Reading 5- B301B
MANAGING STRATEGIC CHANGE-STRATEGY, CULTURE AND CHANGE
Explaining strategy development in organizations
An incremental perspective
Organizations take a long period of time when strategies develop incrementally. That is, decisions build one upon the other which means that the past decisions mould the future strategy. Some writers argued that these incremental developments are logically and consciously managed by senior managers to cope with the complexity and uncertainty of strategy developments. Managers are aware that it is impossible to know all about the influences that will affect the future of the organization and that, organizations are political entities where trade-off between the interests of different groups is inevitable. This is why it is impossible to have an optimal strategy since strategies must be compromises to go forward. To cope with such uncertainties and compromises, strategies must be developed gradually so that new ideas can be tested and commitment within the organization is achieved whilst maintaining low scale change. This has become the logical incrementalism.
A cultural perspective
Managers hold a set of core beliefs and assumptions that are specific and relevant to the organization in which they work, and are learned over time. Whilst individual managers may hold paradigm which is a deeper level of beliefs and assumptions that are shared by the managers of the organization, that operate unconsciously and define, in a basic ‘taken for granted’ fashion, an organization’s view of itself and its environment.
This paradigm which is in every organization creates a homogeneous approach to the interpretation of complexity that the organizations face. All the confusing signals that face the organization are made sense of and interpreted by this paradigm. This paradigm evolves over time and reinforced by the history or success of the organization, and provides a repertoire of actions and responses to the interpretation of signals that are experienced by managers. Its most beneficial, is that it encapsulates the unique and special skills and competences by which the organization achieves a competitive advantage.
The paradigm as a filter
Strategies are developed by people. A one mechanism of creating a strategy is through paradigm. Managers advocate the strategies that emerge through the social and political processes are described as configured within the bounds of this paradigm. Changes within or outside the organization affect the organization’s performance, and if managers perceive such changes, they may not acknowledge them. Paradigm is a cognitive structure or mechanism that is protected by a web of cultural artifacts and can cause resistance to significant changes. Routines of behavior, rituals of the organizations, ways things are done, etc, are embedded in this paradigm.
Culture audits by managers
Cultural web can be used as a convenient device for cultural audit. Cultural audit is an exercise taken by the managers to discover the nature of their organization in cultural terms, and the way it impacts strategy and difficulties of change.
Company A is a menswear clothing retailer. It was highly successful in 1970s with all the strategies it tried. However, when competition in 1980s became fierce, it affectedits performance badly. Trying to shift to a new strategy and provide fashionable clothes, the shift was slow in the face of the paradigm that assumed a low cost, high volume buying approach, emphasizing on sourcing from the Far East. Even when outsiders were brought in to effect such changes, they didn’t last long.
Implications of strategic change
1-Resistance to change
Faced with pressure to change, managers try to deal with the situation in ways that are in line the existing paradigm and the social, political and cultural norms of the organizational life. Difficulties rise when a strategic change requires actions that are out the scope of the existing paradigm and cultural web. Managers try to search for solutions that are within the paradigm and the cultural web. In the case of menswear retailer, the first attempt to change was in the form of copying clothes from the UK boutiques, and trying to distribute it through its low cost channels to sell it with low competitive prices. This was a merchandize and buying approach that has nothing to do with the quality of products, changing mentality of head quarters, changing stores, etc.
2-Strategic drift
In these circumstances, strategic drift occurs gradually and becomes less in line with the existing paradigm and cultural web.
Strategic drift occurs incrementally and might take years because managers are more comfortable when changes are with the paradigm. When the drift becomes recognized, the strategy is likely to enter a period of flux in which there is no clear direction and there is a good deal of disquiet and counter argument about the strategic direction of the organization. This will affect the performance negatively. Then, radical changes to the strategy occur.
What are the implications of managing change?
1-Traditional planning approach: managing strategic change becomes a matter of how the systems and structures will be employed to achieve the strategy. This is a rational view but dubious. The problem with this notion is that it neglects many important processes such as the socio-cultural ant symbolic processes which they preserve current ways of doing things. Moreover, it is very important for paradigm to be shifted which is the most difficult of all to achieve. For this strategic change to succeed there is a need to exist a climate capable of embracing and promoting this change.
2-Managing strategic change: in order to facilitate strategic change, it is very important not to take anything for granted. These are guidelines to follow:
-perform cultural audit
-make explicit those aspects that are difficult to change
-Facilitate ways to overcome such barriers through political process and should be addressed in the planning agenda.
3-Creating a climate of change
Acceptance of change is essential and depends on a widely accepted perceived need for it. This need may rise as a result of crisis or threat, such as a downturn of performance or fierce competition. Managers may inflate internal negative performance or set up internal devices to challenge the status-quo. For successful change, it is important to create a climate that is capable of embracing and promoting the change.
4-Intervention by outsiders
what we mean by outsiders is someone who physically come from outside the organization such as new CEO. A new CEO will bring a new perspective to the organization which is probably rooted from previous paradigm of another organization. He will see the context of the organization fresh and less linked to political systems. Consultants often recommend for the changes to be within the current paradigm to have a chance of being implemented.
5-Providing signals and symbols
Managing the change was often conceived by executives as control systems and cultural change. These are means of change and not signaling change.
Ex, in the menswear clothing retailer, it is not the action plan or the words of managers that signaled the change. When managers required the staff to wear clothes that they are selling in the shop, it signaled the change. Symbols of change are important to signal the change. Ex, change of logo, change in language and terminology used in the organization or even smashing an old machine in front of employees.