Importance of Change in an Organization

One can try to predict the future. However, predictions produce at best a blurred picture of what might be, not a blueprint of future events or circumstances. The effective and progressive management of change can assist in shaping a future which may better serve the enterprise’s survival prospects. Change will not disappear or dissipate. Technology, civilizations and creative thought will maintain their ever accelerating drive on-wards. Managers, and the enterprises they serve, be they public or private, service or manufacturing, will continue to be judged upon their ability to effectively and efficiently manage change. Unfortunately for the managers of the early twenty-first century, their ability to handle complex change situations will be judged over ever decreasing time scales. The pace of change has increased dramatically; mankind wandered the planet on foot for centuries before the invention of the wheel and its subsequent “technological convergence” with the ox and horse.

In one ‘short’ century a man has walked on the moon; satellites orbit the earth; the combustion engine has dominated transport and some would say society; robots are a reality and state of the art manufacturing facilities resemble scenes from science fiction; your neighbor or competitor, technologically speaking, could be on the other side of the planet; and bio-technology is the science of the future. The world may not be spinning faster but mankind certainly is! Businesses and managers are now faced with highly dynamic and ever more complex operating environments. Technologies and products, along with the industries they support and serve, are converging. Is the media company in broadcasting, or telecommunications, or data processing, or indeed all of them? Is the supermarket chain in general retail, or is it a provider of financial services? Is the television merely a receiving device for broadcast messages or is it part of an integrated multi-media communications package? Is the airline a provider of transport or the seller of wines, spirits and fancy goods, or the agent for car hire and accommodation?

As industries and products converge, along with the markets they serve, there is a growing realization that a holistic approach to the marketing of goods and services is required, thus simplifying the purchasing decision. Strategic alliances, designed to maximize the ‘added value’ throughout a supply chain, while seeking to minimize costs of supply, are fast becoming the competitive weapon of the future. Control and exploitation of the supply chain make good commercial sense in fiercely competitive global markets. The packaging of what were once discrete products (or services) into what are effectively ‘consumer solutions’ will continue for the foreseeable future. Car producers no longer simply manufacture vehicles, they now distribute them through sophisticated dealer networks offering attractive servicing arrangements, and provide a range of financing options, many of which are linked to a variety of insurance packages.

Utility enterprises now offer far more than their original core service. For example, Scottish power have acquired utilities in other countries and have recently moved into water, gas and telecommunications, to become a ‘unified’ utilities company offering ‘one-stop shopping’ to domestic and commercial customers. How can we manage change in such a fast moving environment without losing control of the organization and existing core competencies? There are no easy answers and certainly no blueprints detailing best practice. Designing, evaluating and implementing successful change strategies largely depend upon the quality of the management team, in particular the team’s ability to design organizations in such a way as to facilitate the change process in a responsive and progressive manner.

Imperatives for Organizational Change

Any organization that ignores change does so at its own peril. One might suggest that for many the peril would come sooner rather than later. To survive and prosper, the organizations must adopt strategies that realistically reflect their ability to manage multiple future scenarios. Peter Drucker, for example, argued that : Increasingly, a winning strategy will require information about events and conditions outside the institution. Only with this information can a business prepare for new changes and challenges arising from sudden shifts in the world economy and in the nature and content of knowledge itself. If we take an external perspective for a moment, the average modern organization has to come to terms with a number of issues, which will create a need for internal change.

Six major external changes that organizations are currently addressing or will have to come to terms with in this century are :

  1. A large global marketplace made smaller by enhanced technologies and competition from abroad. The liberalization of Eastern European states, the creation of a single European currency, the establishment of new trading blocs such as the ‘tiger’ economies of the Far East, and reductions in transportation, information and communication costs, mean that the world is a different place from what it was. How does an organization plan to respond to such competitive pressures?
  2. A Worldwide recognition of the environment as an influencing variable and government attempts to draw back from environmental calamity. There are legal, cultural and socio-economic implications in realizing that resource use and allocation have finite limits and that global solutions to ozone depletion, toxic waste dumping, raw material depletion, and other environmental concerns will force change on organizations, sooner rather than later. How does an individual organization respond to the bigger picture?
  3. Health consciousness as a permanent trend amongst all age groups throughout the world. The growing awareness and concern with the content of food and beverage products has created a movement away from synthetic towards natural products. Concerns have been expressed about salmonella in eggs and poultry, listeria in chilled foods, BSE or ‘mad cow disease’ and CJD in humans, genetically engineered foodstuffs, and the cloning of animals. How does an individual organization deal with the demands of a more health-conscious population?
  4. Changes in lifestyle trends are affecting the way in which people view work, purchases, leisure time and society. A more morally questioning, affluent, educated and involved population is challenging the way in which we will do business and socialize. How will people and their organization live their lives?
  5. The changing workplace creates a need for non-traditional employees. Many organizations have downsized too far and created management and labor skill shortages as a result. In order to make up the shortfall, organizations are currently resorting to a core/periphery workforce, teleworking, multi-skilled workers and outsourcing. A greater proportion of the population who have not been traditional employees (e.g., women with school aged children) will need to be attracted into the labor force. Equal opportunity in pay and non-pecuniary rewards will be issues in the future. How will an individual organization cope with these pressures?
  6. The knowledge asset of the company, its people, is becoming increasingly crucial to its competitive well being. Technological and communication advances are leading to reduced entry costs across world markets. This enables organizations to become multinational without leaving their own borders. However, marketing via the internet, communication via e-mail and other technology applications are all still reliant on the way you organize your human resources. Your only sustainable competitive weapon is your people. How do you intend managing them in the next millennium? The same way as you did in the last?

What is important, however, is recognition that change occurs continuously, has numerous causes, and needs to be addressed all the time. The planned change is not impossible, but it is often difficult. The key point is that change is an ongoing process, and it is incorrect to think that a visionary end state can be reached in a highly programmed way.

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About Abey Francis

Abey Francis is the founder of MBAKnol - A Blog about Management Theories and Practices - and he's always happy to share his passion for innovative management practices. You can found him on Google+ and Facebook. If you’d like to reach him, send him an email to: [email protected]

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