The Management of Change and Consultancy Practice - Term Paper Example

Individual assignment: the critical essay Objective ‘There are basically just two ways to change an organization. One is the incremental, step-by-step approach in which you attempt to bring people along with you. The ether is by engaging in rapid discontinuous change that is dramatic and which pulls people along by its sheer momentum.’ Aim This section presents the management of change and consultancy practice within the context of the organization. It provides an overview of the key issues involved in the management of change and some of the key issues that influence consultancy practice and the relationship with the client. It stresses the need to get away from the ‘hype’ that some writers generate on the topic of change management, to develop models and approaches to change that are grounded in experience. It goes on to argue that whatever the overt task of consultants within the organisation they are all at some level engaged in the processes of change management. Learning outcomes Understand how the external environment impacts on the organisation. have an analytical understanding of issues of proactive and reactive approaches to change undertake a stakeholder analysis appreciate the ways in which change can happen at different levels undertake a Systems Analysis to understand change issues place consultancy into the context of the development of organisations have an understanding of the underlying issues of planned change as an issue for consultants identify the different phases of the change process understand the different levels at which change can be approached and the implications in terms of the consultant's role identify the key roles of change agency and their situational appropriateness for the consultant CHANGE IN DIFFERENT LEVELS As we showed in the section on reactive/proactive change, efforts to undertake change can occur at a number of different levels. They suggest that there are three fundamental approaches to change - Alpha, Beta and Gamma. They suggest that: Alpha change is fairly superficial, sometimes referred to as “beauty parlour” approaches to change. It really only looks at symptoms and is essentially reactive change applied over a wide range of issues. In that sense although the change may have short term useful affects it never gets to be embedded deeply into the organisation. An example, from IT driven change at this level would be the installation of web/online access to all desktops in an office situation. This might well increase efficiency and even in some cases effectiveness in the production of required materials - although it can lead to an excess of information - but little else. Beta change is change which goes rather deeper than alpha. It is liable to be much more systematic and planned and can be organisation-wide in its implications. It is, however, essentially single-loop in its intent - it gets an improved state of organisational operation but essentially the organisation and its members do not undergo fundamental change - they are shaken but not stirred. In IT driven change Process Improvement would be an example of this level of change. It has these characteristics - it is incremental, it starts with where the organisation is at the time of change, implementation takes a short time, it requires bottom-up participation, its scope is fairly narrow and its level of risk is contained. Gamma change is fundamental change. The organisation undergoes a paradigm shift so that the organisation turns out to be fundamentally different. There is significant culture change and the members of the organisation learn to relate to each other in very different ways. Stacey for example discusses the distinction between what he calls “ordinary” and “extraordinary” management. In the former, change processes are handled in a linear, management driven, rational and incremental way - so that the learning “is done before doing and embodied in documents.” In the latter, change is handled in ad hoc, complex, political ways with an emphasis on creativity - so that learning” is done in the action. It is real time reflection-in-action. An organisation which moves from “ordinary” to “extraordinary” management - and he discusses many other implications of the two approaches - would be undergoing a paradigm shift. This would be the essence of a gamma transformational change effort. In IT driven change an example would be Process Innovation which, Davenport suggests, is radical change. It is immediate (i.e. not incremental) but because it is radical it has a long time span. It is top-down driven with a broad, cross-functional scope and is therefore high risk(Perren, L. (1996), “Resistance to change as a positive force: its dynamics and issues formanagement development”, Career Development International, Vol. 1, No. 4, pp. 24 – 28.) Indeed - and note the metaphor - he suggests that “process innovation and the organisation change it occasions are equivalent to radical surgery. They are the triple bypass operation, the removal of a large malignancy, the transplanted organ ... Process innovation can only be accomplished when the leaders of an organisation believe and can demonstrate that current modes of operation are a threat to the survival of the company. Despite all the hyperbole, the last sentence is probably correct for all Gamma change. The Dynamics of Change: Unfreezing … Movement Strategies of one’s own will not make any firm fast growth oriented. Organisation structure and systems also play significant roles in turning a strategy successful. For instance, in a rigid, bureaucratic