Managing Change by Managing Risk - Essay Example

? Managing change by managing risk Executive summary The proponent integrates the whole idea about managing change by managing risk through the discussion of the essential concepts about change, the necessity for change, the risks associated with change, and even successful risks management towards a victorious change. It is found that change is a risky option of an organization, but in order for it to succeed; a manger or a leader must learn to understand some remarkable issues associated with change. One important issue that needs to be considered is about understanding the probable risks linked with change. The essay starts with the definition of change and ends with some recommendations on how to ensure successful change without risks. Keywords: change, risks, organisations, individuals, manage Table of Contents Page Executive summary 2 Introduction 4 What is change? 6 Why change is necessary? 8 Why risks are associated with change? 9 How to ensure successful change without risks? 10 Conclusion 11 References 14 Introduction In the advancement of almost everything today, change has become the fundamental issue in order to integrate better understanding on how situations have been created and on how to respond to them. In addition, how to cope with change in order to optimise productivity is another major consideration not just among individuals hooked on business, but every organisation trying to make sure of a continuing operation, competitive advantage and a remarkable market share through strategies for adapting, transforming and succeeding in the new business reality (Schoemer, 2009). Nokia for instance decides to jump off a burning platform right before it is too late for them to explore areas of possibilities where everybody seems to be moving around and embracing the need for change. Nokia has finally decided to initiate changes in its sales and marketing activities, which include the possibility of interacting with potential customers with its new Windows phones (Nokia Research Center, 2012, Reisinger, 2012). Today, almost everything around is changing and in the business environment this needs remarkable considerations. Let us cite the case of communication and technology advancement and the influence of the media on the business arena that has just headed to an upward spiral. As observed, it would now be much easier among companies to promote latest developed product offerings because of the increasing users of fast-speed internet connections having accessibility from almost everywhere, an event of the human history that could be ascribed to advanced mobile gadgets that are able to surf the World Wide Web from roughly anywhere. Thus, it is clear that the information technology and communication system have altogether risen to a new level of applications. What is most important about these newly formed applications is the thought that individuals and even organisations are learning to rely on them on a daily basis. For instance, bank transactions are nowadays integrated with the fast-speed internet connections in order to serve more than the desired number of customers from across the world at a fast pace, which must be a move way much beyond compared from the past. With the advancement of technology that is integrated with information and communication system, organisations are finding the comfort of using these advancements for their advantage such as increased profitability. In fact, advancement strategies are proven to secure future profitability (Von Krogh et al., 2000, p.72). People from the past were bombarded with ideas about globalisation, but the actual face of it today is tantamount to creating one big market over the internet. This is a remarkable change in the century that everyone particularly those who are in the business realm have observed and considered both risky and an opportunity at the same time. These changes have indeed triggered corresponding opportunities to embrace change, but there are also some challenges and even risks involved. The business is faced with various concerns including some questions that are starting points to where certain change should lead an organisation. How to manage the human resource in the digital age? How to ensure effective marketing system in the advent of e-marketing? How to make sure of competitive advantage in a constantly changing business environment influenced by major innovations through integrating technology in the business? These are some of the questions that need careful considerations in order to make sure of full understanding about change. Not being able to address all of these will primarily result to the dominance of risks associated with getting a feel for change. So there is a need to manage risks while coping with change. This paper tries to emphasise the move to cope with change by managing its linked risks. However, prior to the discussion of this issue, let us first consider the remarkable concept of change in the business context. What is change? Prior to moving ahead to the next point, let us first consider defining change by looking at it from the business perspective. A new management for instance may not necessarily require change if it would want to implement the same culture, core values and vision to follow. However, if there is necessary change to be imposed, the actual level of adaptation to the newly imposed rules, policies and standard operating procedures are technically would result to some responses. With new set of rules for instance, an individual will learn to respond either positively or negatively. Here where one could determine the associated risks with change. In the presence of change, there are probable manifestations of strong or mild resistance and the lack of willingness to go for it due to the following reasons. An organisation with open system is most likely to respond positively to change especially if it brings or proposes positive effects (Clark, 2003, p.81). Thus, if individuals especially those belonging to an