Changing Organizations Is as Frustrating as It Is Satisfying - Essay Example

Changing Organizations Change is a pertinent option for adjusting the equilibrium of business in response to external and internal forces. Change is the systematic modelling which guides the existing business environment to cross the threshold and attain desired state. In 2000, Paton and McCalman have pointed out that change management is a multidimensional process and Organizations can give response to change in various functional and macro dynamic aspects such as technology, customer relationship management, communication media, competition norms, government legislation and many others. Main objective of change management is to increase profitability and decrease impediments (Blokdijk, 2008, p. 43). Organizations commit different types of changes such as substantial, transformational and incremental. In 2005, Research scholars have pointed out that changes can be broadly dissected into three parts such as strategic, tactical and operational (DuBrin, 2011, pp. 117-119). Study shows that companies can decide to go through change management process in order to address various external factors like changing purchasing behaviour of customers, need of implanting latest technology in order to retain competitive position in the market, fluctuation in supply and demand while other organizations feel the urge of change management in order to address internal factors like value chain integration, corporate restructuring, product market strategy etc. At some point of time all the organizations face the urge of changing existing corporate structure, human resource strategy or business process. In 1996, Kotter has pointed out that although many organizations fail to incorporate change successfully but still it is the most significant issue for an organization (Kotter, 1996). This study is influenced by exhilarating nature of change process. Organizations need to uproot many of the existing systems ruthlessly in order to make room for change process hence the essay will try to shed some lights on various aspects of organisational dynamics in order to interpret role of organization dynamics in strategic change management. The study will analyze various organizations on the ground of threats, opportunities, context and emerging issues of strategic change management. It is evident from current practices that implementing change in business process is challenging task for organizations hence the essay will miss a great opportunity if it fails shed light on challenges associated with change management process. Challenges come in triplet structure while resistance from employees and stakeholders can be classified as primary challenge organization faces while implementing the change. A five stage model can be used to understand psychological characteristics of employees resisting change. Stages Characteristics Denial In the first phase employees use denial as a part of natural defence mechanism to resist the change. Anger Employees vent anger in inward or outward mode in response to change process. Bargaining In the third stage they are forced to compromise and unwillingly agree take part in change process in order to avoid greater loss like termination from service. Depression This is ‘preparatory grieving’ phase and employees accept harsh consequence of change situation. Acceptance It reflects that employees might get emotionally detached from change process while they are participating in the process unwillingly. (Source: Cantore and Passmore, 2012, pp. 50-51) [Note: This model is known as Kubler-Ross Five Stages Transition (Grief) Cycle] Many organizations face internal resistance in terms of transforming rigid business objectives and strategies (like mission, values and corporate strategies) into a flexible one and this can be inferred as second resistance in change process. Sometimes macro environment issues like sovereign debt crisis, government policy, economic recession and stage of business cycle play critical role on filliping the resistance for change process and this can be classified as third pillar of above mentioned triplet structure. There is fine line between transformation and change and organizations need to understand the distinction in order to create sustainable impact on employees’ dynamics through change management process. Organizations face resistance from employees while implementing change process because the process disturbs equilibrium of their comfort zone. In many cases it has been observed that cultural norms and values of an organization can create impediments for implementing the change. For example in engineering companies senior engineers might create resistance to learn technical knowhow of newly implemented technology. For example, W.L Gore & Associates (A manufacturing company) has created a ‘Lattice Management Structure’ in order to infuse culture of empowerment among employees. W.L Gore & Associates has replaced vertical model of organizational hierarchy into interconnected lattice model and encouraged associates (the company changed the employees into associates) to gel up with each other in order to understand technical knowhow of newly implemented technology (Pride, Hughes, and Kapoor, 2011, p. 295). Organizational desire to accept the change process plays crucial role can be termed as significant