Page 125 - Managing Change in Organizations

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Chapter 7 ■ Organizations in the twenty-first century: the value-added organization
■ The shift in power or added value from one player to another in the value
chain (from manufacturers to distributors or suppliers, or vice versa).
■ The need to cope with and exploit the increasing speed of business processes,
in particular time to market for innovative new products and services.
These are critical issues for competitive organizations. Business transformation is
a philosophy which challenges established practices and boundaries in a funda-
mental way. It involves challenging ‘the rules of the game’.

Changing the rules of the game

‘We’ve restructured, we’ve delayered, we’ve got close to our customers, we’ve
achieved zero fault manufacturing and service capability. Now what do we do for
an encore?’ Questions like this indicate that ‘business as usual plus’ is no longer
an adequate means of achieving sustained competitive success. In future, this will
go increasingly to organizations which are able to achieve radical change either
internally or externally, or, more probably, both. This is the central idea of the busi-
ness transformation philosophy. This approach to competitive strategy is based on
five key propositions:

1 Discontinuity in the market is more likely to result from radical rather than
incremental change, and this is likely to be driven as much by companies them-
selves as by social and economic factors.
2 Coping with strategic change needs to move from an emphasis on forecasting
to creating an organization which can respond to change fast.
3 Approaches to gaining and sustaining competitive advantage need to shift
from erecting barriers (vertical integration, proprietary technology, piling up
fixed costs to create scale, etc.) to overcoming or ignoring barriers (through out-
sourcing, building strategic alliances and the aggressive elimination of fixed
costs).
4 The basis of strategic thinking, therefore, needs to shift from a current per-

spective of market attractiveness and competitive capability to changing the
rules of the game, thus destabilizing entrenched players.
5 The role of leadership in this context is to affirm that ‘it’s achievable’ (provider
of a business vision), rather than ‘it’s impossible’ (controller/naysayer).
By changing the rules of the game, a business may be able to wrong-foot com-
petitors to such an extent that they may never recover; this can be achieved by
driving radical changes internally or externally. Thus the competitive break-
throughs of the future are likely to go to businesses which can transform either
their market or their organization, or both. This will involve radical rather than
incremental change and needs vision and leadership to bring it about. But before
business transformation can realistically be contemplated, a sound strategic basis
must be formulated on which subsequent actions can be built. Strategic thinking
must be the foundation of any intention or attempt to change the rules of the
game, and the programme will commence with a searching review of this essen-
tial management skill.
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