Managing Strategic Change: Types, Barriers, and Overcoming Resistance

1. 10 Managing strategic change Recap Year 1: Complete the diagram below State 3 leadership styles. 10.1 Managing change

2. 10.1 Managing change • In this topic you will learn about • Causes of and pressures for change • Types of change include: • internal change • external change • incremental change • disruptive change • Managing change should include: • Lewin’s force field analysis • The value of change • The value of a flexible organisation • Flexible organisations include: • restructuring • delayering • flexible employment contracts • organic structures v mechanistic • knowledge and information management • The value of managing information and knowledge • Barriers to change • Kotter and Schlesinger’s four reasons for resistance to change • How to overcome barriers to change • Kotter and Schlesinger's six ways of overcoming resistance to change

3. Managing change Do you like or fear change? • Managing change is the combination of activities involved in planning for, implementing, coordinating and monitoring the process of change • For change to be achieved with maximum positive outcomes and minimum negatives it is necessary to manage it • Change occurs when a business alters its structure, size or strategy to respond to internal or external influences • Change may be necessary to help a business meet its aims and objectives • Change creates opportunities and threats • Change should not be seen as bad but must be managed carefully to ensure a business maintains or increases its competitiveness as a result of change

4. Discussion – why do people respond differently to change? Why do people fear change? What do these diagrams tell you about attitudes to change? How do these relate to change in the workplace? Draw a diagram to illustrate your reaction to change.

5. Causes of and pressures for change • To meet objectives • Gain market share • Increase shareholders’ worth • Respond to external forces • Technological advancements • Political and legal changes • Consumer demand • Respond to internal forces • Employee pressures • Owners’ power • Experience curve • Gain competitive advantage • Economies of scale and scope • Market development Look at the history of M&S from 1884 to present. How has it changed? What were the key internal and external causes of and pressures for change?

6. Types of change What does PESTLE stand for? Can you think of one example for each part of PESTLE that has affected a big business of your choice in recent years? • Internal change • Change that happens from within the business e.g. change of leadership or strategy or realignment of values • External change • Change that happens from outside of the business e.g. PESTEL environment or the competitive environment • Incremental change • Change that is implemented over time with a number of small changes being made on a regular basis to achieve ongoing improvements • Disruptive change • Change that is rapid and unexpected having a dramatic effect on the way in which an industry or businesses operate

7. Types of change How would you describe change within Uber and the taxi industry as a whole? Try to refer to internal, external, incremental and disruptive change in your answer. You may wish to do some additional research. Uber Uber was founded in March 2009. It uses a mobile phone app that allows customers to search for a local car driver who will transport them to a specific destination. An estimated price is given on the app and the service is quick and efficient. No money is exchanged; the fee comes straight out of the customer’s Uber account. The service has impacted on taxi drivers globally. Non-Uber drivers have lost trade and there have been protests worldwide from drivers who believe that Uber has created unfair competition. The quality of Uber’s service has led to an increase in the use of services in the market as a whole. People are taking far more journeys. Uber has a corporate objective of increasing global market share. This disruption to the market has had a dramatic impact. By 2015 Uber operated in over 100 cities and 58 countries. Uber is currently working on new product development. With the forecast rise of the self-drive car, Uber drivers are concerned that they might be replaced soon.

8. managing change • Change is often viewed as a complex project and therefore requires project management • The activity of delivering the required change within a predetermined set of resources e.g. time, personnel and finance • The people within a business are crucial to implementing and managing change • Techniques include: • Identifying a project champion • The person responsible for driving a project forward and gaining commitment • Establishing project group • A group of specialists from different backgrounds who are tasked with achieving the desired change • Gaining commitment from employees

9. Lewin’s force field analysis • There are two opposing forces when change is being implemented • Driving forces who are in favour of change and pushing for it to happen as they welcome change • Resisting forces who are against change and fighting against it happening as they prefer the status quo • Lewin’s model of change attempts to identify: • The balance of power between the two forces • The key decision makers • Those people for the change and those against it Further reading.