contributor to successful change process. For example we can cite example of rigid Finnish culture of Nokia a barrier for the telecom giant to take over Smartphone industry. Nokia has failed to understand the arrogance and aggression of American culture due to their strong emphasis on politically correct Finnish culture. Finnish culture is complemented with long approval period and multi leadership model while this culture is not acceptable in USA. Iconic American telecommunication brands like Microsoft, Apple are led by one charismatic leader. Important thing is that Nokia has finally understood the depth of the problem and in 2010 they have replaced Finnish CEO Kallasvuo with American CEO Elop in order to infuse cultural change in Nokia (Denison, Hooijberg, Lane and Lief, 2012). Organizations need to start from the scratch in order to define nature of change required to turn the table. Change process passes through three transition steps such as degree of change, stages of change and centre of change. Organizations need to identify whether they want incremental change or small adjustment at functional level or else a complete transformation in business in order to measure the scalability of change process. For example Australia post has increased retail merchandising operation in order to counterbalance ill effect of declining demand for postal usage. The company has not completely transformed postal business into retail merchandising operation rather they have altered functionality of post offices. Type of change was incremental in nature for Australia post. Next part of the essay will discuss importance of decision dynamics in order to decide centre of change. Centre of change can be classified as operational and strategic. Researchers have pointed out that strategic change deals with altering the vision statement while operational change deals with changing functionality of business process. For example P&G has changed their standardized model into glocalized business matrix in order to fulfil local demand while Zara has localized the sourcing and manufacturing process with an intention to decrease turnaround time. According to me the P&G’s model can be depicted as strategic change while Zara’s model can classified as operational change. Now the study has come to a point where we need to discuss stages of change such as team level, individual level and organisational level in order to understand systematic framework of change process. The study will be incomplete if it fails to underline three phase change process proposed by Kurt Lewin while discussing stages of change process. I as a backbencher, very ordinary backbencher, can assume that three phase change gives a systematic guideline to managers while they are banking on change management to achieve profitable business result. In 1958, Kurt Lewin has proposed a three stage change management model with an intention of creating process map for change. Three steps can be explained in the following manner. Unfreezing In this phase organizations destabilize the equilibrium of existing system in order to decrease resistance to change. Initial planning is needed in order to bring change in the organization. In this phase organization identifies existing dissatisfaction among employees against the ongoing change process while creating supplementary forces like budget constraint and program schedule can be termed as part of the planning step. Organizations need to develop employee knowledge about current market scenario, competitive threats and industry standard in order to decrease the resistance level. Change In this phase organizations create teams and implement the long cherished action plan to create some real impact. Companies need to involve all three levels of management in order to create resonance among employees and change the platitude of old system. In this phase organizations emphasizes on different aspects such as establishing reward system for employees, bringing the flexibility in managerial style and others to decrease resistance from stakeholders. Refreezing In this phase organizations consolidate the positive result of change process and institutionalize employees to align with newly implemented culture. Many organizations use knowledge sharing program to create resonance between change process and work culture. Organizations need to share the positive result of change process with employees and congratulate them in order to recognize their contribution in successful implementation of new system (Simms, 2005, p. 124). We are going smoothly on road of understanding and digesting organizational change process but now we have to stop at a junction named as organisational dynamics. Now the study will discuss impact of organizational dynamics in change management. In many cases it has been observed that many organizations are implementing change process successfully while others are failing to do so. Now the question is there any magic formulae which separate successful organization from mediocre firms and the answer is yes, name of the magic formulae is organizational dynamics. Business environment complemented with turbulence, low predictability and active nature can be classified as organizational dynamics. Globalization has made organizations susceptible to change and also changed the meaning of barrier. Study shows that dynamics