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The challenge of implementing a strategic plan is how to manage the change. A strategic plan would become unnecessary if it did not envisage changes.
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Unit 4: Business Strategy &
Leadership
Lesson 10: Strategic Plan & Change Management
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 2
Aims & Objectives
After reading this presentation, you should be able to understand The structure & configuration of the ‘Strategic Plan’ Strategic Change The issues involved in strategic change, the cultural web,
and strategic drift Change Management & activities involved in managing
change.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 3
Questions
What is a strategic plan?
What is strategic change? What causes/triggers strategic change?
Should organizational change be incremental or transformational?
What is the impact of culture on organizational change?
What is change management?
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 4
What is Strategic Plan?
Also called as ‘Resource Plan’ is the ultimate outcome of the planning process
Determines ‘what’ and ‘how’ the existing resources and competences of the organization has to be utilized.
Also identifies the need to create new resources and competencies.
It is based on the critical success factors (components where organization must excel/outperform competition) derived from the business & policy objectives
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 5
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 6
Process for Developing the Strategic Plan
Step 1: Choose targeted stakeholder segments The explicit strategy identifies the customer segments that the
organization intends to serve as well as those it leaves for others to serve
There must be a focus so that the limited organizational resources can be effectively used
The decision on target market segments, an understanding of the opportunity space (potential market segments), the competitive environment as well as organizational competencies is essential
Step 2: Identifying their requirements Each customer segment is characterized by its own unique set of
requirements. Potential customers test each supplier against these requirements
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 7
Process for Developing the Strategic Plan
Step 3: Determine Performance Gaps Targeted customers should be used to provide information on
how the product or service meets their various requirements This gives the external perspective to identify performance
gaps. The organization has to close these gaps in order to improve the relative competitive position and protect itself against more aggressive competitors who are pursuing their own improvement objectives
Step 4: Set Stakeholder Improvement Priorities Improving requirements that are unimportant to a targeted
customer segment is often a waste of precious organizational resources that can be used elsewhere
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 8
Process for Developing the Strategic Plan
Step 5: Link Stakeholder Requirements to Internal Processes Identify the relationship of each process within the
organization to the key stakeholder requirements identified in Step 2
This is the key to the linkage of external improvement priorities to internal processes
Step 6: Establish Process Improvement Priorities Organization has to establish an internal perspective on the
improvement priorities. This step involves, identifying the critical internal processes whose improvement will have the greatest strategic impact
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 9
Process for Developing the Strategic Plan
Step 7: Establish Metrics & Goals for Process Improvement Priorities Once the priorities have been established, create programs
for those changes that are considered strategically important.
The anticipated benefits, risk, and estimated costs, timescale & effort required is determined.
Three major challenges that need to be addressed: Choosing the Metrics: What exactly should we measure? Setting Goals: How will we define success? Avoiding over commitment: Do we have the organizational
capacity to do all of it?
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 10
Process for Developing the Strategic Plan
Step 8: Reassess Strategy Organizations should check subsequent results against the
original plan and take corrective actions based on what is learnt from the diagnosis
The primary objective is constructive learning, an effort to continuously improve the strategic planning process itself.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 11
What is Strategic Change?
<Post World War-2> Drive to improve efficiency; resulted in control-oriented organization (simplification of work; environment was ignored) > Emergence of human relations approach to management > <1970s> Marketplace demanded quality products & services; with fierce competition, organizations had to differentiate from competitors > <Current Situation> Success of organizations determined by ability to respond to demands of micro-markets; depends on flexibility – ability to respond to change
A restructuring of an organization’s business or marketing plan that is typically performed in order to achieve an important objective.
For example, a strategic change might include shifts in a corporation’s policies, target market, mission or organizational structure.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 12
Strategic Change Triggers (1/5)
Strategic organizational change originates from Change in external environment (competitors’ actions, government
regulations, economic conditions, and technological advances) Change in internal environment (new corporate vision & mission,
purchase of new technology, mergers & acquisitions, and decline in morale of the company)
Most common and influential forces of organizational change are the emergence of new competitors, innovations in technology, new company leadership, and evolving attitudes towards work
Strategic organizational change can be Proactive, management foresee the necessity for change and undertake
necessary steps to adjust to meet the environment challenges Reactive, management resist change and be forced to transform to
survive
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 13
Strategic Change Triggers (2/5)
Exit Strategy at the end of the PLC As the market for a companies product reaches maturity,
market growth and profits begin to diminish. Despite the fact that cost cutting occurs and marketing budgets are reduced, when the opportunity cost of deploying capital and resources to another more favorable opportunity presents, companies either sell off existing operations or cease production altogether.
