Organisational transformation: 3 key stages for managing change

By | March 9, 2011

Sarah-Dixon---New-DeanIn a Dilbert cartoon the eponymous office hero casts his satirical eye over the process of organisational transformation, concluding it is carried out by non-communicative morons.  But are the problems really down to management style and lack of communication or is there a deeper malaise for managers?

A major challenge for managers today is lack of time to think and do things differently. But with day-to-day operational tasks and a focus on short-term results rather than strategic innovations taking up all their time, what then about securing the future? What do they do when the environment changes?

Understanding the process of organisational transformation and establishing the critical success factors for achieving change is of practical value for managers of any large organisations faced with the need to adapt to radical changes in the environment. Below are the three key stages for managing organisational transformation along with the critical success factors for managing change at each stage.

cartoon-2Stage 1: Break with the past

 

  • Bring in outsiders. The Board should introduce entrepreneurial outsiders with targeted expertise onto the top management team.
  • Break with your administrative heritage. Important mechanisms here can be the removal of blockers, rotation of managers, promotion of young managers untainted by the organisational heritage, the utilisation of project teams, the achievement of early successes and designing a suitable bonus/incentive system.
  • Use aspects of the administrative heritage that help the change process. Not everything that worked in the past needs to be thrown away.  This will vary from company to company. Some may be able leverage a traditional command-and-control management style to achieve more rapid implementation of change; however, in environments where a more democratic leadership style is the norm, it may be more appropriate to leverage other factors, for example, customer relationships, a strong R&D department, or the latent enthusiasm of organisational members for participating in new initiatives. Crisis is also an important lever for organisational change.

 

Stage 2: Manage the present

  • Vary your leadership style as appropriate. The top-down approach of Stage 1 may be still required to break with the past in some parts of the organisation, while other parts may by this stage already have the ability to learn and therefore may be given authority and empowerment to act.
  • Exploit best practice from your own or other organisations. This will require knowledge acquisition, knowledge internalisation and knowledge dissemination.
  • Reconfigure, divest and integrate resources. This involves everything from streamlining business systems to removing non-aligned employees to consolidating new acquisitions operationally and culturally.

 

Stage 3: Invest in the future

  • Empower the organisation.  The top management team should delegate to employees as well as motivating and enabling them to act.
  • Enable the organisation to engage in exploration of new ideas and business practices. You can achieve this by encouraging innovation, trial and experimentation and by developing a culture which encourages informed risk-taking and facilitates learning from mistakes. Exploration enables the organisation to develop new capabilities fitted to its specific context, rather than just importing systems and routines from other contexts.
  • Create new paths. This means creating a deliberate change in direction using new capabilities, whether that be in terms of new products, services, processes or business models. The combination of exploration and path creation will lead you to the “disruptive innovation” that will help you secure sustainable competitive advantage.

By going through these stages, organisations can establish new developmental pathways, enhance their strategic flexibility, and react successfully to changes in the environment.

Where is your business? Still rooted in its past and needing to change, or already engaged in exploiting best practice and exploring for new ideas to create new business pathways?

About Dr Sarah Dixon

Dr Sarah Dixon, Dean of Bradford University School of Management, completed her MBA at Kingston University, subsequently joining them where she held a variety of roles, culminating in director of postgraduate programmes for the Faculty of Business and Law. Gaining a DBA from Henley Business School in the interim, she went on to research activity at the University of Bath taking on the role of head of MSc programmes.

Her business career at Royal Dutch Shell Group included petrochemicals business management in Vienna and Moscow and later positions in strategic planning and mergers and acquisitions in London. She moved into business consulting as director of the strategy consultancy, Albany Dixon Ltd before joining the School in September 2010.

Specialties: Strategy, Organizational change, Dynamic capabilities, Organisational learning

13 thoughts on “Organisational transformation: 3 key stages for managing change

  1. Denise Howard

    Sarah in my experience, if transformation is not led from the top it will not happen. If you are in the middle of the organisation, you can have some influence ‘where you are’ but it is hard to change the status quo top to bottom from where you sit if you are not at the top.

