Chapter 9 - Corporate Planning and Implementation
Class Objective: To understand the stages of change management
The relationship between Corporate Culture and Strategic Implementation is a close one:
Strategic Implementation is heavily dependable on Corporate Culture;
The fact that Corporate Culture is responsible for the widespread of values and behavior throughout the organization makes it indispensable for an effective Strategic Implementation.
'Organizational Culture eats Strategy for breakfast, lunch, and dinner.'
Strategic Change is the process businesses go through to adapt in response to a change - which can be caused by internal pressures or external forces. Either way, managers need to be able to control and guide change positively.
How to implement, manage, and control a change, therefore, will heavily impact on the Strategy. There are 6 steps in doing so:
Understanding the meaning of change;
Recognize the major causes of change;
Understand the stages of the change process;
Lead change, not just manage it;
Project champions;
Project groups or teams.
1. Understand the meaning of change:
Change is the continuous adoption of business strategies and structures to respond internal and external pressures;
Change happens spontaneously or not!
Whether change will successful is what Change Management comes in for: take control and ensure it's a positive process.
'Change is not an exception, it is a rule in today's business environment.'
Change Management makes it possible for businesses to cope with dramatic one-off changes or more gradual and evolutionary change:
- Incremental changes are slow and over-time. They can be anticipated (e.g. switch to electric cars) or unexpected (e.g. sudden oil-price increases);
- Dramatic changes are more likely unexpected forcing businesses to go through the process of 'business process re-engineering' where rethinking and redesigning processes are necessary for improvement in performance and adaption (e.g. war in Ukraine).
When analyzing the impacts of change on a business consider whether it was a dramatic, incremental, expected, or unexpected change.
2. Recognize the major causes of change:
Changes can be driven by different pressures - whether it's a technological development, a macro-economical change, a legal change or even competitors' actions in the market - business will have to react.
Drivers of Change:
Technological Advancements leading to new products and processes:
- Fingerprint technology into phones;
- CAD, CAM, IT systems, AI;
- Requires staff retraining, investment in equipment, change of product portfolio, and potentially flexible organizational structure (to quickly respond to changes).
Macro-Economic Changes such as fiscal policies, interest rates, business cycle fluctuations:
- Change in income levels and consequentially in demand patterns;
- Boom or recession conditions: invest in extra capacity or rationalization decision;
- Flexibility of staff and capital to cope with demand switches;
- Possible need for staff cutback - or the opposite.
Legal Changes:
- Changes on what can be sold (e.g. legal drinking age, driving age, or ban in certain products/materials);
- Legislation on promotion;
- Legal requirements for operations (e.g. health requirements for restaurants; licenses);
- Require changes on processes, products, operations, marketing.
Competitors' Actions requiring response:
- Launch of new and innovative products;
- Development of an specific competitive advantage;
- Lower prices due to lower costs ability;
- Higher promotional budget;
- Change towards encouraging innovation;
- Need for increased efficiency (capital and labor);
- Need for investment/resources to take on competitive challenges.
Summary of the main causes of change:
3. Understand the several stages of the change process - the essential points to be covered when attempting to introduce significant changes:
Where are we now and why is change necessary?
Recognition of why the business needs to change from its current situation to a new, desirable state
Communicate a new vision and new objectives
Allocate enough resources for the change to be successful
Thoroughly communicate the change to staff
Create an involvement environment among staff
Introduce initial successful changes
Focus on training
'Sell' the benefits of the change to staff and other stakeholders
Provide support for individuals who need support throughout the change process
4. Lead changes, not just manage it:
Managing change is about allocating resources towards change, establishing objectives, taking day-to-day actions to ensure strategic implementation - all of which are important. Leading change, however, is different:
It's about ensuring acceptance of change as part of the Corporate Culture. It is necessary to have dynamic leaders to lead change:
- Shake out companies from corporate inertia and reduce resistance making it part of the organizational culture;
- Motivation at all levels to encourage positive behavior towards change;
- Senior management support to communicate acceptance throughout the organization.
