Importance of Strategic thinking and formulation in the organisational change - Essay Example

Running head: Importance of Strategic thinking and formulation in the organisational change Importance of Strategic thinking and formulation inthe organisational change [Writer's Name] [Institution's Name] Strategic management is the way of finding gaps in the current performance of the organisation and to design, formulate and implement new steps in order to fill these gaps and to align the organisational functions with the pre settled objectives. It is the method of aligning all the activities being undertaken in the organisation such as management, marketing, research and development and Computer information system in a prescribed way to achieve the goals of the organisation. There are many stages involved in the process of the strategic management. These steps are divided in to three broad categories: 1) Strategy formulation 2) Strategy implementation 3) Strategy evaluation The first step namely the strategy formulation involves the development of the business mission, evaluation of the opportunities and threats faced by the business organisation in the business, by using tools such as SWOT analysis, examining the strengths and weaknesses of the business, determining the long term objectives of the business and designing the new strategies to eke in the process of achieving the new targets. It also include the processes to determine the investment direction, the business markets to be addressed, extension of the operations of the business, limitations faced by the business in order to undertake the business activities. Strategy formulation also helps the business in deciding about the matters to be addressed on priority basis. There is not any organisation in the world which has unlimited resources. Therefore the business organisations need to evaluate which projects are important and need investment. The future of a business organisation is very much effected by the strategic decision of the management of the organisation. Strategy implementation is the process of preparing the culture, employee motivation and resource allocation in order to eke the management in acquiring the on going benefits for the business. The process is constituted on the implementation of supportive policies, redirecting the management and the marketing efforts, planning the financial issues, alignment of the information system with the information needs of the employees and last but not least provisions of appraisals and rewards to the employees. The strategy implementation stage requires several actions to be taken by the management in order to get the most of it. The successful implementation of a strategy is directly related to the ability of a manger to motivate employees in the strategic direction and to develop an organisational culture to adopt the change and take it into the daily business practise. It also demands some crucial steps by the managers on personal level. The manger should depict different qualities such as discipline, high level of commitment and motivation, leadership and enthusiasm of making things possible. Successful implementation of strategy is very important. This is the most crucial step in the whole process since it involves many factors besides the ability of manger. This includes the adoption of change by the employees, their commitment levels, and the enthusiasm towards their jobs. Most often the business organisations fail to achieve their desired targets since they fail to implement their strategies in a successful manner or fail to get support from their employees. The final stage is the strategy evaluation. After the implementation it is important for the managers to test the effectiveness of the strategy. The strategy of a company requires constant updating. With the changing conditions of market and industry it is important for an organisation to keep its strategy in tact with the changing environment. An out dated strategy cannot fulfil the needs of today's global environment. In order to go through the updating process the organisations should carry on an audit to analyse which aspect requires improvement. It also specifies what strategy is necessary to support the business operations, the information people use currently and the gaps in these functions and the business goals. Most managers fail to analyse the current situation of their business and lack a sense of intuition and forecasting. Often it is also a draw back that the strategy of some organisations neglects the change in the functions of some important departments. It is important for a strategy to serve all the needs of departments, which require change. Through a strategy audit it becomes easier to find out which departments and operation require to be revolutionised or updating. By assessing the knowledge possessed by an organisation about its competitors and market environment the mangers can effectively take decisions in order to find the most feasible way for their businesses to maximise profits and improve market share. It is also important to calculate the extent to which change needs to be introduced to the organisation. Although the identification of the problem is a big issue but the finding a solution making sense with business world is the main purpose of change in the organisation. "Back in 1970 Alvin Toffler in Future Shock (Toffler, A. 1970) describes a trend towards accelerating rates of change. He illustrated how social and technological norms had shorter life spans with each generation, and he questioned society's ability to cope with the resulting turmoil and anxiety. In past generations periods of change were always punctuated with times of