Change refers to the alteration of a system’s structure or process, regardless of whether it is beneficial or detrimental. It disrupts the existing equilibrium or status quo within an organization. Change in one area of the organization can influence the entire organization or various parts of it at varying rates and levels of significance. It can impact individuals, the structure, technology, and other facets of an organization. Change may occur either as a response to external influences or as a proactive initiative.
Management initiates proactive change to improve organizational effectiveness, as it is a crucial aspect of effective management. Proactive change involves moving from the current state to a desired state in response to internal and external factors that impact individuals, groups, and organizations. Even successful organizations cannot assume survival without addressing change.
In order to remain viable, organizations in specific sectors of the economy must possess the ability to swiftly adjust. Failing to do so can result in significant expenses. All organizations function within an ever-evolving environment and experience internal modifications themselves. The effectiveness of organizations that prioritize bureaucratic or mechanistic systems is declining. Organizations characterized by rigid hierarchies, excessive functional specialization, narrow job descriptions, inflexible rules and procedures, and impersonal management are ill-equipped to effectively respond to the requirement for change.
Organizations require flexible and adaptive designs and systems that foster employee and manager commitment. Those that fail to facilitate timely change are unlikely to survive. The rapid acceleration of change can be attributed to the self-perpetuating nature of knowledge and technology, which continually generate innovations at an exponential pace. Organizational change entails moving from the current state to a desired future state in order to enhance effectiveness.
The aim of planned organizational change is to find innovative methods of utilizing resources and skills to enhance a company’s ability to generate value and enhance returns for stakeholders. A company facing decline may need to reorganize its resources to better align with the current market conditions. For instance, IBM and General Motors faced decreasing demand for their products during the 1990s and have since been exploring alternative approaches for utilizing their resources to boost performance and regain customer interest.
Organisational Development And Change involves the need for even successful organizations to adjust how they utilize resources in order to innovate new products or explore untapped markets for current products. Retail giants like Wal-Mart, Target, Blockbuster Video, and Toys “ ” Us have actively undertaken expansion efforts and the opening of new stores to capitalize on the demand for their offerings. In fact, in the past ten years, more than 50% of Fortune 500 companies have implemented significant organizational transformations to enhance their capacity to generate value.
The only constant in recorded history is change. Those who are considered “winners” in society, both in the past and present, are often characterized by their skill in managing and capitalizing on change. Whether it be individuals, societies, nations, or enterprises, those who have been successful in commercial or technological growth have achieved dominance or a competitive edge by being innovative and enterprising. They have shown both initiative and entrepreneurship.
Management and change are often considered interchangeable, as change is essentially a journey that requires careful consideration of the purpose, route, and companions. The process of managing change involves navigating the complexities of this journey, which includes evaluating, planning, and implementing operational, tactical, and strategic “journeys”. The ultimate goal is to ensure that the journey is meaningful and the destination remains relevant. The Industrial Revolution, a revolutionary period in Europe from 1750 to 1880, greatly accelerated the pace of change beyond imagination.
The rate of change in various economies has continuously increased and shows no signs of slowing down. This progression can be traced through different technological advancements: from the spear and sword to the gun, the shift from scribe to printing press, the replacement of manpower with James Watt’s steam engine, the substitution of horse and cart with the combustion engine, and the transition from typewriter to word processor. The examples go on, highlighting this ongoing acceleration of change.
Change is highly significant and cannot be overlooked. Although it is possible to try predicting the future, these forecasts only provide a general sense of what might happen and lack a comprehensive blueprint for upcoming events or scenarios. Skillfully and gradually managing change can contribute to molding a future that increases the chances of an enterprise’s survival. Change is unavoidable and continuous, propelled by technological advancements, societal progress, and innovative ideas.
Managers, regardless of the type of enterprise they work for (whether it be public or private, service or manufacturing), will be continually evaluated on their aptitude for successfully and proficiently managing change. Regrettably, the managers in the early 21st century will need to showcase their capability to handle intricate change scenarios within increasingly shorter time frames.
The pace of change has greatly accelerated. Before the invention of the wheel, mankind relied on foot for centuries. Eventually, the wheel merged with the ox and horse, resulting in a significant “technological convergence”. In a mere century, humans have achieved remarkable feats such as walking on the moon, launching satellites into orbit, and the dominance of the combustion engine in transportation and society. The existence of robots and advanced manufacturing facilities that resemble scenes from science fiction is now a reality. Your neighbor or competitor may be located on the opposite side of the planet in terms of technological advancements. Furthermore, bio-technology represents the promising future of science.
The pace of mankind may have increased, although the world’s rotation remains constant. Nevertheless, businesses and managers now confront intricate and rapidly changing operating environments. The convergence of technologies, products, and industries has created ambiguity in categorizing companies. For instance, is a media company involved in broadcasting, telecommunications, data processing, or all of these? Similarly, a supermarket chain may be seen as involved in general retail or as a provider of financial services.
In the highly competitive global markets, it is lucrative to have control over and exploit the supply chain. Previously separate products or services are now being combined into consumer solutions, which is a trend that will persist in the future. Car manufacturers, for instance, have evolved from solely producing vehicles to distributing them through advanced dealer networks. In addition to this, they provide appealing servicing options and offer various financing choices that are often connected to different insurance packages. Similarly, utility companies now offer a wide range of services beyond their initial core offering.
Scottish Power has expanded its operations by acquiring utilities in foreign countries and has recently entered the water, gas, and telecommunications industries. This move has transformed the company into a comprehensive utilities provider that offers convenient services to both domestic and commercial customers. However, managing change in such a rapidly evolving environment poses challenges in maintaining control over the organization and preserving its existing core competencies. Finding effective solutions for this complex task is not straightforward, and there are no established guidelines for best practices. The success of change strategies depends largely on the competency of the management team, particularly their ability to design, evaluate, and implement these strategies.
