Environment and Strategic Management - Literature review Example

Environment and Strategic Management Introduction The rapid rise of technological advancement has practically changed the way that an organization typically runs. The growing competiveness in the global business market has increased drastically over the decades, where the firms are seeking out for new ways to achieve organizational efficiency, thereby incorporating new technologies in the organization (Genpact, 2014). However, although the incorporation of new technologies in an organization’s structure is potentially capable of improving the overall output, but at often times the employees are not able to instantly adopt the new implementation (Edmonds, 2011). This paper focuses on the impact of introducing new technological changes in an organization and the challenges faced by the management in regards to its diffusion process. It also includes the steps taken by the organization to facilitate a seamless diffusion of the new technological changes and the necessary recommendation that the organizations can pursue to make the necessary transitions smoother. Identification of issues and opportunities by theoretical models Impact of Technology in Firms and Industries The strategic role of the new technology implementation is to ensure that the firm gains new competitive advantage over its competitors. This advantage may be on the grounds of new product development or improving the production efficiency or increasing the individual productivity of the employees. Technologies like the Knowledge Management Systems and cloud computing has helped the organizations to successfully monitor and control the organizational activities and simultaneously ensure the security of confidential information. However, the success of the new technology not only depends on the inception but also on the way it is being implemented by the higher management. Edmonds (2011) mentioned that in order to ensure that new technology is being properly implemented; the authority must make sure that the employees are being able to properly connect to the new technological changes. They are also responsible for the seamless change management where the employees will adapt to the new technological changes with least possible friction and will willingly encourage others to commit to the new changes (Blokdijk, 2008). The impact of technological advancement is not only been found on individual firms, but its momentum is strong enough to bring drastic changes in industries and even create new ones. The industries like the banking sector which used to conduct its operations completely on pen and paper few decades ago has now completely computerized its operations and have been easily able to centralize and manage and store large number of data securely (Sako, 2012). Thus it can be stated that technology has completely changed the way how banks work. Apart from banks, other services industry like hospital and health care sector has also been able to serve their customers better by installing technological advanced equipments that are able to diagnose and cure the patient faster and in a more cost efficient way. The retail sector has also developed owing to the advancement of technology. The firms are able to track each purchases made and are able to maintain error free book keeping. They are also capable of indentifying the purchase behavior of the customers by using the CRM software which helps them to offer deals and offers tailored to individual customers. Technology has also changed the way marketing communication is made. With the advent of internet and social media, the firms are making a close communication with the customers (Ingram, 2014). Moreover, social media has enabled the business firms to closely monitor the post purchase behavior and the momentum of the word of mouth. Thus it can be stated that technology has brought the buyer and seller closer. Technological advancement has led to the rise of several new industries, like the social media, IT services, consumer electronics, E-commerce, etc. These industries have revolutionized how the global business market runs and it has also changed the lifestyles of the consumers (Genpact, 2014). Based on the theory of industry of industry life cycle, every industry has an initiation, growth and decline phase. Since technological development is a dynamic process, it has constantly replaced the older technology with a new one (Lucas and Baroudi, 1994). Therefore, it may have fast forwarded the industry life cycle of certain products like the cameras, personal computers, etc. The rapid technological developments have made the previous versions obsolete. Moreover, certain industries have developed a predatory nature that hampers the profitability of other industries, for example, the rapid growth of the E-commerce segment has attracted a lot of customers to shift from physical retail stores to online shopping. This trend in the near future can significantly deteriorate the physical retail industry (Scarbrough and Corbett, 2013). Factors hampering the diffusion of new technology The growth and advancement of technology has drastically changed the way the people live their lives. The impact of technology responsible for changing our lifestyle is massive it has changed the way of our interaction with others for performing our daily activities. Although technological advancement is meant to bring about positive changes in the organizations and industries, but there are certain internal factors that create hurdles on the way of implementing new technologies. The employees are at times become skeptical to new change particularly the ones that bring about drastic modifications in their job roles and the organizational structure (Genpact, 2014). Using a new technology or running new kind of machinery or software requires a certain