can be reckoned as alteration in the organization environment while change is being implemented. Academic researchers have pointed out that significance of change has not altered over the course of time but the background, reason or measuring criteria have drastically changed with due course of time. Organizational dynamics can be directed by three types of forces such as political, economic and culture while internal dynamics is affected by three systems like technical, political and cultural. (Source: Tichy, 1983, pp. 55 – 67) Technical Gone are the days when companies rely on age old technology to fulfil customer demand. In modern business environment companies need to integrate latest technology to save their skin. Sometimes technological integration can be named as change drivers for organization. For example, Toyota has outdone its global competitors by focusing on lean manufacturing and economies of scale to sell a car at lower price. This is technological pressure on other motor manufacturers who are trying to compete with the Japanese giant. Companies like General Motors need to change organization dynamics in order to attain technological capability of manufacturing Car at a production advantage of $1,000 to $1,500 (currently it is only $400). Attaining such production advantage will help GM to compete with Toyota. Political Pankaj Ghemawat has argued that organizations need to adopt change organizational structure and business policy in accordance with the political circumstances of a particular country (Ghemawat, 2004). For example, Wal-Mart has changed their operational plan according to the norm of Communist party of China while political turbulence in India (read controversy over FDI) has forced Walmart to change their business plan to enter in the country. Sometimes companies need to change organizational structure in order to fulfil local government norms. Economical Economic recession and sovereign debt crisis have increased risk factors associated with change process. Companies like Nortel, Lehman Brothers Holdings Inc have suffered from financial fraud, insolvency and bankruptcy in last decade. Companies need to create a shock resistive financial system in order to protect the stakeholders and shareholders. In the global economy companies are using local people in Strategic business units in order to resolve critical issues like ethnocentrism. Organizations need to change their human resource strategy in order to create scope for diversity in work place. For example, per capita income of USA is almost $45,000 while PPP of Bhutan and Nepal is only $1100 hence same type of business strategy will not be applicable in each case. Unequal distribution of wealth in the world has compelled organizations to change business policy to attain sustainability. Political, technological and cultural forces decide dynamics of business environment and interesting fact is that these three forces work in an overlapping manner to create impact on change process. (Source: Tichy, 1983, pp. 55 – 67) This diagram is showing that impact of three aspects on organizational dynamics increases with time and organizations need to create a buffer system to decrease the overlapping impact. The study already underpinned the importance of change process in business dynamics hence time has come to shift gear and look at the bigger picture. Next section of the study will discuss theoretical background of strategic change inside the organization. Theoretical aspect of change management will help management researchers to realize the real significance of the term organization dynamics. Organization dynamics is complemented with two facets like strategic building blocks and business foundation and it helps the company to accomplish long term business objectives. Strategic building blocks depend on six strategic aspects and these aspects can be explained in the following manner. A- Organizations need to select market in accordance to its potentiality. Companies need to use Ansoff matrix in order to select right product mix for right market. Organizations can adopt four types of strategies such as increasing product penetration in existing market, developing new product for newly found market, launching existing product in new market and launching new product in existing market. (Source: Stone, 2001, p. 51) B- In this phase organizations try to increase growth and penetration in selected market. C- In this phase organizations channelize assets to fillip the growth. For example, HSBC uses five filter frameworks such as connectivity, economic benefit, cost efficiency, profit margin and liquidity to analyze profitability of particular market and after getting positive result from the analysis they decide allocation strategy. D- Organizations need to maintain a progress profile for long term operations. In this phase they segregate strategic choices from operational ones. E- In this phase of organizational dynamics companies emphasize on operational perspective of business. F- In this phase organizational leaders play crucial role on guiding the employees and the firm to attain predetermined objectives. For example, Steve jobs led the innovation culture in Apple. Business foundation is completed with three issues such as business concept, core strategy and strategic mission. Business concept provides the guideline to