10. Group activity • Imagine a scenario where your school or college has decided to change the normal day • The following changes have been suggested • Start 30 minutes earlier in the mornings • Shorten lunch by 10 minutes • Cancel any afternoon breaks • Have every 2nd Friday afternoon off • Decide are you going to be on the side driving for change or resisting change • Split into 2 teams to prepare and present your arguments • Where does the balance of power lie?

11. Lewin’s force field analysis Using the articles on the left and your own research draw a diagram similar to the one shown above to show the driving and resisting forces at Barclay’s when they wanted to change the culture of the bank. Culture is the way things are done and will be studied in more detail in 10.2.

12. The value of change Change is of great value. A business that is able to respond to change is better placed to maintain a competitive advantage. The value of change includes: • Embrace change in the external environment e.g. respond to technological advancements • Engage employees as a result of responding to their changing needs e.g. greater flexibility to match work life needs • Take advantage of opportunities e.g. new market or new product development • Respond to changes in the competitive environment e.g. a new competitor entering the market • React to changing needs and tastes of society to meet customers’ expectations Nestle to remove artificial flavours in US chocolate. What was the value of change to Nestle? Are there any disadvantages?

13. The value of a flexible organisation • A flexible organisation is one that is more able to respond to change quickly • The following actions may improve the flexibility of an organisation: • Restructuring • Changing the way in which the workforce is organised e.g. the span of control, hierarchy or from a functional structure to a matrix structure • Delayering • Removing levels from within the hierarchy e.g. taking out a level of junior management • Flexible employment contracts • Employees contracts allow for a degree of flexibility in terms of hours to be worked, number of hours guaranteed, place of work and tasks to be carried out What actions did Morrison’s CEO take to achieve a leaner organisation? What are the advantages and disadvantages of his actions?

14. discussion • Should businesses be allowed to use zero hour contracts to increase flexibility?

15. The value of a flexible organisation Organic structures v mechanistic structures

16. The value of change • Knowledge and information management • Information systems will help keep managers informed allowing for more scientific decision making • Monitoring of internal and external trends allowing a business to respond more quickly • Better able to meet customer needs maintaining a competitive advantage • Keep stakeholders informed making it easier to implement change as and when it is needed How could China’s new Supercomputer help businesses manage change?

17. Barriers to change Barriers to change are the obstacles in the way i.e. the reasons why some people resist change. • Kotter and Schlesinger’s model shows 4 reasons for resistance to change: • Parochial self interest • Stakeholders fear that change will result in them being personally worse off and therefore want to protect themselves against this • Prefer the status quo • Stakeholders are happy with the way things are and therefore just want to keep it as it is • Different assessment • Stakeholders believe that the proposed change is not the correct course of action and that they could suggest a better solution • Misunderstanding and fear • Stakeholders believe that the motives for change are wrong and they therefore mistrust the decision makers Junior doctors strike. What are the barriers to change?

18. How to overcome barriers to change • Kotter and Schlesinger’s model shows 6 ways to overcome resistance to change: • Education and communication – providing stakeholders with all of the necessary information to help them understand the reason for change, how it will be implemented and the proposed outcome • Participation and involvement – providing a sense of ownership to stakeholders so they feel part of the whole change process • Facilitation and support – providing the necessary skills and resources to help stakeholders feel more confident with the change process • Negotiation and agreement – increase two-way communication by bargaining with stakeholders and if necessary making compromises to the change process • Manipulation and co-option – use of project champions who may receive incentives and are tasked with winning around others • Explicit and implicit coercion – pushing change through despite resistance. This may be a last resort Change management.

19. In pairs explain the links between the 2 models by Kotter and Schlesinger

20. 10.1 Managing change • In this topic you have learnt about • Causes of and pressures for change • Types of change include: • internal change • external change • incremental change • disruptive change • Managing change should include: • Lewin’s force field analysis • The value of change • The value of a flexible organisation • Flexible organisations include: • restructuring • delayering • flexible employment contracts • organic structures v mechanistic • knowledge and information management • The value of managing information and knowledge • Barriers to change • Kotter and Schlesinger’s four reasons for resistance to change • How to overcome barriers to change • Kotter and Schlesinger's six ways of overcoming resistance to change