level of learning. Some of them can be easily mastered, while the rest have a steep learning curve and requires rigorous training and time investment. Thus introducing a new technology in a society may not always be fruitful and yield the desired result. This fact also stands to be true in case of organizational practices. Technological advancements have completely changed the way the firms operate today. However, the process of technological development is not a onetime process, but is a dynamic one, as the innovative products and processes are always being developed and are being implemented in the organizations. According to the theory of cultural anchoring discussed by LaTour and Roberts (1992), an individual always bear a certain degree of tendency to hold on to an old concept that he has been accustomed to. The homeostatic nature of the humans allows them to create mental barriers to new changes in their lifestyle. An individual generally prefers to stay within his comfort zone and tries to avoid facing new changes. However, Edmonds (2011) has mentioned that the skepticism is not a universal reaction to new changes. The response of an individual is determined by the type of changes he has been exposed to. The individual may welcome the new change with gratitude and excitement if the perceived value of the new product or technology that he has been exposed to is adding considerable value for him. On contrary, if the new technological implementation is not perceived to add any immediate or direct value and is causing initial friction in the daily activities of the individual, then it is most likely that he will try to avoid that particular change. Matzler et al (2011) further added that an individual’s reaction to something new is also dependent on his personality type. From the Big five model of personality traits explained by Čuljak and Mlačić, (2014), it can be stated that an individual with high openness to experience is more likely to welcome new changes than the individual with low openness to experience. In order to make a new technological implementation within the organization, it must ensure that it is being properly adopted by the employees and its positive effects are more than its adverse effects. The development of information technology (IT) has changed the way the company manages the organizational information and conducts internal and external communication. It has made firms more efficient at their operational activities and reduced the room for errors. However, at the time of inception of IT in the organizational structure, the firms had to undergo rigorous training process with the employees, which as a result led to spending valuable time of the organization. Moreover, the older employees who are not so conversant with technological usage might find IT implementation to be a big hassle as they might find it is more difficult to learn a entirely new practice. Thus it can be stated that the diffusion of technology in the organizational structure may get hampered by the rigid mentality of the employees. Moreover, Attaran, (2004) mentioned that the introduction of new technology can potentially put older employees into inferiority complex, as they might perceive themselves to be out-dated for the new technologies and they might also think that the new technology may absorb their employment. This often reduces the motivational level of the employees as well as their productivity. Thus the new technology can in fact reduce the organizational efficiency if the new technological changes are not welcomed by the employees. The primary hurdles faced by the employer while implementing a new change is from the reaction of the employees. The most common reaction of the employees is fear, which leads to resisting changes, be it of any kind (Green, 2007). The employees are often ignorant when it comes to new changes in the organization and this fear of the unknown drives them out of their comfort zone. The risk of proceeding towards change is often taken when the individuals are completely convinced that they are proceeding towards a positive direction. Alternatively, if the employees perceive that the risk of stagnation is more than the risk of change, then the employees actively engage in the change management. This as a result pushes the individual to fight for its survival in the organization, thereby compelling them to take the risk of change. Introducing a new technology brings about rapid changes in the organizational activities, which in all perspective is a major change for the employees (Lucas and Baroudi, 1994). This change results in different levels of momentum in both positive and negative direction. It brings about high levels of commitment among some employees, conflict and tension among others and indifference to a few. However, these inescapable responses need to be managed by the higher authority so as to ensure that the newly implemented changes are bringing the desired results. Since, there will always be a significant number of employees in the organization that will pose conflict to the change, so the employer must take pro-active measures to deal with these frictions. According to Edmonds (2011), depending on the reactions of the employees, they can be characterized into four categories, blockers, sleepers, preachers and champions. Depending on the nature of these groups of individuals, the company needs to implement different strategies to foster a seamless change implementation. The blockers are the ones who pose direct obstacle to change and therefore the higher management should reduce their momentum by decreasing their power of influence or authority. The sleepers are almost indifferent to any imminent changes and so they are needed to be made aware of the responsibility towards implementing the organizational changes. The preachers hold a higher power of influence