organisation where everything is done based on written orders, strategies sensitive to time will not work. Control systems should also be tuned to implement the strategy. For instance, the success and growth of a restaurant operating in a highly competitive environment depends on the quality of items, lead time and attitude and behaviour towards customers, often more than on price. In such places, ordering and delivering systems have to be closely monitored to ensure competitiveness and resultant growth opportunities. For example, it may not be possible for it to charge a price that is higher than what the competition is charging, especially during the first one or two years. A detailed analysis of the competitive situation will also help in identifying the gaps and opportunities that may be available for exploitation. One of the most disturbing thoughts that come to an entrepreneur's min d during the conception and implementation stages of setting up a small enterprise is how he would reach the numerous prospective customers. They may be scattered in a wide geographical area. Many products are such that they require the help of marketing intermediaries — wholesalers, distributors, retailers etc, — to reach the ultimate consumers. Through their contacts, experience, and specialisation, these intermediaries make the product available and accessible to the target markets. Since intermediaries are independent organisations, they have their own ways of doing business. Their expectations and requirements regarding price, discount, credit, promotional support, and mode of delivery of the product may vary quite considerably. However, these usually conform to the trade practices that are prevalent in the market. Understanding the prevailing trade practices, therefore, forms an essential part of market assessment exercise. These three things - namely, analysis of the market demand, the competitive situation, and the trade practices — are important for sound market assessment. We shall now consider each one of them in some detail. The Advantages of Internal and External Consultants One of the trickiest questions that haunt an entrepreneur is: Whether the product or service that he wishes to offer to the market will have sufficient demand or not? Here comes the importance of a consultant.( Bridges, W. (2003), Managing Transitions: Making the Most of Change, 2nd Ed., De Capo Press, Cambridge MA.) Proper demand analysis and forecasting techniques help in the formulation of effective marketing programmes. For example, the price to be charged for a product, the advertising budget to be allocated for its promotion, and the sales promotion tools to be employed, will all be based, at least to some extent, on the assessment of its demand. If a firm is able to make an accurate prediction about the level of demand for its products, many decisions pertaining to marketing, inventory control, purchasing, production, personnel, and finance become exceedingly simple. The actual situation, however, is not so simple. The demand picture for most products and services is very complex and unstable. Even after much advancement in the field of marketing, demand forecasting remains a grey area. There are a large number of variables and assumptions involved in any exercise of demand estimation.” Many factors that impinge upon the demand for a product are external to the firm and hence uncontrollable. These include behaviour of the customers and competitors, government policies, technological breakthroughs, and general economic conditions. Many assumptions are required to be made which may or may not come true. The process becomes more complex for products which are innovative and yet to be tried in the market.( Leadership and Organizational Development Journal, Vol. 14, No. 4, pp. 10 -14.) To change an organization the incremental, step-by-step approach in which attempt to bring people along with The Motivations for Seeking the Help of a Consultant could be According to one definition, demand refers to the willingness and ability of consumers to buy products and services. Thus, when the consumers have both willingness and ability to buy a product, we say that there is demand for it. This is a very broad definition and if we consider all the potential customers who have the willingness and ability to buy a product we arrive at what is termed as its 'total market' or its 'potential market . Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing programme. - As clear from the definition, there are eight elements or variables which must be understood in order to determine market demand. Product: The class of product has to be clearly defined. For example, a manufacturer of fans must decide whether its product is table fan, ceiling fan, pedestal fan, exhaust fan, cooler fan, industrial fan, or a combination thereof. Then there are various sizes and other features in each class. Opportunities available to the manufacturer differ according to the exact nature and specifications of the product. Total volume: We have the question of how total volume is measured. It can be measured in terms of physical volume (i.e. in terms of units sold), in monetary terms, or both. It can also be measured in terms of per cent of total market, i.e., in relative terms. As an illustration, a demand analysis for shoes may reveal that in one particular region, the number of pairs of shoes sold is 1000, valued at 50,000pounds. In another region, the number may be 750, valued at 150,000 pounds. It is evident that depending upon our requirement; the data on total volume must be in appropriate units. Bought: The third element 