans, Treat risk as an opportunity

What is Strategic Drift?

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