Strategy in action 4:

strategic change
Aims

▪ Identify and assess the different styles of leading strategic change

▪ Analyse how organisational context might affect the design of strategic change
▪ Assess the value of different levers for strategic change
▪ Identify types of strategic change
▪ Identify approaches, pitfalls and problems of leading strategic change
Why is Organizational Change So Difficult?

Organizational
routines

Complementarities Social and political

and fit structures

Limited
Conformity
search
Dynamic Capabilities

• A firm’s ability to integrate, build and reconfigure internal and external

competences to address rapidly changing environments (Teece et al. 1997
p.516).

• The organizational and strategic routines by which firms achieve new

resource configurations as markets emerge, collide, split, evolve and die
(Eisenhardt & Martin. 2000 p.1107).
Key elements in leading strategic change

Leadership and change ▪ Strategic leadership roles

▪ Styles of strategic leadership

Diagnosis ▪ The organisational context of change

▪ Adaptive change
▪ Turnaround strategy
Managing types of strategic change
▪ Revolutionary change
▪ Evolutionary change

▪ Forcefield analysis
▪ Building case for change
Levers for change ▪ Challenging the taken for granted
▪ Changing routines and symbols
▪ Political systems
Key issues in managing change

Strategy matters – in identifying the need for change and the direction of
change

Context matters – the right approach to change depends on the

circumstances. There is no ‘one right way’

Inertia and resistance – getting people to change from existing ways of

doing things is challenging
Strategic leadership
roles
❑ Leadership is the process of
influencing an organisation
(or group within an
organisation) in its efforts
towards achieving an aim or
goal
❑ Three key roles of top
management in leading
strategic change :
▪ Envisioning future strategy
▪ Aligning the organisation to
deliver that strategy
▪ Embodying change
Strategic leadership roles
Middle managers do not just implement strategy but have key roles in leading change :
▪ Advisers – on requirements for change and the likely blockages to change
▪ Sense making – interpreting the intended strategy for their specific part of the
organisation
▪ Reinterpretation and adjustment – of strategic responses and relationships as events
unfold
▪ Local leadership of change – aligning and embodying change at the local level
Leadership styles

Leaders can be categorised in two ways

▪ Transformational leaders – building a vision; an organisational identity built on

collective values and beliefs and energising people to achieve the vision

▪ Transactional leaders – focus on ‘hard’ levers of change, e.g. designing systems,

targets, financial incentives, project management and careful monitoring.
Styles of leading change
Description Advantages Disadvantages
Gain support for change by Develops support for change Time consuming. Fact based
generating, understanding and and a wide base of argument and logic may not
commitment through e.g. understanding convince others of the need for
Persuasion small group briefings and change. Or may gain national
delegation of responsibility for support without active change
change

Widespread involvement of Spreads not only support but Time consuming.

Collaboration employees on decisions about also ownership of change by Little control over decisions
what and how to change increasing levels of involvement made

Change leaders retain overall Spreads ownership and support Can be perceived as
coordination and authority but for change, but within a manipulation
Participation
delegate elements of the controlled framework. Easier
change process to shape decisions

Change leaders take most Less time consuming. Potentially less support and
Direction decisions about what to Provides a clear change commitment, so changes may
change and how. Use of direction and focus be resisted
authority to direct change
Styles of change leadership according to context
Styles of managing change

Persuasion
▪ Convince employees that change is imperative
▪ Make the change relevant to each group
▪ Ensure ongoing communication of progress
▪ Reinforce behavioural guidelines and use rewards

Disadvantages/problems:
▪ Deeply embedded assumptions don’t change easily
▪ Apparent acceptance of change may not be delivered
▪ Can take a long time and may be costly
Styles of managing change

Collaboration
▪ The involvement of those affected by the change process in setting the change
agenda.
▪ To foster a positive attitude to change, increase ownership and commitment.
▪ Build readiness and capability to change

Disadvantages/problems:
▪ Little control over the suggestions made.
▪ May lead to change within the existing paradigm.
▪ Can be time-consuming
Styles of managing change

Participation
▪ The change leader retains authority over the change process but delegates elements
of it.
▪ Employees involved in originating ideas for change and how to deliver change.
▪ To increase commitment to change and enhance motivation.
▪ The strategic leader retains overall control..

Disadvantages/problems:
▪ Can be perceived as manipulation
▪ May lead to disenchantment and de-motivation.
Styles of managing change

Direction
▪ The use of personal authority to establish clarity on future strategy and how change
will occur
▪ Used when the need is for rapid change or specific outcomes.

Disadvantages/problems:
▪ Potentially less support and commitment
▪ So proposed changes may be resisted.
Diagnosing the change context
Approaches to leading change depend on the organisational context.
(For example leading change in a small, entrepreneurial firm is likely to differ from leading
change in a large corporation.)

