Slide 10.1 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Strategic managament Lecture 13 Managing strategic change

Slide 10.2 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Managing Strategic Change - Outline Differences in scope of strategic change Differences in scope of strategic change Effect of organisational context on design of strategic change programmes Effect of organisational context on design of strategic change programmes Force-field analysis Force-field analysis Role of change agents and styles of managing change Role of change agents and styles of managing change Levers for influencing strategic change Levers for influencing strategic change Unintended consequences of change programmes Unintended consequences of change programmes

Slide 10.3 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Managing Strategic Change Tendency towards organisational inertia and resistance to change Tendency towards organisational inertia and resistance to change Top and middle managers (and below) are responsible for strategic change Top and middle managers (and below) are responsible for strategic change Need to link the strategic and the operational aspects of the organisation Need to link the strategic and the operational aspects of the organisation Managing change is context dependent Managing change is context dependent

Slide 10.4 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Key Elements in Managing Strategic Change

Slide 10.5 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Diagnosing the Change Situation Why is strategic change needed? Why is strategic change needed? Basis of strategy Basis of strategy Strategic purpose/strategic intentStrategic purpose/strategic intent Bases of competitive advantageBases of competitive advantage Specific possible directions and methods of strategy development Specific possible directions and methods of strategy development Changes in structures, processes, relationships, resources and activities required Changes in structures, processes, relationships, resources and activities 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 Change

Slide 10.7 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Influence of Context on Strategic Change

Slide 10.8 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Diagnosing context and change problems (1) Cultural Web Cultural 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 for strategic successCan be used to analyse changes needed for strategic success Map current and required culture Map current and required culture

Slide 10.9 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Diagnosing context and change problems (2) Forcefield Analysis Forcefield Analysis Identifies forces for and against changeIdentifies forces for and against change Provides an initial view of change problems that need to be tackledProvides an initial view of change problems that need to be tackled

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Forcefield Analysis

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Styles of managing strategic change

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Styles of Managing Change StyleMeans/ContextBenefitsProblems When effective Education/ Communic -ation BriefingsInternalisationTrust Overcome lack of information Time consuming Unclear Incremental change/long duration/horizo ntal transforma- tional change Collabora- tion/Parti- cipation Involve in developing strategy Ownership/ improved quality Time/Within current paradigm Inter-vention Change agent coordinates/ controls Guided but with involvement Perceived manipulatio n Incremental/ non-crisis transformation Direction Use authority to set direction Clarity and speed No accept- ance/ill conceived Transforma- tional change Coercion/Edict Explicit use of power through edict May succeed in crisis Least success unless crisis Crisis/rapid transform/auto -cratic culture

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Roles in Managing Change (1) Change Agent Change Agent Individual or group that effects strategic change in an organisationIndividual or group that effects strategic change in an organisation Strategic leadership Strategic leadership The process of influencing an organisation in its efforts towards achieving an aim or goalThe process of influencing an organisation in its efforts towards achieving an aim or goal Charismatic leadersCharismatic leaders Instrumental or transactional leadersInstrumental or transactional leaders

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Roles in Managing Change (2) Middle managers Middle managers Facilitators or blockers?Facilitators or blockers? 5 roles in managing strategic change5 roles in managing strategic change Implementation and control Implementation and control Translators of strategy Translators of strategy Reinterpretation and adjustment of strategy Reinterpretation and adjustment of strategy Relevance bridge between top managers and lower managers Relevance bridge between top managers and lower managers Advisors to senior management on blockages and requirements Advisors to senior management on blockages and requirements Outsiders, e.g. new CEO, new management, consultants, key influencers (stakeholders) Outsiders, e.g. new CEO, new management, consultants, key influencers (stakeholders)

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Strategic leadership approaches