stability. This allowed society to assimilate the change and deal with it before the next change arrived." (Wikipedia) In the volatile business environment of the 21st century the most important requirement of today's business is constant changing and updating with the external conditions. Change can be referred to as Internal, External, and business process re-engineering and transformation programs. The external change includes the changes in market, technology, and competitive environment, global and political environment etc. Internal changes involve the actions, which the organisation has to take in order to put up with the external changes. These include the business restructuring and the transformation programs. The well-planned strategy to undertake change combine all of the above elements in the suitable ratio to undertake the process effectively and in timely manners. On the other hand an unplanned change introduction can worsen the things rather than improving. Therefore it is important for the leaders and mangers to undertake the change activities in a strategical way to reap the fruit of change introduction in the organisation. A change project undertaken without a suitable strategy can increase the operating cost of the business without improving the operations and performance of the business. The formulation audit of the internal and external environment helps the organisation in formulating change strategy and the successful implementation of the change. The main purpose of the strategic management is to support organisations in the successful adaptation of change. With the advent of Information technology and the increasing globalisation the external forces are constantly putting pressure on the organisations to undertake updating activities. "Swift changes in information and communication technology (ICT) over the last decades have had a revolutionary impact on how today's business organisations work, co-operate and compete. Information systems, Telecommunication and the Internet challenge the thinking on organisational structures and industry boundaries and fuel the debate on globalisation. The growth and following rupture of the dot-com bubble shows how businesses must continue to struggle how to best take advantage of the new technological possibilities." (Impact of e-economy, 2004). With the increasing globalisation the competition in the industries is also increasing the market and the domestic stakeholders have been transformed into global market and global stakeholders. In order to adapt change it is important to find answers to the questions such as what should be the direction of change Which departments need to change Does the business need restructuring Who are the competitors What are the factors effecting the tastes of the customer What are the new threats the business will have to face in case of the invention of new technology The process of strategic management helps the managers to find out the answers of the above questions and designing or reshaping the strategy in order to respond to the needs of change required. These change plans are then implemented in different departments and in different phases by adjusting with the culture, environment and people of the organisation. With the increasing globalisation the importance of strategic management in bringing about change in the business organisation is also multiplied. The role of a change manager has become complex due to the multicultural workforce increasing diversity, difference in perceptions and lack of synchronisation in different departments. On the other hand the increasing expectations of customers also add to the challenges facing today's managers. According to Ajayi " Several factors such as distance time, culture, history, demographics and the internal and external forces are needed to adjust in order to undertake an effective change process." (p.51) This is impossible without planning and implementing change in a strategic manner. In order to undertake the change process effectively it is important to change the culture of organisation. This can be done in a strategic way by communicating with the employees and making them getting over their fears regarding the change. The change applications and projects that develop those applications have always been subject to certain behavioural influences. The influences that can affect the performance of employees as they perform their tasks are regarded as human factor considerations. Fear as the Underlying Factor: The employees of the firms that installed the first data processing systems experienced fear. The employees feared that the computers would put them out of work, and in some cases that actually happened. However, even in those firms in which management had no intention-replacing people with the computer, the employees were still distrustful and expected the worst. How Employees Express Their Fears: When employees are afraid of the change they may react in various ways. The healthiest response is to openly express their fears to management. Management then has the opportunity to respond and put the fears to rest. Many times, however, the employees will keep their fears to themselves. How Managers Express Their Fears: Rank-and-file employees are not the only ones who can throw up roadblocks to computer use. Managers may have fears of their own. At times the managers in one functional area do not want to share their information with others. Their reasoning is that they have gathered the information and should be able to control its use-it is their data. While such attitudes are clearly not in the best interests of the firm as a whole, they are a reality of human nature. A Program to Minimise