slide 10.1 exploring corporate strategy, seventh edition, © pearson education ltd 2005 strategic...

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Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005

Strategic managament Strategic managament

Lecture 13 Lecture 13

Managing strategic change Managing strategic change

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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

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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

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Key Elements in Managing Strategic ChangeKey Elements in Managing Strategic Change

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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

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Types of ChangeTypes of Change

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Influence of Context on Strategic ChangeInfluence of Context on Strategic Change

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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

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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

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Forcefield AnalysisForcefield Analysis

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Styles of managing strategic change

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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

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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

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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)

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Strategic leadership approaches

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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

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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

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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

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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

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Turnaround: Revenue Generation and Cost Turnaround: Revenue Generation and Cost ReductionReduction

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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

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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)

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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

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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

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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

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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

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Organisational rituals and culture change

Exhibit 10.8

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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

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Political mechanisms in organisational

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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

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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

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Effective and Ineffective Communication Effective and Ineffective Communication of Changeof Change

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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

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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

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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

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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

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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

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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

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