'bought' needs to be understood. Do we have to assess the volume ordered or booked, despatched, paid for, received, or consumed? The figures may vary according to the basis used. In the case of food grains we normally refer to quantity consumed,, and in the case of construction industry we refer to orders booked. The relevance of the correct understanding of the term 'bought' becomes clear when we look at the example of the scooter industry. Only a few years ago there was a huge order booking and a customer had to wait for several years before he could get the delivery. Many people had booked scooters in anticipation of the high premium that was prevailing in the market. As the supply position improved, the premium reduced considerably and many of them cancelled their bookings. Thus, the figure of order booking was portraying a distorted picture of the actual demand for scooters. Customer group: Market demand for a product should be measured for the customer group that is of interest to the firm. Examples are a manufacturer of brief cases who estimates the volume to be bought by the high income group people, and an educational institution that estimates the demand for its courses from the already employed and the unemployed youth. Geographical area: The geographical boundaries within which market demand is to be measured must be clear. This is particularly true for a small enterprise since its operations are usually confined to small areas. Service establishments also have to define their geographical boundaries while estimating market demand. A Yoga centre or health clinic enjoys considerable demand in a metropolitan city but the concept is yet to establish its utility and acceptance in smaller towns and rural areas. Time period: Demand estimation must always be for specific time-period — for the next season, for the coming year, for the Plan period, and so on. When the time frame is an year or so, we call it short range forecasting, and when it is in terms of several years ahead, long range forecasting. As we increase the time frame, the forecast becomes more tenuous as the environmental factors may change beyond our present imagination. Thus, for products like computers and fashion goods it is almost futile to make any long range forecasts. Marketing environment: Market demand is influenced by many external environmental factors. These include general economic conditions, technological breakthroughs and developments, government policies, political changes, changes in consumer behaviour and competitive situation, and even natural phenomena like rainfall and weather conditions. A cold drink manufacturer has to make certain assumptions about the length and severity of summer period in the region of his interest; a film maker about the tastes of his audience; a helmet manufacturer about the new legislations that may be put into force for the scooter drivers; a TV manufacturer about the technological developments that may take place in the field of electronics in general and reception and transmission of audio and video signals in particular; and so on. Marketing programme: Finally, there are controllable factors which the firms use to influence the demand for their products. These may be termed as marketing efforts or marketing programmes of the sellers. These include pricing strategies, advertising, sales promotion, and personal selling. The marketing efforts proposed or assumed should be specified in order to determine market demand. The definition of market demand, although lengthy and complex, gives us an idea of all the factors and conditions on which the demand for a product depends. Company demand can be derived from the market demand. It is the company's share of the market demand. Here in N&F, Sales Manager is concerned with what she perceives to be differences between outlets in different parts of the country. But our marketing, production, sales and strategy are doing the best by the time. She has provided the details of the current outlets Despite the obvious success of the company over recent years the Sales Manager is concerned with what she perceives to be differences between outlets in different parts of the country. She has provided you with details of the current outlets (Appendix 1) and would like you to analyse the data to see if you can identify any differences. In particular she is interested to see if there is any difference between the product ranges sold and the profits made in different parts of the country. She would not only like to see the results of the various analyses that you undertake but also an explanation interpreting the results... To change an organization one by engaging in rapid discontinuous change that is dramatic and which pulls people along by its sheer momentum.’ DIFFERENCES EXPECTED BY A CONSULTANT AS A DECISION ANALYST N&F is a company founded at the end of 1981 based at a single site in Sheffield, manufacturing and distribution. From this modest start in 1981, the number and geographical spread of the customers have increased rapidly in part as a result of the company starting to sell directly to customers over the internet in 2003. In order to have a change the consultant did the follwing. Strategies for Stabilisation Stages of an organisation are different from the stage where an entrepreneur identifies an opportunity and set up an enterprise. Now an entrepreneur graduates to become a manager. He has to undertake the functions of a manager such as planning, organising, coordinating and control. Several enterprises fall sick partly because they do not get adjusted to the new responsibility of a manager.It is clear from the