organisation that is not set in an open system, resistance to change would be remarkable. For this reason, change must be respectively viewed as something that could not motivate growth or productivity, but only a mere threat of probable disintegration and unproductive output. Change at this point is something set not for the better but is designed to worst case scenario. Thus, the associated risks of proposed change like this should be carefully considered prior to actual or final implementation. Another reason why there might be strong resistance to change is the actual rate associated with it (Clark, 2003, p.82). With strong rate of change even with careful planning and preparation, the entire implementation should always boil down to the actual response of the people, placing great level of consideration to the actual rate of their response. Change that is too rapid is vulnerable to receive system resistance, so there must always be a need to consider actual perceived importance of the change; the rate of needs, values and coping capabilities of individuals (Clark, 2003, p.82). Based on the above illustrations, we discussed change as something that is most likely to be the root cause of probable resistance. However, change could also be an indicator of various opportunities. Based on Porter’s idea, the new market entrants are significant indicators that there is something remarkable in an industry where there would be mushrooming of key players (Porter, 1998). For instance, the mobile industry especially when China comes into play has been bombarded with various offers. From time to time, there would be latest models of product offerings due to innovation. There is fast-pace innovation because there are many key players trying to come into play. As a result, consumers are receiving great advantages, benefits and offers. On the other hand, in the context of management, change is integrated with the notion of leadership. Leadership is about coping with change (Carpenter et al., 2009; Kotter, 1998). A remarkable leadership should therefore embrace the idea that there must change that needs to be properly managed and handled. For example, a good leader requires followers and not just subordinates. For this reason, leading should remarkably include the need to promote change and the human resource must have to accept the necessary change. Acceptance of change will lead to a human resource that would be motivated or influenced to follow certain direction prepared by the upper management. For example, the direction set by Steve Jobs was moving forward to change, making the human resource at Apple Incorporated as ultimate followers of one vision, because Jobs was a visionary leader and a person who believed the power of implementation (Daft, 2008, p.410). So far we now have an idea about change, but in the next section we need to understand more why there is a need for change. Why change is necessary? Change is necessary because everybody is doing it. It is hard to be left behind especially that there are major innovations created out of change. To cite an instance, marketing activities before were just limited solely in finding actual needs, commercial TV ads, magazines, word of mouth and other relevant traditional advertising strategies (Kotler et al., 1999; Boone and Kurtz, 2006). However, today, with the advancement of the media through the internet, companies can create a need for their product offerings through online stores where potential customers could remarkably shop online with all convenience (Berthon et al., 2012). In addition, potential customers can also be informed at a fast pace of certain product and service offerings in the advent of social networking activities through the existence of renowned and increasing number of social media platforms (Chen et al., 2011; Montgomery and Chester, 2009; Berthon et al., 2012). Change is necessary as a way of ensuring growth. Companies who are ambitious enough to grow and are aiming for international expansion are adapting and willing to embrace change. They need to do so because that is the only way they could ensure remarkable opportunities that might be above the other, as they aim for competitive advantage. To remain in a stand still while everybody is progressing is a significant manifestation of failure in today’s age embracing wider scope of change. This was a potential discovery of Nokia upon seeing being left behind by other key players in its industry due to the dominating culture of complacency in its system (O’Brien, 2010). Change is a way of achieving competitive advantage. Companies promoting highly differentiated product and service offerings are embracing change. In the first place, they could not come up with highly innovative product or service offerings if they are not looking forward to major change such as increase revenue, profitability or market share in the first place. The case of Apple Incorporated is a common example that would bring us forward to product differentiation strategy, by which the bottom line is to obtain competitive edge or increase customer value (Png, 2012, p.148). Another would be the case of McDonalds trying to uphold product offerings that are raising major health benefits and concerns in order to expand or create market segments that were not fully served from the past (Warner, 2006; Skrabec, 2012, p.207). Why risks are associated with change? Risks are associated with change because not everyone could become accustomed to change right away. As stated earlier, there are some factors that could lead to resistance to change and one of them is the rate of response to it (Clark, 2003). There are those who would be quite hesitant to change as they are not yet ready to move away from their comfort zone. This is common to happen in an organization where there is a need to change management. Along with the new management, some remarkable changes are necessary, but there are associated risks with this as the human resource would be to embrace and implement the necessary change. If the human resource