over the rest of the employees; therefore in order to communicate the necessity for the change, the higher management should focus on informing and convincing the preachers that the new change is for the long term benefits of the firm and its employees as well. Finally, the champions are the ones who actively commit themselves in the process of the change implementation. The firm needs to keep the champion engaged at all times to maintain the momentum of the process of change (Greener and Hughes, 2006). In order to gain higher competitive advantage, the firms are always trying to take a first mover advantage by newest technology possible. This is mostly achieved by making extensive investments in research and development or by acquiring patent rights of third party companies. However, every technology at its early stage is quite costly to implement, therefore, in order for a company to incorporate the latest technology it may have to consider spending a lot of capital behind it. Thus, the financial factor may pose as a hurdle to diffusion of new technologies. How the firms can ensure a seamless diffusion of new technology. Matzler et al, (2011) have stated that the fear of change emerges from the ignorance of the employees. It is most likely that the employees are unaware of the new technology that is being implemented and how it will impact their daily activities or whether or not it is capable of bringing any future threats to the employees. In order to erase these kinds of misconceptions, the higher management must make proper communication with all the employees and make them clearly aware of the changes that will be implemented. Making the employees aware of the incoming changes will make them ready to face them with confidence. The employer must also make the employees aware of the fact that how the technological changes in the organization will bring long term benefits for the firm and the employees as well. Thus before making any sudden changes in the organization, the management must ensure that the employee is properly aware of the incoming changes. Attaran (2004) opined that although incorporating new technologies in an organization involves installing new hardware and software, but the real change needs to be brought within the people of the organization. This can be achieved by involving the human resource (HR) department in the change management process. The HR managers should utilize their people management skills to make good communication with the employees and make them aware of the changes that are about to get exposed to. Moreover, the HR department can take initiatives to give proper training to the employees to handle the new technology with ease. Attaran (2004) have mentioned that the employees will be more confident and will voluntarily engage themselves to the new changes if they have the necessary skills to operate the new technological implementations. This clearly indicates the importance of training in change management. Moreover, based on the Kolb’s learning cycle discussed by Stice (1987), the training needs to be provided on a continuous basis and the management should opt for a trial run before actually implementing the change. The “active experimentation” where the employees will be able to implement what they have learnt in theory will help them to learn and develop skills in a better way. Attaran (2004) further added that in order to ensure that the employees are being properly able to adapt to the new changes, the higher management must incorporate a review and feedback system. The reviewing will allow the managers to make sure that their subordinates are following all the instructions as guided. This will also give a clear insight to the employer whether or not the new technology is providing the desired result to the organization. Moreover, the feedback mechanism will help the employees to communicate any issues that they are facing with the new implementations and whether or not they are satisfied with the new changes. The data gathered from the review and feedback process needs to be analyzed by the employer to make any further changes if required. Blokdijk (2008) have mentioned that key behind the successful functioning of the new technological changes is firm’s initiative to actively make the necessary amendments in the implementation process so as to yield the desired result. This can be achieved by considering the feedback data gathered from the employees. Thus it can be stated that preparing for the change is as important as implementing the change itself, because the preparation phase gives a strong foundation on which the success of the new technological incorporation depends. Greener and Hughes (2006) have mentioned that the level of “readiness” of change is directly proportional to the success of the change management. Pugh and Mayle (2009) also mentioned that most of the change management fails because the employer is unable to recognize the needs of the employees and overlooks the issues faced by them. This as a result creates a perception of forcible implementation of the changes in the organization, thereby reducing the motivational level of the employees. According to the studies of Pugh (2007), the employer should take the necessary steps to increase the employee engagement to foster better involvement in the change management process. In order to make sure that the employees are responding well to the new technological changes and are voluntarily committing themselves to the training process, the higher management should inspire team building. Implementing new changes makes certain alterations to the mission of the organization. The employer must allocate the necessary tasks for each individuals of the team so that the each member plays its own part to make the new technological implementation successful. Blokdijk (2008) further added that there