Business 10
Managing strategic change
Change helps firms stay competitive, improve performance, respond to shifting market conditions
Key benefits:
– Adapting to market change
– Continuous improvement
– Driving innovation and growth
– Managing risks
– Engaging employees
Incremental change - series of small, gradual improvements to processes, products or structure
rather than a single large overhaul (used by Toyota)
-> lower risk
-> staff acceptance
-> cost effective
-> cultivate improvement
Disruptive change - radical shift than transforms an industry or market by introducing a new
business model, technology or way of operating (eg Netflix shifted from dvd rentals to online)
-> first mover advantage
-> rapid growth potential
-> outpacing rivals
-> long term resilience
Causes of change
Internal
– Leadership change
– Technology upgrade
– Poor performance
– Employee driven improvement
External
– Technological advances
– Competitive pressure
– Economic fluctuations
– Legal and regulatory changes
– Social and cultural trends
– Environmental and ethical concerns
Lewins Force Field Analysis
– Involves managers identifying the driving and restraining forces that surround a strategic
, –
change decision
. Driving forces
– factors that could justify strategic change is needed
– Internal: outdated machinery, declining team morale, need to increase profit
– External: volatile market, disruptive tech, changing demands
. Restraining forces
– factors that could prevent or limit change
– Internal: fear of unknown, organisational structure
– External: existing commitments, legislations
Driving forces and restraining forces are weighted from 1(least important) to 5 in terms of their
relative importance
– Four driving forces justify a decision for change
– Weightings are 5, 4, 3, 2
– Total value is 14
– Four restraint forces present change
– Weightings are 4, 3, 2, 1
– Total value is 10
, – Relative weight of driving forces is greater.
– Good chance decision will be successful
+ simple and visual
+ easily understood
+ comprehensive - considers both forces
+ identifies most critical factors
+ assists decision making
+ helps communication
— subjective - lead to bias
— lacks quantitative data
— snapshot - might change over time
— doesn’t provide solutions
— limited in complex situations
Flexible organisation - can quickly change its structure, processes or resources in response to new
challenges
Benefits
– Rapid adaptation to change
– Efficient use of resources
– Boosts innovation
– Stronger resilience
Restructuring - when business makes significant changes to its organisation, operations or finance
to improve efficiency, customer costs or adapt.
May involve:
– Redrawing the organisational structure
– Divesting or combining business activities
– Outsourcing or insourcing functions
– Financial reorganisation
– Workforce changes
+ improved efficiency
+ cost reduction
+ sharper strategic focus
— staff uncertainty
— up front expenses
— talent loss risk
Delayering - removing one or more tiers of management from an organisations hierarchy to create a
flatter structure
Managing strategic change
Change helps firms stay competitive, improve performance, respond to shifting market conditions
Key benefits:
– Adapting to market change
– Continuous improvement
– Driving innovation and growth
– Managing risks
– Engaging employees
Incremental change - series of small, gradual improvements to processes, products or structure
rather than a single large overhaul (used by Toyota)
-> lower risk
-> staff acceptance
-> cost effective
-> cultivate improvement
Disruptive change - radical shift than transforms an industry or market by introducing a new
business model, technology or way of operating (eg Netflix shifted from dvd rentals to online)
-> first mover advantage
-> rapid growth potential
-> outpacing rivals
-> long term resilience
Causes of change
Internal
– Leadership change
– Technology upgrade
– Poor performance
– Employee driven improvement
External
– Technological advances
– Competitive pressure
– Economic fluctuations
– Legal and regulatory changes
– Social and cultural trends
– Environmental and ethical concerns
Lewins Force Field Analysis
– Involves managers identifying the driving and restraining forces that surround a strategic
, –
change decision
. Driving forces
– factors that could justify strategic change is needed
– Internal: outdated machinery, declining team morale, need to increase profit
– External: volatile market, disruptive tech, changing demands
. Restraining forces
– factors that could prevent or limit change
– Internal: fear of unknown, organisational structure
– External: existing commitments, legislations
Driving forces and restraining forces are weighted from 1(least important) to 5 in terms of their
relative importance
– Four driving forces justify a decision for change
– Weightings are 5, 4, 3, 2
– Total value is 14
– Four restraint forces present change
– Weightings are 4, 3, 2, 1
– Total value is 10
, – Relative weight of driving forces is greater.
– Good chance decision will be successful
+ simple and visual
+ easily understood
+ comprehensive - considers both forces
+ identifies most critical factors
+ assists decision making
+ helps communication
— subjective - lead to bias
— lacks quantitative data
— snapshot - might change over time
— doesn’t provide solutions
— limited in complex situations
Flexible organisation - can quickly change its structure, processes or resources in response to new
challenges
Benefits
– Rapid adaptation to change
– Efficient use of resources
– Boosts innovation
– Stronger resilience
Restructuring - when business makes significant changes to its organisation, operations or finance
to improve efficiency, customer costs or adapt.
May involve:
– Redrawing the organisational structure
– Divesting or combining business activities
– Outsourcing or insourcing functions
– Financial reorganisation
– Workforce changes
+ improved efficiency
+ cost reduction
+ sharper strategic focus
— staff uncertainty
— up front expenses
— talent loss risk
Delayering - removing one or more tiers of management from an organisations hierarchy to create a
flatter structure
