MANAGEMENT OF STRATEGIC CHANGE

Change is the only unchanging factor of a changing society. Changes may be gradual or drastic, minor or substantial, partial or whole. Drucker observes Very few businesses can prosper even five or seven years without substantial change and massive rethinking of the very concepts on which they are based. There are exceptions, to be sure, but they are rare.

The fundamental questions confronting an organization include, points out Drucker, How can we anticipate change? How can we make organizations create the future? and How can we manage change? Companies which fail to change suitably would disappear or decline to insignificance. The Fortune has for more than 45 years been publishing each year a list of 500 top manufacturing companies every year but today only onethird of the original list have maintained themselves in their position. Changes may be needed in portfolio strategy, functional strategies, organizational structure or organizational culture.

Henry Mintzberg has classified changes into 4 types: Incremental Piecemeal Transformational Flux

 The most frequent type of changes are incremental (which are gradual changes) and piecemeal changes (when some strategies change and others remain unchanged). When strategies change without any clear direction, it is regarded as a period of flux. An incremental change is logical and relatively small departure from the past, like expansion of a firms market to a region within a new country or an improvement in a historical technology. A change is discontinuous or novel whenever it does not directly follow the historical logic of the firms development. For example adoption of an entirely new technology, conglomerate diversification. It is pointed out that in many respects gradual change makes a lot of sense, and arguably managers should seek to manage strategy so that it is achieved. Incremental change, might therefore, be seen as an adaptive process in a continually changing environment.

 When environmental changes are drastic and substantial, as the economic liberalization ushered in India in1991, discontinuous or transformational changes may be needed. In this context, it is appropriate to reproduce a part of the TISCO Chairmans statement at the AGM in 1997: Like integrated steel plants like Tata Steel will need to compete domestically with newer more cost effective plants which are being commissioned in India, as also against imported steel products. To meet these challenges, the company has undergone a significant transformation in recent years. It has closed down some of its older mills and Steel Melting shops, replacing them with state-of- art steel, making and continuous casting plants.

 The performance of Tata Steel is no longer measured against its own past history. The company now benchmarks itself against world class steel producers with a view to match or better the best of breed and adopts best global practices. Benchmarking has contributed significantly towards the companys goals in cost reduction and improved manufacturing efficiencies.

BARRIERS TO CHANGE
One common barrier is the lag in recognizing the problem or need for change. The major reason for this is the failure to understanding the need for change or environment.

Behavioural Resistance:
One of the important barriers to change is the Behavioural Resistance. They are of two types.
Inertial resistance Conscious resistance

Inertial resistance to change arises from the existing perceptions, beliefs and habits of work in the organization. Inertial obstacles are critical factors whenever the strategic requirements call for changes of culture, management styles and management preferences. Conscious resistance on the part of individuals or groups of deliberate actions or inaction that is intended to delay or deny change. Conscious resistance may be either covert or overt. It may range from foot dragging to outright organized challenge. One source of Conscious resistance is the belief that change is not good.

Resource constraints: In many cases an important barrier to change is resource constraints. For example change strategy may involve large investment which is difficult for an organization to mobilize.

Environmental constraints: Environmental factors are labour policy, resistance from public on account of technology adopted, ecological issues and product mix etc.

IMPLEMENTATION OF STRATEGIC CHANGE IMPORTANT STEPS

Determination of change strategy

has to be decided in advance. Finalization of change strategy involves evaluation of alternatives and choice of the best. Evaluation should include the scope of change, possible barriers to changes, and strategies to overcome them.

 Leadership Implementation: refers to appointing right people at the top positions for carrying out the strategy. Successful implementation of the strategy depends upon commitment and capability of people.

 Communication: It is important to communicate the change strategy to all within the organization. The objective is to sell the idea of change by convincing people.

 Organization: Another important requirement for implementing the strategy is the right organization. This may even involve restructuring of the existing organization or creation of an entirely new one.

 Resource allocation: Many strategic changes require resource commitment. Timely availability of sufficient resources is an essential requirement for implementation of strategic change.

 Tactics: It refers to specific measures or way of action or management style to implement the change strategy such as Direction, participation, intervention, accommodation and networking.