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Strategic Leadership Approaches Focus of attention Indicative behaviour Role of other managers Implications for change mgt Strategy Strategy analysis/ formulation Scanning markets/ technology Day-to-day operations Delegated Human assets Developing people Right people Coherent culture Strategy development devolved Recruit/develop people to manage locally Expertise Expertise as source of comp. adv. Improve expertise via systems Immersion in/ management of expertise area Change in line with expertise approach Control Set procedures/ measures Monitor performance for uniformity Ensure uniform perf. vs. measures Change monitored and controlled Change Continual change Communication/ motivation Change agents/open to change Change central to the approach

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Levers for Managing Strategic Change Turnaround Turnaround Managing rapid strategy reconstructionManaging rapid strategy reconstruction Challenging the taken for granted Challenging the taken for granted Changing organisational routines Changing organisational routines Symbolic processes Symbolic processes Power and political processes Power and political processes Communicating and monitoring change Communicating and monitoring change Change tactics Change tactics

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Turnaround strategy (1) Emphasis on speed of change, rapid cost reduction and/or revenue generation Emphasis on speed of change, rapid cost reduction and/or revenue generation Prioritisation of things giving quick and significant improvements Prioritisation of things giving quick and significant improvements Crisis stabilisation Crisis stabilisation Management changes Management changes Gaining stakeholder support Gaining stakeholder support Clarifying the target market Clarifying the target market Re-focusing Re-focusing Financial restructuring Financial restructuring

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Turnaround strategy (2) Prioritisation of critical improvement areas Prioritisation of critical improvement areas Focus on getting the business right, not look for new markets Focus on getting the business right, not look for new markets

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Turnaround: Revenue Generation and Cost Reduction

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Challenging the taken for granted (1) Need to change the paradigm Need to change the paradigm Get people to see the realitiesGet people to see the realities Mechanisms Mechanisms Evidence from strategic analysisEvidence from strategic analysis Analysing what people take for grantedAnalysing what people take for granted Workshop sessions Workshop sessions Bring into open Bring into open Debate and challenge Debate and challenge

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Challenging the taken for granted (2) Mechanisms Mechanisms Scenario planning to overcome bias and cultural assumptionsScenario planning to overcome bias and cultural assumptions Bringing managers face to face with reality (customers)Bringing managers face to face with reality (customers)

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Changing organisational routines (1) Routines are the “way we do things around here” Routines are the “way we do things around here” Can become core rigiditiesCan become core rigidities Difficult to adapt to new strategiesDifficult to adapt to new strategies Mechanisms Mechanisms Identify critical success factors and underlying competencesIdentify critical success factors and underlying competences 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 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Changing organisational routines (2) Mechanisms Mechanisms Education/communication less powerful than involving peopleEducation/communication less powerful than involving people Persistent extending and bending existing ways of doing thingsPersistent extending and bending existing ways of doing things

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Symbolic Processes (1) Symbols are objects, events, acts or people which express more than their intrinsic content Symbols are objects, events, acts or people which express more than their intrinsic content Changing symbols helps reshape beliefs and expectations, as meaning is apparent in day to day experiencesChanging symbols helps reshape beliefs and expectations, as meaning is apparent in day to day experiences Mechanisms Mechanisms Introducing new rituals/abolishing old onesIntroducing new rituals/abolishing old ones Change systems and processesChange systems and processes Change physical work environmentChange physical work environment

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Symbolic Processes (2) Mechanisms Mechanisms Behaviour of change agentsBehaviour of change agents Language – metaphors to galvanise change Language – metaphors to galvanise change Stories Stories Problems Problems Symbolic levers may be misinterpretedSymbolic levers may be misinterpreted

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Organisational rituals and culture change Exhibit 10.8

