The Significance of Discontinuous hange in Light of the Organization Strategic Management - Essay Example

Abstract This paper has widely covered the concepts of rapid, volatile and discontinuous change, how this concept fits within the strategic management. Various models of assessing the impacts and implications of rapid, volatile and discontinuous change are also discussed; the CEO behavior in discontinuous change is also covered with examples. Introduction Rapid, volatile and discontinuous change is becoming necessary in the ever changing business environments. Organizations that survive major industry changes must adapt to such changes in order to survive. In fact, organizations that do not adapt discontinuous changes eventually crumble under external competitive environment. This paper seeks to elaborate the significance of discontinuous change in light of the organization strategic management and its impact on the organizational leadership. The concept of rapid, volatile, discontinuous change The concept of rapid, volatile and discontinuous change is fostered by external environments which mandate organization to change rapidly. Competition and global economy are some of the key factors which forces organizations to adapt change in a discontinuous manner. Rapid means at a faster rate, volatile on the other hand means that the change is liable to sudden negative implications while discontinuous means that the change happens with interruption. In essence, a change that is rapid is also volatile and discontinuous at the same time. Discontinuous change is emerging because of the shifting economical, political, technological as well as social factors (Benner 2007, p.703). In order for organization to survive in the ever changing market environment, rapid, volatile and discontinuous change is inevitable (Benner 2010). Organizations that successfully adapt rapid change survive the ever changing market environment while those that do not became obsolete and lose their market share to better managed competitors. Where the concept fit within Strategic Management Process The concept of rapid, volatile and discontinuous change fit within the strategic management process in the following manner. The rationale for strategic management is mainly to ensure survival of the organization through volatile market conditions; strategic management thus provides a plan for the future that will allow necessary change to take place without thwarting the core objectives of the organization or reducing its profitability. As such concept of rapid, volatile and discontinuous change is necessitated by the changing market environment which demands either external or internal structural change in order for the business to survive. The process of strategic management is thus vastly influenced by concept of rapid, volatile and discontinuous change as the strategic management framework may need to be changed in order to accommodate this rapid change (Alonso, Dessein, Matouschek 2008, p.145). More so, strategic management is designed to adapt to such changes and provides necessary guideline for the change process. In essence, the concept of rapid, volatile and discontinuous change will always be part of strategic management process. Model(s) of assessing the role, impacts, and implications of rapid, volatile, discontinuous change for an organization There are models of organizational change that are useful in assessing the role, impact and implication or rapid, volatile and discontinuous change in an organization. The Seven S Framework model is a model developed by Peters; it mainly focuses on three main elements in determining the success of the change process, strategy, structure and systems. It also considers other soft elements such as style, staff and skills. As noted, these elements are linked and hence the overall success of the change process depends on the success of every element (Liu 2009, p.235). The other model which can came in handy when assessing the implication of discontinuous change is the Mintzberg’s Model, this model contains five segments which act as a baseline for analyzing the success of the change. These models only provide a framework for capturing the impacts of the change process by the real outcome of the change process can be further tailored by the organization with respect to the nature of the change (Liu 2009, p.237). How the CEO should respond to discontinuous change Firstly, the CEO should clearly understand the scope of the change that is required in their industry in order to allocate adequate resources required by the process. The CEO should also not wait too long to act, according to Eggers & Kaplan (2009, p.461) research reveals that during spells of major industry upheaval, companies which commence discontinuous change at the start of the cycle often have a 50-50 chance of surviving the crisis while those that start late limit their chances of survival to 1 in every 10. Notably, in discontinuous change, there is no substitute for active, personal and committed leadership of the organization’s Chief Executive. As noted by Cheng (2004, p.305) the CEO’s personal leadership is the single most imperative factor which determines the success of the discontinuous change. This clearly points to the need for the CEO to respond and in timely manner to organizational discontinuous change. In the long term, companies that master the art of organizational agility, the ability to consistently realize the need and swiftly respond to the need for discontinuous change often survive the ever changing market environment. Evidence about whether CEOs do respond appropriately to discontinuous change and if they do not respond appropriately, why not? CEOs do not always respond to discontinuous change in many circumstances. In fact, majority of companies fail as a result of untimely response from its leadership to eminent change. The success or failure of an organization is based on the CEO’s response to organization’s internal and external environment and swiftly initiate discontinuous change whenever needed. Given the global volatile market conditions, it is necessary to initiate discontinuous change in order to be successful. While CEO’s a times fail to recognize the need for discontinuous change, some CEO’s actually to realize the need for change and take initiative to start this change. As an example, the AT&T CEO Allen Bob initiated a discontinuous change, an anticipatory change in late 1980s as a result of increasing competitive pressure (Birkinshaw, Hamel & Mol 2008). Allen radically changed AT&T business units by restructuring them and making new acquisitions and setting a new management team as well as promulgating new organizational values in order to reorient the company into global market. There are many examples of companies that have failed as a result of poor adaptation of the need for swift discontinuous change. A good example of this is the Kodak CEO George Fisher who failed to swiftly change the company’s structure to adapt new digital technology. Kodak was recently declared bankrupt as a result of its CEO poor strategies which proved fatal in the end (Corley & Gioia 2004,). Conclusions and implications As discussed, rapid, volatile and discontinuous change is necessary in the modern day business environment because of the varying factors that directly impact on the business. The top management should therefore be in a position to realize the need for discontinuous change and quickly facilitate this change in order to survive. Reluctance of CEOs to eminent change results in organization failure, most importantly it is clear that most CEOs are less agile to initiate change whenever needed and hence the many failures of companies in different industries. CEOs keen on the impending change and take action are more successful in steering the organization towards its strategic goals. References Alonso, R, Dessein, W & Matouschek, N 2008, When Does Coordination Require Centralization? American Economic Review vol. 98, no.1.pp. 145‐179. Benner, MJ 2007, The Incumbent Discount: Stock Market Categories and Response to Radical Technological Change, Academy of Management Review vol. 32, no.3.pp. 703‐720. Benner, MJ 2010, Securities Analysts and Incumbent Response to Radical Technological Change: Evidence from Digital Photography and Internet Telephony, Organization Science vol. 21, no.1.pp. 42‐62. Birkinshaw, J, Hamel G & Mol MJ 2008, Management Innovation, Academy of Management Review vol. 33, no. 4.pp. 825‐845. Cheng SJ 2004, R&D Expenditures and Ceo Compensation, Accounting Review vol.79, no.2.pp. 305‐328. Corley, KG, & Gioia DA 2004, Identity Ambiguity and Change in the Wake of a Corporate Spin‐Off, Administrative Science Quarterly, vol. 49, no.pp. 173‐208. Eggers, JP & Kaplan S 2009, Cognition and Renewal: Comparing Ceo and Organizational Effects on Incumbent Adaptation to Technical Change, Organization Science vol. 20, no.2.pp. 461‐477. Liu, Y 2009, Analysis and Evaluation of Organizational Change Approaches, International Journal of Business and Management, vol, 4, no12. Pp. 234-237. Read More