should be clarity in setting new goals that satisfy the new mission of the organization, this will reduce ambiguity, and foster better task accomplishment. Communicating clarity of new job roles which are in line with the new technological changes can only be achieved if the organization fosters a robust communication across the hierarchy. This as a result will help the employees to receive proper guidance from the higher authority and offer their feedback on any issue that they are facing. Example of Organizational practices pertaining to the Topic of Discussion This section discusses about a real life example of technological diffusion in Siemens and the hurdle faced by it and how the company has managed those issues and ensured a proper implementation of new technological developments. Siemens is one of the largest technology and engineering companies, headquartered in Germany. The company operates in a wide scale of business activities starting from power generation and transmission to application of electrical energy. It also operates in the healthcare industry in the in-vitro diagnostics and medical imaging. The company has achieved its huge infrastructure by diversifying its business operations and making technological changes in different segments of its business operations (Siemens, 2015). Among the uncountable technological incorporations of Siemens, this paper will focus on the implementation of knowledge management in the company. In the increasingly competitive market environment, the major firms have realized that in order to secure a strong competitive position in the industry, it is imperative to have a good knowledge management. The company believes that if it is capable of having a proper knowledge management system, then it will be able to evolve itself as a knowledge-guided network (Siemens, 2004). The knowledge management is relatively a new concept where the firms are required to install new management software that involves creating a database of organizational knowledge which is accessed by all the employees. The knowledge database is also updatable by the employees who wish to share ideas or experiences that may help fellow employees. Implementing Knowledge Management System (KMS) in an organization is considered to be a big hassle as it needs to be integrated deeply within the organizational structure and needs to have centralized access. Several firms have incorporated the KMS but have reported for receiving the desired financial yield. Siemens have also faced the same issues of receiving poor outcome from the KMS. The company was one of the first global firms to implement the KMS in the organizational structure (Siemens, 2004). The objective of the company was to fill the knowledge gap among the employees. Siemens created a database where all the employees can have access to necessary data for self development. The data stored in the database was mostly in the form of text and video files on business related data guiding the employees to improve individual performance (Voelpel, Dous, Kolbe and Brenner, 2006). However, this initiative was not as successful in its initial stage because the employees were not interested in using the KMS. Upon review it was found that most of the employees were not aware of the motive for implementing the KMS in the organization. Moreover, the employees, particularly the older ones were highly skeptical of using the KMS, mostly because they were not associated with a concept like this in the past (Davenport and Probst, 2002). In the initial stage, the company merely used the Knowledge Management System as a knowledge repository system, which acted as a store house of organizational information. Therefore, the employees did not feel the necessity to take the trouble to go through the uploaded contents. Moreover, the company also failed to make the required communication to employees regarding the importance of the KMS. Thus the potential of Knowledge Management System was overlooked (Voelpel, Dous, Kolbe and Brenner, 2006). The company decided to make certain changes in the organizational structure and the KMS implementations as well, so that it can be properly utilized by the employees and its advantage is reflected in terms of financial returns. Siemens decided to redesign the KMS to a knowledge sharing system and not just as a knowledge storage system. The company realized that setting up a knowledge database and communication infrastructure is not enough as these are only the secondary tools. In order to ensure a proper implementation of the KMS, the employees need to get involved in the knowledge sharing process. The staffs from all across the hierarchy need to be actively committed in the KMS, so that the system is capable of delivering the desired value for the organization. The proprietary knowledge management system of Siemens was named as Sharenet (Davenport and Probst, 2002). This was developed in response to the rapid changes in the market environment particularly on the ground of increase competitiveness. Sharenet was developed in such a way that all the departments of the company irrespective of the location can have access and share the knowledge from Sharenet. The wide access of the system allowed the employees to draw necessary information from their colleagues form different country. This as a result helped them to foster a worldwide information sharing system. The information uploaded by the users is carefully reviewed by other users so that the authenticity and quality of the data shared is maintained. The user with best evaluation is appreciated in the Sharenet community so that the employees can be motivated for further contribution to knowledge sharing (Voelpel, Dous, Kolbe and Brenner, 2006). The Sharenet had grown rapidly with over 19,000 subscribers by 2002. By that time more than 20,000 knowledge article were posted