    It needs the CEO/MD as the key driver and visionary to desire, create and manage the transformation. And in many cases, it is hard for the CEO to acknowledge that such transformation is necessary because of an implied criticism that their best efforts have not been enough. I think that is why so many examples of organisational transformation come during a time of crisis for the organisation. I think Darwin’s quote sums up the challenge nicely “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” Are our leaders adaptable enough to a fast-changing world?

  2. Rakesh Anand

    Hi Sara,

    Very well elaborated roadmap for implementing change. My 2 cents to the discussion. I believe the key areas of focus should be the leadership focus and drive, holistic communication framework to ensure the organisational buy-in to the change, the capability assessment of where the organisation is and where it intends to go in the future, early benefit realisation, performance management system to ensure that the organisation is on track to realise the change benefits.

    Regards!!

  3. Sarah Dixon

    Denise and Rakesh,
    Thank you very much for your helpful comments. I agree with you Denise – change has to come from the top in the first instance. This was the result of my research into organisational transformation in the Russian oil industry. I had wanted to focus my research just on dynamic capabilities and organisational learning – but lo and behold my data was telling me that I would have to include an analysis of the top management team if I were to gain any proper understanding of the process of transformation. So transformation does indeed start at the top with a break with the past – my article on breaking with administrative heritage published in the Leadership and Organization Development Journal describes this process in more detail (See reference below). But you have rightly identified the key problem here – as you say: ‘how hard iit is for the CEO to acknowledge that transformation is necessary because of an implied criticism that their best efforts have not been enough.’ Indeed the CEO is part of that restrictive administrative heritage which has built up so much organisational inertia over time.

    Of course there are companies that succeed in constantly reinventing themselves, without the need for the catalyst of a crisis. Many of the technology companies are examples of this – take Intel, Apple, IBM etc. So the key is to create an organisational culture where adaptation can thrive – that it is the third stage in my model above.

    I agree with you, Rakesh, about the way to manage change – you mentioned the key points:
    – Strong leadership
    – Shared vision within the organisation
    – Identification of capability gaps and how to address them
    – Quick wins
    – Strong performance management
    – Monitoring of implementation

    It sounds so easy, yet in reality it presents all organisations with huge challenges.

    Dixon, Sarah E.A. and Day, Marc, (2007) ‘Leadership, Administrative Heritage and Absorptive Capacity’, Leadership and Organisational Development Journal, 28:8, pp. 727-748

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  5. Falguni Patel

    Dear Sarah,

    I am a student of EMBA with your University from the Dubai region. Recently I had an opportunity to undertake change management project with a company in Dubai. In my experience, indeed the decision to change needs to be from top management, however as Denise pointed out, the top management would not want to accept that a change is required as that shows them in bad light in terms of poor management. However, one way to get around this, which worked for me, was to find out an area of incompetency which results in under achievement of a strategic goal or not achieving it with the organization’s full potential. This kind of presentation makes the management interested and compels a further discussion as to what needs to be done to improve that and at this point all the issues from the roots are brought out which culminates into a change decision.
    Also, most of the times, it is the management who needs to change their management approach to make the change successful. They are the ones which has the highest influence on the rest of the company in terms of motivation, changing work culture, giving direction by setting goals and targets, clear deliverables and overall a clear communication to the organization that change is THE need of the hour and needs to be given highest priority and support by indicating the benefits of change not only to the organization’s financials but also the employees such as hassle free work environment, clear bonus and incentive structure and a growth path for high performers.

    Thanks & Regards,
    Falguni Patel

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  8. Colin Graves

    Just doing some research for a ‘managing change’ workshop I am running so thanks for useful insights. Love the Dilbert cartoon!

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  12. Adam Cairns

    Just found your website. I’m a busy NHS CEO interested in leadership and change. I really like this article as it captures a lot of what I personally believe about successful change. If you’re interested I’m blogging about my own experiences in Cardiff http://adamcairns.co

    Having moved from Yorkshire to Wales I’m really glad to see the Bradford School of Management going from strength to strength.

    Thanks – I’ll be coming back for more!

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