Diagnosing Change Situations PDF

Diagnosing change situations The ability to diagnose change situa$ons is important if organiza$ons are going to have any chance of responding to and managing change successfully. However, diagnosing an organiza$onal situa$on is far from being an exact science, there are some tools and techniques tha...

Diagnosing change situations The ability to diagnose change situa$ons is important if organiza$ons are going to have any chance of responding to and managing change successfully. However, diagnosing an organiza$onal situa$on is far from being an exact science, there are some tools and techniques that can help: - Greiner’s model of the organiza$onal life cycle -> useful for drawing aCen$on to periods when organiza$onal change is likely to be needed. Stakeholder, SWOT and PEST analysis -> can lead to planned change and can increase awareness of the need for con$nuous incremental change. Mul$ple-cause diagrams -> help understand the rela$onships among events leading to outcomes can lead to a beCer understanding of the interac$ons between the many di:erent and o>en simultaneous causes of change. Looking for breakpoints Strebel (1996a) uses the concept of the ‘evolu$onary cycle of compe$$ve behaviour’ (=gure 2.5, p. 53) to introduce the idea of ‘breakpoints’, that is those $mes when organiza$ons must change their 13 strategies in response to changes in compe$tor behaviour. The cycle of compe$$ve behaviour involves two main phases: 1. The innova$on phase when a new business opportunity is discovered. This triggers a breakpoint to introduce a phase in the evolu$onary cycle that causes a divergence in compe$tor behaviour as they aCempt to exploit new opportuni$es with innova$ve new o:erings. This phase corresponds to variety crea$on in the evolu$onary cycle. 2. Convergence phase. During this phase, the least eJcient leave the scene and only the =Cest survive. This is a phase of cost-cuLng and consolida$on un$l the returns from cost reduc$on decline and people see the advantage of looking for new business opportunity – bringing a new breakpoint with the cycle star$ng all over again. In summary, the compe$$ve cycle suggests that there are two basic types of breakpoint: - Divergent breakpoints associated with sharply increasing variety in the compe$$ve o:erings, resul$ng in more value for the customer. Convergent breakpoints associated with sharp improvements in the systems and processes used to deliver the o:erings, resul$ng in lower delivered cost. There are a number of issues associated with the iden$=ca$on of breakpoints. First, organiza$on need to have both formal (environmental scanning, benchmarking, data collec$on) and informal (open aLtudes on the part of managers and personnel, a degree of coopera$on between departments and divisions, culture suppor$ve of change and innova$on) systems turned in to searching for indicators in the environment. The Burke-Litwin model usefully draws together the array of variables that come into pay when a change is triggered. The model highlights how things 14 G are interconnected and illustrates the ‘ripple e+ect’, that is how change in one factor or variable extends throughout the organiza$on. Looking for breakpoints with leading indicators Convergence is usually easier to an$cipate because it is built on a situa$on that already exists. Typical indicators are shown below. When several of these are in place, all that is needed is a player or event to trigger a breakpoint: - Compe$tors -> when convergence is visible in increasingly similar products, service and image (no di:eren$a$on). Customers -> when the di:eren$a$on between o:erings looks increasingly ar$=cial to customers and the segmenta$on in the market starts breaking down. Distributors -> when the bargaining power in an industry shi>s downstream to distributors who play compe$tors against each other. Suppliers: when they cannot provide a source of compe$$ve advantage because everyone knows how to use their inputs. Divergence is more diJcult to an$cipate because it is based on a new o:ering that does not yet exist. However, if the following are in place the industry is ready for a new o:ering that breaks with the past: - Customers -> when an increasingly saturated market is accompanied by declining growth rates and restless customers. New entrants -> when restless customers are aCrac$ng new entrants. Compe$tors -> when declining returns may force them to experiment with new o:erings or look elsewhere for pro=ts. Suppliers -> when new resources and, especially, new technology are frequently the source of a divergent breakpoint. Distributors -> when they lag behind because they have to adapt to the new o:ering. Hard (di.cult) and so (messy) problems Some$mes, the signals that managers get are not clearly categorized as breakpoints; neither can they always be separated easily into issues concerned with compe$tors, customers, suppliers and distributors. These signals are frequently confused and di:use and it is not easy to see clearly just what type of situa$on prevails – the only thing manager perceive are ‘problems’. Paton and McCalman (2000) use the terms ‘hard’ and ‘so>’ to describe, respec$vely, these two types of problems. Another way of seeing situa$ons is as diJcul$es and messes (Acko:, 1993). Di.cules and messes DiJcul$es are bounded in that they: - Tend to be smaller-scale and are less serious in their implica$ons. Have clear priori$es as to what might need to be done. Generally, have quan$=able objec$ves and performance indicators. Have a systems/technical orienta$on. Generally, involve few people. Have facts that are known and which can contribute to the solu$on. Have agreement by the people involved on what cons$tutes the problem. Tend to have solu$ons of which the type at least is known. - Have known $mescales. Are ‘bounded’ in that they can be considered separately from the wider organiza$onal. context and have minimal interac$ons with the environment. Messes are unbounded in that they: - Tend to be larger-scale and have serious and worrying implica$ons for all concerned. Are an interrelated complex of problems that cannot be separated from their context. Have many people of di:erent persuasions and aLtudes involved in the problem. Have subjec$ve and at best semi-quan$=able objec$ves. Have an absence of knowledge of factors and uncertainty as to what needs to be known. Have liCle agreement on what cons$tutes the problem, let alone the solu$on. Have usually been around for some $me and will not be solved quickly. Have fuzzy $mescales. Are ‘unbounded’ in that they spread throughout the organiza$on and, some$mes, beyond. The change spectrum Asking a number of ques$ons about a change situa$on may help to iden$fy whether it is characterized by hard or so> complexity and whether it is more of a diJculty or more of a mess. Paton and McCalman (2000) have devised what they call the ‘TROPICS’ test to help locate a change situa$on on a con$nuum from hard to so>. The TROPICS test, as with any analysis of the problems according to the lists illustra$on 2.13, can only be a guide to the nature of the problem. 16