Managing Strategic Change

Incremental change: small adjustments made, usually over a long period of time, towards the desired end result; it usually does not alter current working practices in any significant way

Disruptive change: an irreversible change to products, processes and markets; a change that later the future completely from what was expected before the change

Flexible organisation: an organisation that can respond quickly to changes. taking place in the external environment; includes a flexible workforce structure that allows capacity to be increase or reduced quickly and easily in response to external pressures

Issues with flexible organisations:

• restructuring
• delayering
• Flexible employment contracts: working arrangements that give some degree of flexibility about how long, where, when and at what times employees work; the flexibility can be in terms of working times, working location or the pattern of working

Organic structures: features include flat, organised structures; horizontal communication and interactions; low levels of specialisation because knowledge reside wherever it is most useful; decentralisation involving a great deal of formal and informal participation in decision making

Mechanic structures: features include hierarchal and bureaucratic organisational structures; highly centralised authority; formalised procedures and practices; highly specialised functions

Knowledge and Information Management (KIM): the practice of organising, storing and sharing vital knowledge and information so that everyone in an organisation can benefit from its use

Organisational culture: the unwritten code that affects the attitudes and behaviour of staff, approaches to decision making and the leadership style of management; the shared values of an organisation, including the beliefs and norms that affect every aspect of work life, from how people greet each other to how major policy decisions are made

Individualism v Collectivism

Some societies value the performance of individuals

For others, it is more important to value the performance of the team

Has important implications for financial rewards at work (e.g. individual bonuses v profit-sharing for bigger groups)

Power Distance

This considers the extent to which inequality is tolerated and whether there is a strong sense of position and status

A high PD score would indicate a national culture that accepts and encourages bureaucracy and a high respect for authority and rank

A lower PD score would suggest a national culture that encourages flatter organisational structures & a greater emphasis on personal responsibility and autonomy

Long-term orientation

This category is concerned with the different emphases national cultures have on the time horizons for business planning, objectives & performance

Some countries place greater emphasis on short-term performance (so-called short-termism), with financial and other rewards biased towards a period of just a few months or years.

Other countries take a much longer-term perspective, which is likely to encourage more long-term thinking.

The key implication of this category is the impact on investment decisions and risk-taking

Masculinity v Femininity

This somewhat unfortunately-named category considers the differences in decision-making style

Hofstede linked what he called a “masculine” approach to a hard-edged, fact-based and aggressive style decision-making

By contrast, ”feminine” decision-making involved a much greater degree of consultation and intuitive analysis

Uncertainty Avoidance

This category essentially considers the different attitudes to risk-taking between countries

Hofstede looked at the level of anxiety people feel when in uncertain or unknown situations

Low levels of uncertainty avoidance indicate a willingness to accept more risk, work outside the rules and embrace change. This might indicate a more entrepreneurial national culture

Higher levels of uncertainty avoidance would suggest more support for rules, data, clarity of roles and responsibilities etc. These cultures might be less entrepreneurial as a consequence

Indulgence v Restraint

Indulgence stands for a society that allows relatively free gratification of basic and natural human drives related to enjoying life and having fun

Restraint stands for a society that suppresses gratification of needs and regulates it by means of strict social norms

Strategic Implementation: the stage when a strategic plan is put into effect in order to achieve the objectives for which it has been designed; the stage where strategies are translated into policies, rules, procedures and operational targets within the different functional areas

External factors and the effective implementation of a strategy:

• Changes in a firm's external environment
• Changes in a firm's competitive environment

Internal factors and the effective implementation of a strategy:

• Leadership
• Organisational structure
• Organisational culture
• Communication
• Timing and distinctiveness
• Providing adequate resources
• Network analysis
• Monitoring and accountability
• Reviewing and evaluating 

Network Analysis: a method of planning business operations in order to identify the most efficient way of completing an integrated task or project. The main form of network analysis is a critical path analysis

Critical Path Analysis (CPA): the process of planning the sequence of activities in a project in order to discover the most efficient and quickest way of completing it

Critical Path: the sequence of activities in a project that must be completed within a designated time in order to prevent any delay in the overall completion of the project

Total float for activity: the number of days that an activity can be delayed without delaying the project

Measured by: LFT - EST - duration of the activity

Advantages of CPA

• Most importantly – helps reduce the risk and costs of complex projects
• Encourages careful assessment of the requirements of each activity in a project
• Help spot which activities have some slack ("float") and could therefore transfer some resources = better allocation of resources
• A decision-making tool and a planning tool – all in one!
• Provides managers with a useful overview of a complex project
• Links well with other aspects of business planning, including cash flow forecasting and budgeting

Disadvantages of CPA

• Reliability of CPA largely based on accurate estimates and assumptions made
• CPA does not guarantee the success of a project – that still needs to be managed properly
• Resources may not actually be as flexible as management hope when they come to address the network float
• Too many activities may the network diagram too complicated. Activities might themselves have to be broken down into mini-projects

Planned strategy: where the main elements of the strategy have been planned in advance and implementation involves putting the precise plan into effect in order to achieve the previously agreed objectives; also known as intended strategy

Emergent strategy: an unplanned strategy that emerges in response to unexpected opportunities and challenges; a response to internal and external changes that were not envisaged at the time of the originally planned strategy

Strategic Drift: A situation where a company responds too slowly to changes in its external and competitive environments; a company continues with a strategy that may have served it very well in the past but is no longer suited to the current circumstances

Reasons for strategic drift:

• Changes in the external and competitive environment are greater than the incremental changes being made in an organisation's strategy
• Organisational culture restricts the ability of an organisation to change at a rate that is necessary to cope with external changes or to maintain performance
• Leaders of an organisation continue to persevere with obsolete or largely redundant policies and practises and are not prepared to, or do not see the need to change
• An organisation simply reacts to changes in its external and competitive environment rather than innovating in a proactive way
• The strategic plan is not reviewed regularly to check that it is aligned well with what is happening in the external and competitive environments
• An organisation is not keeping up with, or adapting quickly or appropriately enough to, changes in technology

Divorce of ownership and control: separation of the two functions of ownership and control in public limited companies; ownership entails providing finance and therefore taking risks; control involves managing the organisation and making decisions

Corporate Governance: a set of relationships between a company's management, its board, its shareholders and other stakeholders; a system for protecting the interests of the owners (shareholders) of a company

Strategic planning: the process of determining an organisation's long-term goals and then devising a plan (strategy) to achieve them

Contingency Planning: Planning for the unexpected and, usually, unwelcome events that are, however, reasonable predictable and quantifiable; the objective is to reduce the risks and costs of such events on an organisation