This can be in response to a new superior product release, a change in consumer purchasing habits or the introduction of a new technology.
Irrespective of the cause, capital and labor are redeployed to new more promising business activities.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 14
Strategic Change Triggers (3/5)
Change in Government Employees that work for government departments can find existing
initiatives get discontinued when a change in government takes place.
The subsequent refocus of priorities that takes place as a result of the new governments mandate can create redundancies or a radical change in the way the department conducts its affairs.
Mergers and Acquisitions When two competitors merge, the existing business operations of
both companies get centralized and streamlined. This can result in the merging of departments and processes, cost cutting and a redeployment of existing resources.
Mergers and acquisitions are one of the most frequent causes of organizational change.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 15
Strategic Change Triggers (4/5)
Strategic Refocus When the company changes its business processes to adopt a new
paradigm, organizational change ensues. Example, a company shifting its focus form a product centric to a customer centric platform.
New manufacturing specifications, new marketing and a change in logistical operations create a change reaction for change throughout the organization.
Structural Change When new administrative processes get introduced, organizational
change results. Example, consider the ramifications of centralizing an archiving process
using computer technology. Old redundant processes get replaced by new software and hardware and staff members are required to retrain to operate the new systems.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 16
Strategic Change Triggers (5/5)
Process Oriented When a company redefines its manufacturing operations by
changing its manufacturing process to a JIT operation, infrastructure, warehousing and logistical operations are required to be redesigned and deployed.
Stakeholder & Ownership Pattern Privatization of public sector undertakings have resulted in
transformational change. Example, BALCO (Sterlite), & VSNL (renamed as Tata Communication Ltd.) which was sold to private sector
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 17
Strategic Change
Extent of the impact of strategic change depends on the nature of the change. Strategic change can be Incremental, or Transformational
Incremental Change Doesn't challenge existing assumptions and culture. It doesn't modify the
existing organization. It uses existing structures and processes; it causes little disruption; it's relatively low risk; it's slow and it may not produce enough change.
Aimed at making many small-scale improvements to current business processes. It focuses on small-scale improvements because experience shows the likelihood of succeeding with a small-scale improvement is much higher
Provides time to build on the skills, routines, & beliefs of employees within the organization
Responsible for ‘Strategic Drift’
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 18
Strategic Change
Transformational Change Changes existing structures, the existing organization and
the existing culture. It's relatively high risk. It's fast and focuses on major breakthroughs.
Reengineering is an example of transformational improvement. It involves radically rethinking and redesigning a major business process with the objective of achieving large-scale improvements in overall business performance quickly
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 19
Culture & Strategic Change
Miles and Snow, based on an in-depth cross-industry study of a relatively small sample or large corporations, developed a theory that there are three superior performing business types and all others are average or less than average.
Organizations are characterized as Defender Culture, finds change threatening and tend to
favor strategies which provide continuity & security Analyzer Culture, favors growth through market penetration
and is generally follower in the market Prospector Culture, flourishes on change and favors
strategies of market/product development supported by flexible management styles
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 20
Organization Type
Defender Culture
Prospector Culture
Analyzer Culture
Characteristics
Mature company in a mature industry that seeks to protect its market position through efficient production, and strong control mechanism
Company seeks to exploit new opportunities to develop new products/services and create new markets | Core skill lies in marketing and R&D
Company avoids excessive risks but excels in the delivery of new products/services | Focus on limited range of products & seeks to outperform competition on the basis of quality
Entrepreneurial Problem
How to maintain a stable share of market?Function best in stable markets, strive for cost leadership, specialize in particular areas to maintain low costs
How to locate & exploit new product or markets opportunities? Have broad product lines & promote creativity over efficiency | Prioritize new product & service development
How to maintain shares in existing markets while identifying & exploiting new markets?Maintain efficiency of established products while remaining flexible enough to pursue new business activities
Administrative Problem
How to ensure efficiency?Centralization, Vertical integration
How to coordinate diverse business activities & promote innovation?Decentralization, flat structure, collaboration
How to manage both existing markets & new products?Cultivate collaboration between departments & units (balance between defender & prospector)
EnvironmentChanges slowly, rely on long-term planning
Unpredictable, succeed by examining market
Balance between defender & prospector
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 21
Cultural Web (1/3)Aligning Organizational Culture with
Strategy
Stories – The past events and people talked about inside and outside the company. Who and what the company chooses to immortalize says a great deal about what it values, and perceives as great behavior
Rituals and Routines – The daily behavior and actions of people that signal acceptable behavior. This determines what is expected to happen in given situations, and what is valued by management
Developed by Gerry Johnson & Kevan Scholes, 1992
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 22
Cultural Web (2/3)Aligning Organizational Culture with
Strategy
Symbols – The visual representations of the company including logos, how plush the offices are, and the formal or informal dress codes
Organizational Structure - This includes both the structure defined by the organization chart, and the unwritten lines of power and influence that indicate whose contributions are most valued
Developed by Gerry Johnson & Kevan Scholes, 1992
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 23
Cultural Web (3/3)Aligning Organizational Culture with
Strategy
Control Systems - The ways that the organization is controlled. These include financial systems, quality systems, and rewards (including the way they are measured and distributed within the organization.)