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Organisational Rituals and Culture Change Types of ritual RoleExamples Rites of passage Promote social roles/ interaction Induction/training programmes Rites of enhancement Recognise effort Motivate others Awards ceremonies Promotions Rites of renewal Reassure about action Focus on issues Appoint consultants Project team Rites of integration Push shared commitment Reassert norms Christmas parties Rites of conflict reduction Reduce conflict/ aggression Negotiate commitment Rites of degradation Acknowledge problems Weaken political roles Fire top execs Demote/pass over Rites of sense- making Share interpretations Rumours, surveys Rites of challenge Throw down the gauntlet New CEO behaviour Rites of counter- challenge Resist new ways Grumble, work to rule

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Political mechanisms in organisational

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Political Mechanisms in Organisations Activities ActivitiesMechanisms Building the power base Overcoming resistance Achieving compliance Resources Control resources Acquire expertise & resources Withdraw resources/ counter- intelligence Give resources Elites Sponsored by/ associated with elite Division of elites Associate with change agent Remove resistant elites. Visible change hero Subsystems Alliance building Team building Foster change momentum/ change agent Part implementation/Di sciples/ ‘Young Turks’ Symbolic Build on legitimation Attack legitimation/Foster confusion/conflict Applause/reward Reassurance Symbolic confirm Key Problems Time required Duality of ideals Threat to elites Too low power base/potentially destructive Converting the body of the org. Slipping back

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Communicating and Monitoring Change Effective communication possibly single most important factor for overcoming resistance Effective communication possibly single most important factor for overcoming resistance Importance of clarity of vision and strategic intent Importance of clarity of vision and strategic intent Choices of media – effectiveness depends on complexity of change Choices of media – effectiveness depends on complexity of change Involvement of members of organisation in strategy development process Involvement of members of organisation in strategy development process Two-way process – feedback is important Two-way process – feedback is important Emotional aspects important – emotions can induce negative or positive responses Emotional aspects important – emotions can induce negative or positive responses Need to monitor change programmes Need to monitor change programmes

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Effective and Ineffective Communication of Change

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Change tactics (1) Timing Timing Use crisis as catalyst for changeUse crisis as catalyst for change Windows of opportunity, e.g. post take- over, new CEOWindows of opportunity, e.g. post take- over, new CEO Symbolic signalling of timeframesSymbolic signalling of timeframes Choose time for promoting change to avoid unnecessary fear and nervousnessChoose time for promoting change to avoid unnecessary fear and nervousness Job losses and de-layering Job losses and de-layering Tactical choice, e.g. remove blockers of change or senior managers to give signalTactical choice, e.g. remove blockers of change or senior managers to give signal Avoid creeping job losses – reduce insecurityAvoid creeping job losses – reduce insecurity

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Change tactics (2) Job losses and de-layering Job losses and de-layering Demonstrate visible, responsible, caring approach to those who lose their jobsDemonstrate visible, responsible, caring approach to those who lose their jobs Visible short-term wins Visible short-term wins

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Potential Pitfalls of Change Programmes (1) Unintended outcomes (Harris & Ogbonna 2002) Unintended outcomes (Harris & Ogbonna 2002) Ritualisation of change and “initiative overload”Ritualisation of change and “initiative 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 Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Potential Pitfalls of Change Programmes (2) Managerial implications Managerial implications Monitor the changeMonitor the change Understand the cultureUnderstand the culture Involve peopleInvolve people A major challengeA major challenge

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Main steps of strategic change 1. Strategic diagnosis, 2. Find change agent, 3. Levers for strategy, 4. Education, participation and communication

Slide Exploring Corporate Strategy, Seventh Edition, © Pearson Education Ltd 2005 Key Points Need to tailor approaches, styles and means of change to context Need to tailor approaches, styles and means of change to context Strategic change differs in scope and nature Strategic change differs in scope and nature Diagnosis of organisational context Diagnosis of organisational context Cultural web and forcefield analysis to identify blockages and levers Cultural web and forcefield analysis to identify blockages and levers Different roles and styles for managing change Different roles and styles for managing change Levers for strategic change depend on type and context of change Levers for strategic change depend on type and context of change