above discussion that entrepreneurs should be realistic about their strengths and weaknesses. If they do not possess some critical strength, they should either build them or recruit/associate with-others to have the benefit of their specific strengths. It will be suicidal to venture into entrepreneurial activities without recognising the strengths required to exploit opportunities and thwart threats, and the willingness to build strengths whenever required. Coping with Competition In the conventional sense competition is considered only in the marketing context. Porter (1980) has, however, shown that this is a limited vision. In fact, an entrepreneur faces competition from four sources; existing firms in the same line of activity, suppliers of inputs, buyers of product or service, and possible substitutes. It is the bargaining power a firm has against each of these constituents which determines its competitive position. For instance, while projecting the market demand, very often entrepreneurs do not anticipate the ways in which firms in the same activity would react. If the market size is vast and the new entrant is insignificant in terms of size of operation, retaliation from competitors will be minor. There are, however, situations where a next door neighbouring shop might retaliate badly for sheer survival.( Senge, P. [et al], (1999), The Dance of Change: the Challenges of Sustaining Momentum in Learning Organizations, Nicholas Brealey, London.) Suppliers of materials labour and infrastructure also might change their strategies based on the changed situation emerging from the entrance of a new entrepreneur. Similar might be the effect on buyers and possible substitutes. The basic rule to follow in such circumstances is to "Know thy competitors well, their strengths, weaknesses and strategies". Recruitment and Retention of Personnel One of the major problems faced by new enterprises is identification, recruitment and retention of the right kind of personnel. A new enterprise is generally weak in terms of an established name and ability to offer very attractive terms of employment. Above all, an entrepreneur should recruit the right kind of people who could contribute to the success of the organisation. Their, attitude to work, temperament etc. are important considerations for a good entrepreneur. These conditions are not likely to motivate good quality people to join such a new enterprise. They would be concerned about factors such as lower than average remuneration and other terms, risk of losing job, and lack of job satisfaction. An entrepreneur should be clear about his personnel policy from the very beginning. Several entrepreneurs use their social contacts to recruit people. Some of them explain to their employees the enterprise mission and strategies. They might offer part ownership in enterprises or have some profit sharing schemes. The enterprise strategy towards personnel should be formulated based on these realities. Avoid Overtrading In their eagerness to grow fast, some entrepreneurs tend to undertake more work than what they could really do with the available resources, leading to overtrading. Such instances might result in imbalances in the system such as building up of inventories or receivables without leaving enough cash to carry on operations. This results in effective reduction in working capital and could lead to industrial sickness unless rectified in time. Entrepreneurs have to remember that they should bite only what they could chew. Developing Systems Closely linked to strategy is the control system in any enterprise. Although, no formal systems could be noticed in a new enterprise at this phase, the entrepreneur should start working on the development of systems of control. It is when systems get established that entrepreneur finds more time for developing new strategies. In short, stabilisation strategies are critically important for the very survival’ of the enterprise. It is entrepreneurs who can keep on expanding activities in the beginning according to organisational capabilities, are the ones who can cross the stabilisation phase successfully. Several entrepreneurs remain in this phase for lack of any clear strategy. We have to remember that a new enterprise is like a new baby; it needs attention, tender care, but no overfeeding. Similarly, a new baby should not be forced to walk or run before it learns to crawl and sit. As an enterprise gets stabilized, it has to start thinking in terms of its growth, unless of course, the entrepreneur consciously decides not to grow. In the rest of this unit we shall see what growth strategies are and how such strategies help firms achieve fast growth. Discussion related to stabilization strategies such as overtrading will continue to be relevant even in this stage. GROWTH STRATEGIES These strategies are formulated and implemented by firms which want to grow. Such firms have to maintain sustainable competitive advantage by delivering superior value to the customer. Although it is difficult for any firm to be an ideal growth business, it is worth attempting to reach that ideal. Some of the important characteristics of an ideal growth business are given below A near monopoly that can dominate a market because of patents. A business where the rate of growth in profits is far higher than the rate of growth in sales. A business which can grow relatively independently of economic cycle. A business that has a consistently high rat6 of inquiries and new and repeated orders. A business that is dependent on management talent. Growth firms provide value for money to their customers. They provide so much value