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Strategic Plan & Change Management

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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Strategic Plan & Change Management

  1. 1. Unit 4: Business Strategy & Leadership Lesson 10: Strategic Plan & Change Management
  2. 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 2
  3. 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?TRIUNE GLOBAL | Hardy Alexander May 10, 2012 3
  4. 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 objectivesTRIUNE GLOBAL | Hardy Alexander May 10, 2012 4
  5. 5. TRIUNE GLOBAL | Hardy Alexander May 10, 2012 5
  6. 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 requirementsTRIUNE GLOBAL | Hardy Alexander May 10, 2012 6
  7. 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 elsewhereTRIUNE GLOBAL | Hardy Alexander May 10, 2012 7
  8. 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 impactTRIUNE GLOBAL | Hardy Alexander May 10, 2012 8
  9. 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?TRIUNE GLOBAL | Hardy Alexander May 10, 2012 9
  10. 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 10
  11. 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 11
  12. 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 surviveTRIUNE GLOBAL | Hardy Alexander May 10, 201212
  13. 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 13
  14. 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 14
  15. 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 15
  16. 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 sectorTRIUNE GLOBAL | Hardy Alexander May 10, 2012 16
  17. 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  Doesnt challenge existing assumptions and culture. It doesnt modify the existing organization. It uses existing structures and processes; it causes little disruption; its relatively low risk; its 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’TRIUNE GLOBAL | Hardy Alexander May 10, 2012 17
  18. 18. Strategic Change Transformational Change  Changes existing structures, the existing organization and the existing culture. Its relatively high risk. Its 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 quicklyTRIUNE GLOBAL | Hardy Alexander May 10, 2012 18
  19. 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 19TRIUNE GLOBAL | Hardy Alexander May 10, 2012
  20. 20. Organization Defender Culture Prospector Analyzer Culture Type Culture Mature company in a Company seeks to exploit Company avoids mature industry that new opportunities to excessive risks but excels seeks to protect its develop new in the delivery of new market position through products/services and products/services | FocusCharacteristics efficient production, and create new markets | on limited range of strong control mechanism Core skill lies in products & seeks to marketing and R&D outperform competition on the basis of quality How to maintain a stable How to locate &exploit How to maintain shares in share of market? new product or markets existing markets while Function best in stable opportunities? identifying & exploiting markets, strive for cost Have broad product lines new markets?Entrepreneurial leadership, specialize in & promote creativity over Maintain efficiency ofProblem particular areas to efficiency | Prioritize new established products maintain low costs product & service while remaining flexible development enough to pursue new business activities How to ensure efficiency? How to coordinate How to manage both Centralization, Vertical diverse business existing markets & new integration activities & promote products?Administrative innovation? Cultivate collaborationProblem Decentralization, flat between departments & structure, collaboration units (balance between defender & prospector) Changes slowly, rely on Unpredictable, succeed Balance betweenEnvironmentTRIUNE GLOBAL | Hardy Alexander long-term planning by examining market defender& prospector20 May 10, 2012
  21. 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 &KevanScholes, 1992TRIUNE GLOBAL | Hardy Alexander May 10, 2012 21
  22. 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 &KevanScholes, 1992TRIUNE GLOBAL | Hardy Alexander May 10, 2012 22
  23. 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 &KevanScholes, 1992TRIUNE GLOBAL | Hardy Alexander May 10, 2012 23
  24. 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 24
  25. 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 demiseTRIUNE GLOBAL | Hardy Alexander May 10, 2012 25
  26. 26. Symptoms of Strategic Drift  If there is little toleration of  Little focus on external questioning or challenge in the environment (markets) organization (powerful symbols & stories of an historical &  Deteriorating relative conservative nature) performance: for example, is the performance keeping pace  Major power blockages to with or outstripping its rivals? change, either because of Has there been a gradual resistant dominant leaders or decline in relative because some layer of performance? management is resistant to changeTRIUNE GLOBAL | Hardy Alexander May 10, 2012 26
  27. 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 27
  28. 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 whos affected about the changes.  Readiness: Getting people ready to adapt to the changes, by ensuring they have the right information, training and help.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 28
  29. 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. 29TRIUNE GLOBAL | Hardy Alexander May 10, 2012
  30. 30. Activities Involved in Managing Change (1/2) Assessing the impact of the changes on people and the organizations 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.TRIUNE GLOBAL | Hardy Alexander May 10, 2012 30
  31. 31. Hardy AlexanderFounder & Director | Triune GlobalBangalore – 560077Contact: +91 96864 48698Email: halexander@triuneglobal.comMy Blog: Thank youTRIUNE GLOBAL | Hardy Alexander 31 May 10, 2012