DRIVING FORCES
RESTRAINING FORCES
THE PROPOSED
(Positive forces for
CHANGE (Obstacles to change)
change)
Forcefield analysis

Forcefield analysis: provides a view of forces that act to prevent or facilitate change.
Various concepts and frameworks can contribute.:
▪ The change kaleidoscope
▪ Mapping activity systems
▪ Stakeholder mapping
▪ The culture web
▪ The 7-S framework
Forcefield analysis for developing strategy
Levers for strategic change

Changing
A compelling case Challenging the operational
for change taken for granted processes and
routines

Power and political

Symbolic changes
systems
Examples of suitability
Types of Ritual Role Examples in change initiatives

Rites of passage Signify a change of status or role Induction to new roles

Training programs

Rites of Recognize effort benefitting organization Awards ceremonies

enhancement Promotions

Rites of renewal Reassure that something is being done Appointment of consultant

Focus attention on issues Project teams and workshops

Rites of Encourage shared commitment

integration Reassures rightness of norms
Rites of conflict Reduce conflict and aggression Negotiating committees
reduction

Rites of Throwing down the gauntlet New CEO setting challenging goals
challenge
Political mechanisms in organisations
Managing change from a political perspective can be achieved using various mechanisms :
▪ The control of resources, expertise and information
▪ The support and association with elites (powerful and/or influential people)
▪ The building of alliances
Change tactics
Timing :
▪ Building on an actual or perceived crisis
▪ Exploiting windows of opportunity
▪ Symbolic signalling of time frames
Visible short-term wins – the demonstration of such wins can galvanise commitment to
the wider change strategy
Types of strategic change

(or turnaround)
Types of strategic change

Four types of strategic change:

▪ Adaptation – can be accommodated with the existing culture and can occur
incrementally
▪ Reconstruction (turnaround) – rapid change but without fundamentally changing the
culture
▪ Revolution – fundamental changes in both strategy and culture
▪ Evolution – cultural change is required but this can be accomplished over time This style
relies on cultural systems to foster trust and mutual understanding
Turnaround strategy

A turnaround strategy is where the emphasis is on speed of change and rapid cost
reduction and/or revenue generation
Elements of turnaround strategies :
▪ Crisis stabilisation
▪ Management changes
▪ Gaining stakeholder support
▪ Clarifying the target market(s) and core products
▪ Financial restructuring
Turnaround: revenue generation and cost reduction steps
Increasing Revenue Reducing costs

• Tailor marketing mix to new • Reduce labour and

market management costs
• Review pricing strategy • Improve productivity
• Focus on needs of key targets • \reduce marketing to non-core
markets market
• Exploit all avenues of extra • Tighter control on finances and
revenue cash
• Invest cost savings in growth • Reduces stocks and manage
areas debt
• Cut non profitable products
Managing revolutionary change

Change that requires rapid and major change as well as culture change.
Likely to involve :
▪ Establishing a clear strategic direction
▪ Top Management changes
▪ Multiple styles of change management
▪ Culture change
▪ Monitoring change
Managing evolutionary change

Change in strategy that results in transformation but incrementally.

Involves building on and exploiting existing capabilities while also developing new
capabilities
Two approaches:
▪ Organisational ambidexterity
▪ Stages of evolution
Organisational ambidexterity

Involves both the exploitation of existing capabilities and the search for new capabilities.
May be achieved by :
▪ Structural ambidexterity
▪ Diversity rather than conformity
▪ A culture of questioning and challenge
▪ Type of leadership
Stages of evolution

Moving from one strategy to a changed strategy over time .

May involve :
▪ Identifying interim stages of transition
▪ Recognising (or initiating) irreversible changes
▪ Sustaining top management commitment
▪ Winning hearts and minds
Why change programmes fail?

Change programmes may fail because of :

▪ Death by planning
▪ Loss of focus
▪ Reinterpretation of change in terms of current culture
▪ Disconnectedness
▪ Behavioural compliance
▪ Misreading scrutiny and resistance
▪ Broken agreements and violation of trust
 Lecture Summary
Approaches, styles and means of change need to be tailored to the context of that change. So :
▪ Situational leadership – strategic leaders need to adopt different styles of managing
strategic change according to different contexts.
▪ Forcefield analysis helps identify blockages to change and levers for change
▪ Levers for managing strategic change include building a compelling case for change,
challenging the taken for granted, the need to change operational processes, routines and
symbols, the importance of political processes, and other change tactics
▪ There are different types of strategic change in terms of the extent of cultural change
required and whether it can be achieved through incremental or rapid change
▪ Different approaches to leading change are likely to be required for the different types of
change