Page 207 - Managing Change in Organizations

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Chapter 12 ■ Diagnosing change
monitoring the environment for new products, markets, distribution channels,
technologies, etc. We shall see that making change is not simply a rational process.
Yet diagnosing change involves and requires systematic effort, even if the diagno-
sis itself may need ‘selling’ if we are to gain acceptance for it. Having the right diag-
nosis is of no use if we can do nothing about it. The diagnosis must not only be
right, it also needs to gain acceptance enough to make implementation feasible.

Monitoring performance, measuring effectiveness

What do we mean by effective? How do we assess whether or not our organiza-
tion is doing well? What do we mean by ‘doing well’? Are we concerned with
profit? Or sales value? Or market share? Or service levels? If so, what level is sat-
isfactory? The same as last year? Last year plus 5 per cent? Profit expressed as a
percentage of turnover? Rate of growth of sales volume or of profit? Satisfactory
for whom? Shareholders, managers, employees, clients, customers? What about
comparing our performance with that of competing, or at least similar, organiza-
tions? A manufacturing company would compare itself with other companies in
its own industry and sectors. A hospital would be compared with other hospitals
of a similar size and case load and mix. We can readily see that the question of
how well we are doing becomes quite complex.
We need to assess effectiveness for two reasons: first, identifying sources of
ineffectiveness might lead us to restructure or reorganize in order to improve; sec-
ond, because ineffective organizations present a tougher context in which to
implement technological, product or service changes. We are often involved in
both. We need to introduce new technology and discover that progress will be
impeded by lack of in-house expertise and by poor attitudes to change. Part of
our preparation for the new technology involves bringing in the expertise
(whether by forming a new department, through secondments or transfers or by
hiring consultants). Also involved may be a training programme designed to
introduce people to the new technology carefully, partly to allay any fears they
may have about the impact of change.
Dealing with sources of ineffectiveness as part of the implementation of

change provides us with two advantages: first, it will allow us to implement
change more effectively, and more speedily; second, it will make future changes
easier to implement because the organization will have become more adaptable.
In essence, this will be because the people involved will have learned through the
process of change, learned about themselves, about the new technology and
about how to prepare people to cope with change. A positive experience of
change, properly exploited by all those involved, leaves people more capable of
handling future change. Following Itami (1987), this means that the organization
has developed its ‘invisible assets’. Invisible assets are the knowledge base from
which all employees operate. To quote Itami:
Invisible assets are the real source of competitive power and the key factor in
corporate adaptability for three reasons: they are hard to accumulate, they are
capable of simultaneous multiple uses, and they are both inputs and outputs
of business activities.

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