Unit 4: Business Strategy & Leadership

Lesson 10: Strategic Plan & Change Management

 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.

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 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?

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 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 objectives
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TRIUNE GLOBAL | Hardy Alexander May 10, 2012 5
 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
requirements
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 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 elsewhere
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 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 impact
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 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?

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 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.

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 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 organizations 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
corporations policies, target market, mission or organizational
structure.
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 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
survive
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 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.
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 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.
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 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.
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 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
sector

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 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
Doesn't challenge existing assumptions and culture. It doesn't modify the
existing organization. It uses existing structures and processes; it causes little
disruption; it's relatively low risk; it's 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
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 Strategic Change

Transformational Change
Changes existing structures, the existing organization and the
existing culture. It's relatively high risk. It's 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 quickly

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 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
TRIUNE GLOBAL | Hardy Alexander development supported by flexible management
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 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 | Focus
Characteristics 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 of
Problem 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 collaboration
Problem Decentralization, flat between departments &
structure, collaboration units (balance between
defender & prospector)
Changes slowly, rely on Unpredictable, succeed Balance between
Environment
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long-term planning by examining market May 10, 2012 20
defender& prospector
 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, 1992
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 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, 1992
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 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, 1992
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 What is Strategic Drift?
Where an organizations response to the changing environment
is often within the parameters of the organizations 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.
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 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 demise

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 Symptoms of Strategic Drift
If there is little toleration of
questioning or challenge in the
organization (powerful symbols
& stories of an historical &
conservative nature)
Major power blockages to
change, either because of
resistant dominant leaders or
because some layer of
management is resistant to
change
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Little focus on external
environment (markets)
Deteriorating relative
performance: for example, is
the performance keeping pace
with or outstripping its rivals?
Has there been a gradual
decline in relative
performance?
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 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.
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 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 who's affected about the changes.
Readiness: Getting people ready to adapt to the changes, by ensuring
they have the right information, training and help.
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 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
TRIUNE and/or delivering the communications messages.
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 Activities Involved in Managing
Change (1/2)
Assessing the impact of the changes on people and the
organization's 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.
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Hardy Alexander
Founder & Director | Triune Global
Bangalore 560077
Contact: +91 96864 48698
Email: halexander@triuneglobal.com
My Blog: dayscore.wordpress.com

Thank you
TRIUNE GLOBAL | Hardy Alexander 31 May 10, 2012