Power Structures - The pockets of real power in the company. This may involve one or two key senior executives, a whole group of executives, or even a department. The key is that these people have the greatest amount of influence on decisions, operations, and strategic direction.
Developed by Gerry Johnson & Kevan Scholes, 1992
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 24
What is Strategic Drift?
Where an organization’s response to the changing environment is often within the parameters of the organization’s culture
Faced with a stimulus for action, managers may seek to extend the market for the business, but may assume that it will be similar to their existing markets and therefore set about managing the new venture in much the same way as they have been used to.
If this is not successful, strategy development is likely to go into a state of flux, with no clear direction, further damaging performance.
Eventually transformational change is required if the demise of the organization has to be avoided.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 25
Risks of Strategic Drift
Phase 1: Distance between strategic change and environmental change is gradually increasing. If the drift is detected during this phase, organizational performance can be corrected
Phase 2: Influence of paradigm impacts the development of strategy. Strategy development is likely to be in flux, with no apparent direction. Drift is apparent & performance visibly affected (deteriorating)
Phase 3: Transformational change or demise
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 26
Symptoms of Strategic Drift
If there is little toleration of questioning or challenge in the organization (powerful symbols & stories of an historical & conservative nature)
Major power blockages to change, either because of resistant dominant leaders or because some layer of management is resistant to change
Little focus on external environment (markets)
Deteriorating relative performance: for example, is the performance keeping pace with or outstripping its rivals? Has there been a gradual decline in relative performance?
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 27
What is Change Management?
Change management is a structured approach for ensuring that changes are thoroughly and smoothly implemented, and that the lasting benefits of change are achieved.
The focus is on the wider impacts of change, particularly on people and how they, as individuals and teams, move from the current situation to the new one.
The change could range from a simple process change, to major changes in policy or strategy needed if the organization is to achieve its potential.
The underlying principle is that change does not happen in isolation – it impacts the whole organization (system) around it, and all the people touched by it.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 28
How do you Manage Change?
Change management focuses on people, and is about ensuring change is thoroughly, smoothly and lastingly implemented.
Typically, these will cover: Sponsorship: Ensuring there is active sponsorship for the change at a
senior executive level within the organization, and engaging this sponsorship to achieve the desired results.
Buy-in: Gaining buy-in for the changes from those involved and affected, directly or indirectly.
Involvement: Involving the right people in the design and implementation of changes, to make sure the right changes are made.
Impact: Assessing and addressing how the changes will affect people. Communication: Telling everyone who's affected about the changes. Readiness: Getting people ready to adapt to the changes, by ensuring
they have the right information, training and help.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 29
Activities Involved in Managing Change (1/2)
Ensuring there is clear expression of the reasons for change, and helping the sponsor communicate this.
Identifying "change agents" and other people who need to be involved in specific change activities, such as design, testing, and problem solving, and who can then act as ambassadors for change.
Assessing all the stakeholders and defining the nature of sponsorship, involvement and communication that will be required.
Planning the involvement and project activities of the change sponsor(s).
Planning how and when the changes will be communicated, and organizing and/or delivering the communications messages.
April 12, 2023TRIUNE GLOBAL | Hardy Alexander 30
Activities Involved in Managing Change (1/2)
Assessing the impact of the changes on people and the organization's structure.
Planning activities needed to address the impacts of the change.
Ensuring that people involved and affected by the change understand the process change.
Making sure those involved or affected have help and support during times of uncertainty and upheaval.
Assessing training needs driven by the change, and planning when and how this will be implemented.
Identifying and agreeing the success indicators for change, and ensure they are regularly measured and reported on.
April 12, 2023
Thank you
Hardy AlexanderFounder & Director | Triune GlobalBangalore – 560077Contact: +91 96864 48698Email: [email protected] Blog: dayscore.wordpress.com
TRIUNE GLOBAL | Hardy Alexander 31