would not be willing to promote change then the entire organisation will not be heading to the target direction. Change is risky because it means there is a need to change culture and implement core values for the entire organisation or for each member to follow. This is risky because failure to implement appropriate culture would mean not being able to hold on to one vision and eventually success. For example, for some, the case of HP-Compaq merger was a clear indication that the failure was due to the inability to build a unified new internal massive culture for the integration of the two companies and execution of their strategy (Rivlin and Glassman, 2005). When there is probable resistance to change, conflict will arise (Kelly, 2009, p.161). As based on what is stated earlier, there seems to be an implication that change and innovation can potentially threaten an individual or group. There are many probable definition of conflict, but what is clear is the point that there must be an existence of opposing interests, so in its general sense the term could be best described as a dynamic process underlying organisational behaviour (Rahim, 2010, p.15). How to ensure successful change without risks? Managing change by managing risks means formulating a flexible organisational culture that at any time would have the willingness to embrace change. The most influential move would be to start within the human resource. As stated earlier, there could be a positive implication that the creation of culture is right at the front of initiating core values. The point of this is to ensure creating an open system that is most likely to take the possibility of embracing change. However, based on the principal concepts stated above, there is an implication that managing risks could be initiated in two possible ways. First, it is possible to manage risks prior to experiencing them. This is a clear point of taking into account the ultimate possible impacts of change, including risks, before its definitive implementation. As discussed earlier, there are risks associated with change. Not everybody in an organisation will embrace change. For instance, a change of culture and core values will result to probable disintegration as not everybody could right away embrace the truth and reason behind the imposed change. Apple Incorporated’s horizontal hierarchy is very risky as it needs to ensure everybody should be able to embrace the culture, and it is a matter of having uniformity in holding on to the vision to guarantee total success of the implementation of change (O’Grady, 2009, p.29). Second, managing risks could also mean being in the midst of them which would insinuate taking control and the right course of actions. For example, managing change by managing risks could be about conflict management, as potential divergence based on what is stated earlier could be an upshot of the implemented change. In the midst of conflict, a manager must be able to identify conflict’s potential sources and it could not be impossible to pinpoint change as possible factor. However, knowing the fact that change could be risky, a manager must then be able to understand the right course of actions identifying some reasons of potential risks, and the right way to manage risks. Managing risks in this context would be about elimination of potential conflicts and even the remarkable reasons behind having resistance to change. Individuals or the entire organisation should accept the fact that change is necessary and there must a need to hold close it. Conclusion There is associated risk in coping with change. The whole point of the essay is about showing that a successful change can only be realised by managing risk. Managing risk in this context is actually about understanding potential resistance to change. As shown, risks can be determined by understanding change from different perspectives and how the human resource or organisation would be willing to embrace potential changes. In addition, managing risk could be about trying to understand the necessity of change especially in the context of a highly competitive and changing business environment. In order to integrate the whole idea about managing change by managing risk, the proponent discusses essential concepts about change, the necessity for change, the risks associated with change, and even successful risks management towards a victorious change. It is found that change is a risky option, but in order for it to succeed, a manger or a leader must be able to understand remarkable issues associated with change. One important issue that needs to be considered is about understanding the probable risks linked with change. Understanding these risks requires substantial understanding about the essential management functions which in great detail should be in line with the achievement of target goals. Managers must be able to learn to plan and understand the probable level of response the entire organisation might probably guarantee in reaction to change. The upper management must learn to understand that the risks should be generated when there is probable existence of resistance. This resistance sooner or later could result to significant conflict that needs to be managed accordingly. Organising the individuals in the team is necessary and this would eventually include that need to ensure everyone must not be in conflict with each other. Then since there is a need to ensure change, a high level of leadership within the group should be initiated. This would in response to the point that managing change is actually managing associated risks. However, since coping with change significantly includes the idea about leadership, then it would imply that leading the team is the right course of action in order to guarantee effective implementation of change. After this, control would be necessary and this could be successfully illustrated on managing conflict and actual team management prior and during the actual execution of change. 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