To succeed and flourish, organizations must recognize and accept change. Neglecting change can be risky and result in adverse outcomes. It is crucial for organizations to devise strategies that effectively demonstrate their ability to manage different potential future scenarios. As an example, Drucker highlighted the importance of gathering information about external events and conditions as a core aspect of a prosperous strategy.
In order to effectively prepare for new changes and challenges brought about by sudden shifts in the world economy and in the nature and content of knowledge, businesses must have this information. By looking externally, we can see that the average modern organization has to confront several issues, which will necessitate internal change. Currently, organizations are addressing or will need to address six significant external changes in the new millennium.
- A large global marketplace made smaller by enhanced technologies and competition from abroad. The liberalization of Eastern European states, the creation of a simple European currency, e-trading, 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?
- A Worldwide recognition of the environment as an influencing variable and government attempts to draw back from environmental. 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?
- 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 healthconscious population?
- 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?
- The changing workplace creates a need for non-traditional employees. Many organizations have downsized too far and created management and labour skill shortages as a result. 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 labour force. Equal opportunity in pay and non-pecuniary rewards will be issues in the future. How will an individual organization cope with these pressures?
- The knowledge asset of the company, its people, is becoming increasingly crucial to its competitive wellbeing. Technolgical 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 viae-mail and other technology applications are all still reliant on the way you organize your human resources.
In order to effectively manage your people in the future, it’s crucial to acknowledge that change is a constant and should be addressed continuously. It may not always be easy, but planned change is possible. It’s important to understand that expecting a flawless outcome through strict programming is unrealistic. So, what motivates organizations to consider making changes?
There are clear factors that will require a departure from the current situation. The most apparent are related to changes in the external environment that provoke a response. Yet, disregarding the environment as the sole cause of change would be a substantial denial.
This would suggest that organizations were simply adrift on a stormy sea of change, lacking the ability to exert influence or steer. The changes within an organization occur in response to both business and economic events, as well as to the processes of management perception, decision-making, and implementation. In this regard, managers observe events that indicate the necessity for change. They also observe the internal circumstances surrounding change such as structure, culture, power systems, and control mechanisms, which provide additional insights on whether it is worthwhile to implement change.
Organizations undergo change for various reasons. One such reason is the desire to remain ahead of change by adopting proactive measures. This involves anticipating market issues or mitigating the impact of a global economic downturn on their own business. Proactive change aims to improve effectiveness in several areas, including human resources, functional resources, technological capabilities, and organizational capabilities.
Human Resources: The most valuable asset of an organization is its human resources. Employee skills and abilities set the organization apart and give it a competitive edge. As a result, organizations need to regularly evaluate their structures in order to optimize motivation and organization of human resources for effectively utilizing their skills.
Common types of change initiatives aimed at human resources involve:
- new investment in training and development activities so that employees acquire new skills and abilities;
- socializing employees into the organizational culture so that they learn the new routines on which organizational performance depends;
- changing organizational norms and values to motivate a multi-cultural and diverse work force;
- ongoing examination of the way in which promotion and reward systems operate in a 10 MBA –H4010 Organisational Development And Change iverse work force;
- changing the composition of the top-management team to improve organizational learning and decision making.
Functional Resources: Each organizational function must establish procedures to effectively manage the specific environment it faces. As the environment evolves, resources are often reallocated to functions that can generate the highest value. Important functions gain significance while those that are becoming less useful decrease in size. By modifying its structure, culture, and technology, an organization can enhance the value created by its functions.
Moving from a functional to a product team structure can expedite the new product development process. Making changes in the functional structure can establish a motivating environment for individuals to perform. Shifting from traditional mass production to a manufacturing operation focused on self-managed work teams often allows companies to improve both product quality and productivity, provided that employees can reap the advantages of the new work system.
Technological Capabilities: The ability to adapt and seize market opportunities is a crucial advantage for organizations, made possible by their technological capabilities. To remain appealing to customers, it is essential for organizations to constantly innovate products or enhance existing ones. Equally important is improving the manufacturing process to ensure high-quality and reliable goods and services. At the organizational level, creating an environment that converts technological competencies into stakeholder value is vital, often necessitating restructuring of activities.
IBM has recently restructured its organization to effectively utilize its strengths in IT consulting. Previously, IBM was unable to convert its technical capabilities into business opportunities because its structure was not aligned with consulting. Instead, its focus was on manufacturing and selling computer hardware and software, rather than offering guidance and advice.
Organizational Capabilities: Through designing the structure and culture of an organization, it can effectively utilize its human and functional resources to leverage technological opportunities. Enhancing the relationship between individuals and functions is a common approach to organizational change, aiming to improve their capacity to generate value.
At all levels of the organization, there are shifts in structure and culture that involve altering individual routines for customer interaction, reshaping work group dynamics, enhancing collaboration between divisions, and transforming corporate culture through adjustments to the top management team. These interdependent levels of change necessitate modifications in multiple areas simultaneously.
Imagine an organization putting resources and effort into recruiting a team of specialized scientists who focus on a new technology, like biotechnology. If this investment pays off, it will lead to the development of a functional resource and technological capability. As a result, upper management will have to review the organization’s structure and how it incorporates and coordinates its other functions to make sure they harmonize with the new resources. In order to fully utilize these resources in the best way possible, switching to a product team structure may be necessary.
While it may be necessary to downsize and remove non-essential functions, organizations and their managers must recognize that change is not always problematic. The challenge often arises from an inability to effectively manage change, which can result from using improper processes and lacking a clear vision and understanding of the conceptual framework.