5. Project Champions:
A person assigned to support and drive a project forward, who explains the benefits of change and assists and supports the team putting change into practice.
A Project Champion isn't necessarily invested in the day-to-day activities of the project:
- They are there to ensure success by driving engagement;
- They are responsible for overseeing the change and ensure enough resources are allocated;
- They are usually hand-picked by senior managers and have influence within the organization (they might be formal or informal leaders).
6. Project Groups or Teams:
Groups within the organization to address a problem that requires input from different specialists.
Such groups are there to discuss and provide inputs to Project Champions so that he/she can act with more authority and more more informed decisions regarding the project/change proposed.
Project Groups are formed by experts in the specific field of problem making it more likely for better solutions to be created in difficult times of change.
We all understand now that promoting and encouraging positive behavior towards change is necessary. How is this done?
Establish a sense of urgency;
Develop knowledgeable/effective project team to guide change;
Have a vision and a strategy for the change to be implemented upon;
Communicate the new vision;
Empower people to take action;
Generate short-term gains from the change to benefit many people;
Such gains should be acted upon to generate even more positive changes;
Make sure the Corporate Culture supports the change (a Culture of Change).
There are a number of reasons why resistance to change comes to happen:
Fear of the unknown creates anxiety for people within the organization who are unsure with the outcomes of the change in question (e.g. jobs);
Fear of failure is another limiting factor: some people might understand the change but might be fearful of not having the knowledge/skills to make it succeed;
Fear of losing something of value: change sometimes will make some workers lose status, job security, and even more. Such consequences will obviously create resistance;
Disbelief on the need for change: the belief that the 'old way will eventually workout';
Lack of trust due to previous experiences between workers and managers;
Inertia as the status quo is an easier way out and changes often requires effort.
The degree of resistance varies from business to business depending on past experiences, amount of communication passed through, amount of support and training as well as the amount of bottom-up participation.
When discussing the possible resistance to changes proposed by management try to thing of the leadership-style and/or Corporate Culture used to implement the change. These highly influence the degree of resistance present.
Contingency Planning and Crisis Management:
A.k.a:
Contingency Planning: a plan for preparing an organization's resources for unlikely events;
Crisis Management: the process of dealing with a sudden emergency event.
Unplanned events can bring organizations many disruptions.
Those events can be crisis such as fires, floods, damage to stocks, IT system failure, illness of key staff, accidents.
The degree of damage can be wide: from loss of key customers to going out of business altogether.
Contingency Planning aims to minimize such negative consequences of unplanned events.
Main Steps on Contingency Planning:
1. Identify the potential disaster that could affect the business: such events may be different from business to business (e.g. oil company may have oil tankers sinking, explosions at refineries, leakage);
2. Assess the likelihood of those events occurring: look at the chances of happening as well as the degree of impact of the different events. Disasters that are less likely to happen may have the most negative impact - therefore a balance on the preparation is required.
3. Minimize the potential impact of crisis: minimizing damage to the company's physical assets, people, and reputation:
- Training and practice drills;
- Effective Public Relations Department.
4. Plan for continued operations of the business: the sooner the business can begin trading again, the less the impact is likely to be.
Note: Contingency planning does not prevent crisis to happen. It could reduce the chances of them happening as well as decreases the negative impacts.
Benefits | Limitations |
Reassures all stakeholders that the business is committed to safety; | Planning and trainings can be costly and they might never be put into practice; |
Minimizes negative impacts on customers, suppliers, society, and environment; | Needs to be constantly updated as different types of disasters may arise; |
P.R. efforts are more likely to be successful if the company knows what to say, what steps is going to be taking; | In the case of high labor turnover training costs may be significant; |
| Trying to avoid disasters is still better than planning for when they happen. |
To-Do-List:
Term 1, Unit 1 - End-of-Unit Questions - (p. 158), African Publishing Company (APC)
Chapter 9 - Corporate Planning and Implementation
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