understand reasons behind doing the business. Changes for the sake of change ultimately creates brouhaha in the organizational culture hence organization need to design the change process carefully after understanding the purpose of their business process. For example, P&G has implanted front back hybrid matrix but they never changed the purpose (read “improving the lives of the world’s consumers”) of their existence. Organizations design strategy integrated with optimum utilization of resources to attain competitive edge over competitors. For example, Wal-Mart has decreased operating expense more than 33% in comparison to other retail players and the company has also decreased COGS or cost of goods sold to achieve competitive advantage. Zara has achieved the competitive advantage of shortest lead-time over their competitors and they are able to manufacture seasonal collection in 14 days while industry average is six months. Core competence defines the relevance business strategy for any organization. Strategic mission provides the long term target for organization and it also help them to direct and allocate resources to achieve the mission. Study shows scalability of strategic mission is vital for organizations. Quantitative measure of performance helps stakeholders to identify the progress of the organization in numeric manner. For example, Nestle has created a measurable strategic mission of 80% market share in nutritional division of South Asian countries. Strategic aspect of change management measures performance and success of organization in a six dimensional manner. Six strategic drivers for any organizations are Innovative capabilities, Competitiveness, Substitutability, Imitability, Task before acquiring resources and Appropriability. In 2002, Azhar Kozami has argued that above mentioned six factors not only create core competency of the organization but enhances reputation in front of both shareholders and stakeholders (Kozami, 2002, pp. 134-136). Strategic management gives guideline to managers for making right decision while change management can be considers as driver to attain result of successfully implemented strategies. Both of the models work in interdependent manner and organizations should use the infrastructure, resources, capabilities, thought-process and human capital (these aspects are known as connectivity and leverage) to fillip the interdependency. Now we have arrived at the conclusion section and I will try to summarize key arguments presented in the essay. The essay tried to point out importance of change elements and macro environmental dynamics in directing strategic change initiative for any organization. The study tried analyze various key issues like organizational dynamics, impediments, psychological context and opportunities in order to unlock the mysterious world of strategic change process. Aim of the study was to understand the importance of organizational dynamics in change process. The author tried to argue that organizations need to adopt change process in order to increase profitability and value driven growth. The study has been done in order to point out that periodic change process can help the organization to measure success in both qualitative and quantitative manner. I believe that risk taking ability of top level management helps the organization to overcome barriers associated with change process. Globalization has exposed company to borderless risk (read technological, political and economical) hence companies are working on creating a systematic risk management program. The meaning of patriotism and altruism is slowly but surely becoming significant for multinational companies. Organizations need to synchronize risk management program with the change process in order to create positive impact on stakeholders and shareholders. Organizations need to use risk management as shock absorbent to fillip the growth of effective change management (Youngberg, 1998, pp. 61-65). Reference Blokdijk, G., 2008. Change Management 100 Success Secrets. Raleigh, North Carolina: Lulu. Cantore, S. and Passmore, S., 2012. Top Business Psychology Models: 50 Transforming Ideas for Leaders, Consultants and Coaches. London: Kogan Page Publishers. Denison, D., Hooijberg, R., Lane, N. and Lief, C., 2012. Leading Culture Change in Global Organizations: Aligning Culture and Strategy. Hoboken, New Jersey: John Wiley & Sons. DuBrin, A. J., 2011. Essentials of Management. 9th ed. Stamford, Connecticut: Cengage Learning. Ghemawat, P., 2004. Distance Still Matters. [pdf] Available at: [Accessed 9 December 2012]. Kotter, J., 1996. Leading Change. Harvard: Harvard Business Press. Kozami, A., 2002. Business Policy and Strategic Management. 2nd. ed. Boston: McGraw-Hill Education. Pride, W.M., Hughes, R. J. and Kapoor, J. R., 2011. Business. Stamford, Connecticut: Cengage Learning. Simms, H., 2005. Organisational Behaviour and Change Management. Cambridge: Cambridge University Press. Stone, P., 2001. Make Marketing Work for You: Boost Your Profits with Proven Marketing Techniques. Oxford: How To Books Ltd. Tichy, N., 1983. The Essential of Strategic Change Management. Journal of Business Strategy. [e-journal] Iss: 4 Available through: Emerald database [Accessed 9 December 2012]. Youngberg, B. J., 1998. The Risk Managers Desk Reference. 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