Fear and Its Effects: The mangers must be aware of how fear on the part of both employees can affect the success or failure of development projects and operational systems. The firm's management, assisted by the information specialists, can minimise fear and its detrimental effects by taking the following four steps: Use formal communications to keep the employees aware of the firm's intentions. The announcements by top management at the beginning of the analysis and implementation phases of the system life cycle are examples of this strategy. Build a relationship of trust between the employees, the information specialists, and management. Such a relationship is achieved by being honest about the projected impacts of change in the organisational systems and in living up to promises. Such formal communications and the inclusion of employee management team go a long way toward achieving trust. Align the employees needs with the objectives of the firm. First identify the employees' needs, then motivate the employees by showing them that working toward the firm's objectives also helps them meet their own needs. Team leaders and mangers can contribute to each of these three steps. The specialists often observe the resistance that employees keep hidden from management and can also detect that they are not putting their full weight behind projects. Managers should be trained to recognise and respond to resistance. These behavioural skills are just as important as technical skills. After the behavioural factors the speed of the change should be controlled strategically. Although the niche of the market leadership is to respond quickly to the needs of the customers and market condition but a successful strategic management practise should be undertaken in a balance way keeping in mind that the employees should not get overload. The speed and nature of change should be given special attention. The method of undertaking the process of strategic management is of immense importance. This also effects the results of the process. An environment of trust and understanding is the most important benefit of strategic management. Managers and employees become more innovative and productive when they tend to understand the mission of the organisation and align their efforts accordingly. Thus the productivity of the organisation improves increasing the profitability of business. The relationship between the employee compensation and the organisational performance multiplies the productivity of the organisation. The process of the strategic management empowers the employees of an organisation. The empowerment of employees increase their participation in the decision making process of the organisation. When the employees become the part of the change decision they actively participate in the whole process and play important role in the effective implementation of the change strategy. Hence the employees help each other in the process of learning, educating, sharing and supporting the change activities. (David, p.16) Most of the companies experiencing hyper growth rely on the strategic management and flexible business model in order to undertake effective change strategies. But it should also be kept in mind that the strategic management undertaken in a haphazard manner could be harmful for the business. According to Cook and Ferris the practices of high-performing firms reflect a more strategic orientation and longer-term focus. (P.454) The process of strategic management has proven to be the force of providing financial benefits for the organisations. In The Balanced Scorecard, Kaplan and Norton provided managers a framework to measure organisational performance from four perspectives: financial, customer, internal business processes, and learning and growth. While organisations worked to implement their own strategy for using balanced measures, Kaplan and Norton discovered a consistent pattern for achieving strategic focus and alignment." (Kaplan & Norton) Lack of effective strategic management can lead to business failure and a wipe out of the organisation from the industry. The strategic management in the case of undertaking change provides several benefits to the organisation, which are as follows: It helps the management in setting priorities and identifying opportunities and making the most of these opportunities. It helps in the alignment of the steps to be taken and improve the co-ordination in the management and staff of the organisation. It minimises the chances of risk involve in undertaking the process. The effective strategic management helps the businesses to undertake the use of their scarce resources in cost effective manner. It ties the management and employees of the organisation in the strong relationship of trust and understanding by taking effective communication processes. Hence the process of strategic management is inevitable in order to undertake change effectively in the organisations. References Ajayi, O. "Leading Change," EXPRESS EXEC.COM, Capstone Publishing, United Kingdom. P. 47-51 Cook, D. & Gerald, F., "Strategic Human Resource Management and Firm Effectiveness in Industries Experiencing Decline," Human Resource Management 25, no. 3 (fall 1989): 77. David, Fred R., "Strategic Management: Concepts and Cases'" Seventh Edition. p. 5-25 Kaplan, Robert S. & Norton, David P., The Strategy-Focused Organisation: How Balanced Scorecard Companies Thrive in the New Business Environment; Harvard Business School Press, 2001, available at [25 April, 2006] Impact of the e-Economy on European enterprises. (2004). European Union. Available from: [25 April 2006] Wikipedia, Strategic management, 2006, Available from [25 April, 2006] Read More