to the customers compared to the cost involved that the customers are promoted to buy the product or service repeatedly and/or in larger quantities. For instance, a new bakery operator started and grew very fast to become the largest confectioner in the city mainly because he always provided very high quality products to customers. They always wanted such products and were willing to pay a little more for better quality products. This new entrepreneur was tried first to notice this as an opportunity and exploit it. What he did was to give value for money to his customers. It is not the absolute amount or money, but the value relation to the price they pay that matters. This is applicable both to manufacturing and service sectors. In India, a significant number of the urban customers are not happy with many of the things they buy or the service they get. They are willing to pay a little more, if the product or service is worth it. Growth entrepreneurs keep exploiting such opportunities. Grow Your Customers Growth of an entrepreneur depends on the satisfaction and growth of his customers. This is especially so in intermediate products or services. For instance, a small scale chemical industrialist developed a unique solvent to act as a drying agent in paint industry. He demonstrated to his paint manufacturing customer that by using his new solvent the paint quality would improve. The paint manufacturer used it and achieved better turnover. Similarly, a textile processing entrepreneur built up his customer base by giving useful suggestions to them on colour and shade combinations for fabrics. Maintaining Leadership In a competitive environment, maintaining leadership is not easy. New substitutes and products made using new technologies would keep entering the market eroding competitiveness of existing firms. Under such circumstances, constant product improvement becomes essential to maintain product differentiation. Even in fields where competition is limited, it is worth attempting technological improvements either for cost reduction or product improvement. This means that the experience curve of such firms keep shifting continuously. This is well reflected in the air cooler industry in the recent years. Although it is a seasonal industry, of late there is fierce competition to capture the top end of the expensive market segment. For instance, a leading national level manufacturer in the small scale sector entered the market with a revolutionary idea; an air cooler looking likes a room air conditioner. It was technically far better than a conventional air cooler. He improved upon his new ''air conditioner looking air cooler" and introduced three different models in three consecutive years, always improving upon the previous one, making it difficult for his competitors to catch up. Peter Drucker (1985) called it "fastest with the strategy, In the case of the solvent manufacturer referred to earlier also, there is a strong sense’ of product differentiation through technological development. Flexibility Entrepreneurs should be able to change their strategies according to environmental changes in order to register fast growth. As shown in diagram 2 (adapted from Macarena’s, 1981) a firm would have low or high flexibility, and would operate in stable or unstable environments. Time Earlier it was briefly mentioned that a fast growth entrepreneur should be able to respond to customer requests fast. In these days of increasing competition, entrepreneurs can build competitive advantage based on time, shorter the time, better it is. There is furniture makers, tailors and bakers who undertake production and delivery at very short lead time compared to competitors. One hour photo' laboratories and dry cleaning shop's also belong to this category. They in fact have identified a segment of the customers who are prepared to pay premium for quick service. To be the first in the industry and reap the market as quickly as possible can grow an enterprise fast. Since creating a new industry or market involves great uncertainties one has to be careful while entering it. An entrepreneur who ventured into fresh cut vegetables activity in one city has found the going extremely good. Initially, he sold cut vegetables to restaurants and institutional canteens and later expanded to cover household market. He had the advantage of being the first to enter the market and build business first. References 1. Bridges, W. (2003), Managing Transitions: Making the Most of Change, 2nd Ed., De Capo Press, Cambridge MA. 2. Coghlan, D. (1993), “A Person-centred Approach to Dealing with Resistance to Change”, 3. Leadership and Organizational Development Journal, Vol. 14, No. 4, pp. 10 -14. 4. Kotter, J.P. (1995) “Why Transformation Efforts Fail”, Harvard Business Review, Vol. 73, No. 2, pp. 59-67. 5. Kotter, J.P. (2002), The Heart of Change: Real-life Stories of How People Change Their 6. Organizations, Harvard Business School Press, Boston, Mass. 7. Perren, L. (1996), “Resistance to change as a positive force: its dynamics and issues formanagement development”, Career Development International, Vol. 1, No. 4, pp. 24 – 28. 8. Senge, P. [et al], (1999), The Dance of Change: the Challenges of Sustaining Momentum in Learning Organizations, Nicholas Brealey, London. 9. Carol Ann Tilt  (2006),  "Linking environmental activity and environmental disclosure in an organisational change framework",  Journal of Accounting & Organizational Change,  Vol.2,  No. 1, 10. Christine A. Hemingway  (2005),  "Personal Values as A Catalyst for Corporate Social Entrepreneurship",  Journal of Business Ethics,  Vol.60,  No. 3, Read More