As an organization becomes larger the need for strategy and structure change becomes apparent. Strategic change involves altering employees’ construction of meanings by using a discourse that sets a new direction for a firm. All organizations need to make changes in their strategies, structures, management processes and administrative procedures. Many organizations go about this change using a dual core approach, which is a balance between the technical side and the management side of an organization. The technical side refers to the employees who actually produce the product or service that the company offers while the management side ensures that the day to day operations of the company are being fulfilled and the performance objectives are being met. While the two sides may have very different ideas of what changes need to take place, it is imperative that both sides be on the same page and working toward the same goal.
In addition to becoming larger, there are also some other reasons why organizations must change their strategies. The first reason is the persistent pressure from shareholders for greater profitability. This requires business leaders to continually update their strategy. Theses updates are necessary to remain aligned with customers’ changing needs and priorities, while generating the necessary profits. This demands that strategies must be executed successfully within increasingly shorter time-periods.
The second reason relates to the increased complexity of organizations. In many organizations the activities performed to create products and services cross multiple functional, organizational, and geographical boundaries. Consequently, any strategic change program is likely to affect the people, processes, structures, technologies, suppliers, and business partners that work both within and across these boundaries. Hence, strategic change programs are becoming highly complex, resulting in increased risk of failure due to oversight.
The third reason is the difficult challenge faced by managers to balance the demands of successfully executing complex change programs with the demands of managing today’s business performance. In situations where management is strongly tied to reward schemes based on today’s performance, it is challenging to achieve active participation for the creation of tomorrow’s organization. However, as a result of the relentless pressure from stakeholders for repeated performance, managers cannot afford to dedicate their time, effort and resources to one set of demands exclusively. This balance is particularly challenging during the high-risk period when a business transitions to a new strategy.
The fourth reason is the low levels of involvement of a large number of managers across all functions at an early stage of strategy execution. The mechanics of involving large numbers of people in complex discussions leads organizations to restrict involvement in the quest for urgency. Often managers see these early stages as bureaucratic, unnecessary, and delaying real action. However, such involvement is required to obtain commitment to change and for the development of effective implementation plans.
The fifth reason is the difficulty of securing the required resources to execute the strategy. Often, as a result of the large number of concurrent change programs, many of the organization’s resources will already be allocated. Furthermore, as such resources are limited, managers will compete for them, and, once within their control, will endeavor to “own them” to secure their own goals.
New strategies should focus on innovation, productivity and risk management. Productivity can be as easy as having employees working longer hours, implementing new technologies in order to speed up product development, or simply reducing inventory and using effective communication. Firms also need to look to international expansion as another potential strategy. By doing so, they open themselves up to new markets and new customers while being exposed to new ways of doing business and new retail concepts. Business is also all about managing risk. In difficult times, effectively managing risks like political instability, currency fluctuations, transportation costs, and rising energy costs has a direct effect on an organizations ability to survive in a struggling economy.