in the system. These articles were shared more than 2.5 million times. However, amidst the success of the company’s KMS system, the telecommunication industry has been affected badly by the economic crisis. Among all the firms, Siemens also faced the impact of the crisis (MacCormack, Volpel and Herman, 2002). This as a result the organization decicded to restructure the Sharenet, and was allocated to a different department called Competence and Knowledge Management. Resource utilization of the KMS system was reduced as much as possible to reduce the operating costs. The Sharenet team even decided to change on a basis of per user fee. This as a result would help the all the departments to identify the worth of using the Sharenet. However, the idea of charging for the Sharenet usage was not welcomed by all and it was quite difficult to decide on a particular fee for the Sharenet usage. Despite of the financially tough times, the company decided to carry on with the usage of Sharenet, which eventually proved to be lucrative for Siemens. The company recognized the Sharenet had a great influence over the transformation of the company and helped it to rejuvenate its business operations (MacCormack, Volpel and Herman, 2002). The key success factor behind Siemens’ successful implementation of the Knowledge Management is employee motivation (Siemens, 2004). The company realized that it needs to create certain organizational environment and conditions which would encourage the employees to share their knowledge and experience with other colleagues, even the ones who they do not know and are sitting at a different part of the globe. The employees are motivated to engage in the learning process and take voluntary initiative to engage others in the process as well. They developed a willingness to work across the organizational boundaries and make their mark outside their place of work. The global access of Sharenet allowed them to easily connect to other employees. Siemens also created a community of practice, which allowed the employees to form an official social group that is dedicated to knowledge sharing and creation. Thus Siemens despite of the typical hurdles of new technology implementation, it has successfully been able to diffuse an effective knowledge management system, which helped the company to gain a competitive positioning in the industry by improving the overall efficiency of the employees (Pugh and Mayle, 2009). Recommendation The diffusion of new technological tools in an organization is always at the forefront of a firm’s mission. However, before incorporating new technologies in the organization, the higher management must ensure whether or not the firm’s infrastructure is ready for the new technology. Preparing the organizational structure of the firm is as vital as the incorporation of the new technology. Before the diffusion, the firm must make a proper communication with the employees regarding what are new changes that are about to come (Pugh, 2007). The higher management must make it clear that the new technological incorporation is for the long term benefits of the company and the employees as well. The new technology must not be a burden for the employees, because if that happens then the new implementation will have more negative effects than the positive ones. The firm must ensure that the true potential of the technological diffusion is utilized in terms of financial return. In order to achieve that, the management must take active initiative to train the employees, so that they find it easy to use (Green, 2007). Moreover, the company must motivate the employees to voluntarily engage themselves to use the new technology so that the firm can improve its efficiency and productivity. Conclusion New technological advancement has been constantly changing the global business environment in terms of the way the organizations operate. It has also changed lifestyle perception of the consumers. The firm with access to the latest technology always gets the first mover advantage in the industry (Genpact, 2014). Moreover, in the increasingly competitive global business market, every firm seeks to develop or implement new technologies to improve their operational activities, thereby increasing their brand equity and profitability. However, there are certain factors that act as temporary barriers to new technology diffusion. Implementing new technology always comes with a significant level of capital investment, which may not be viable for all companies. Most importantly, during new technology diffusion, the employees are skeptical about its impact on them (Scarbrough and Corbett, 2013). This as a result leads to employees’ avoidance of the new technology. In order to avoid that the employer must conduct a successful change management, this is imperative to the seamless implementation of the new technological changes. The firm needs to ensure that before implementing a new technology, the organization and its employees are made ready for its usage, and then only the firm will be able to release its true potential in terms of the firm’s success. Reference List Attaran, M., 2004. Exploring the relationship between information technology and business process reengineering. Information & Management, 41(5), pp. 585-596. Blokdijk, G., 2008. Change management 100 success secrets. Brisbane: Emereo. Carnall, C., 2002. Knowledge Management. Journal of Change Management, 3(2), pp.189-190. Čuljak, Z. and Mlačić, B., 2014. The Big-Five Model of Personality and the Success of High School Students in Physical Education. Hrvatski časopis za odgoj i obrazovanje, 16(2), pp. 471-490. Davenport, T. H. and Probst, G. J., 2002. Knowledge management case book: Siemens best practices. New Jersey: John Wiley & Sons, Inc. Edmonds, J., 2011. Managing successful change. 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