Navigating Organizational Change in the Modern Business Environment

Introduction

For organizations to survive in the modern business environment, they must be willing to adapt to the various intrinsic and extrinsic factors that will mandate change. Successful organizational change will give the business a competitive advantage over their competitors (Reeves & Deimler, 2011). It is possible that the changes may lead the business to solidify the loyalty of their current customers and gain new customers, which may lead to increased revenues and subsequent profits. However, for the organization to be in a position to reap such benefits, they must be willing to adapt their strategies to an ever-changing and sometimes volatile business environment. As such, the business must be aware of the nature of organizational change, the triggers for change, types of change initiatives, how organizations can predict change, and how some organizations may fail when they fail to adapt quickly to changes.

What is Organizational Change

Before exploring other things, it is important to understand the nature of organizational change. According to Suddaby & Foster (2016, p. 19), organizational change is the process that a company will undergo in response to various intrinsic and extrinsic factors. Organizational change will affect the organization in various ways and may lead to a transformation in their organizational structure, the technologies that they use, its operational methods and many other facets of the organization. It is important to note that organizational change is inevitable in this time and age (Gleeson, 2019). If and when an organization decides that it will not adapt to the market forces, that signals the beginning of its end.

There are various triggers for organizational change, and they are separated into intrinsic and extrinsic factors. The external environment is defined by the acronym PESTLE which stands for Political, Economic, Social, Technological, Legal and Environmental (Rastogi & Trivedi, 2016, p. 384). Political factors will relate to the general political atmosphere in which the company is located. Economic factors refer to the macroeconomic factors in the general business environment in which the organization is located (Koumparoulis, 2013, p. 32). Social factors refer to things such as demographics, cultural trends, and population analytics. Technological factors refer to the various technological innovations that will affect the organization’s operations. Legal factors refer to changes in law and policies that will affect the organization and/or the industry in which it is located. Environmental factors may include things such as climate change, geographical location and various other environmental changes that will affect the business (Rastogi & Trivedi, 2016, p. 384). It is important to note that the organization has little to no control over external which means that they can only make internal changes that will adapt to the external changes.

Intrinsic factors are internal triggers within the company that influence the changes. Intrinsic factors may be context-specific which means that different companies will have different influencing internal factors based on the industry and the different goals that the company is pursuing (Senanayake & Gamage, 2017, p.8). The internal triggers may include but are not limited to new ideas on how to improve the manufacturing or operational process, the appointment of new leadership, relocation of the offices and/or factory, and different innovations that improve the production process. Other factors are adopting new technology, and realizing that there is a knowledge deficit in relation to the transformed industry (Gleeson, 2019). The different internal and external triggers are bound to occur regardless of the path the company selects which means that companies must employ a change mindset long before it becomes a requirement for them to change.

Overall there are two types of change, planned change, and emergent change. Planned change is a management concept that assumes that managers are aware of the environment in which they operate and that they can make the requisite changes any time that they please (Liebhart & Garcia-Lorenzo, 2010, p. 215). The planned change model tends to follow three steps, which were advanced by Lewin, and they are unfreezing, change, refreezing. Unfreezing involves breaking down the status quo and presenting the change to the major stakeholders in the organization (Hussain et al. 2018, p. 124). Change is the step where the organization starts to move in the direction of the proposed change which involves adopting the necessary processes and acquiring the requisite knowledge. Refreezing is where the organization has accepted the change, and it has become the norm of the company (Hussain et al. 2018, p. 124). Planned change is a step by step process, and it may be hard to apply due to the assumption of the manager having the required knowledge of the environment.

Emergent change is more evolutionary in the sense that it follows incremental steps (Cleveland Consulting Group, 2019). Emergent change is best applied in uncertain conditions with unknown factors, and where planning will have little effect on the outcome because the factors are always changing (Liebhart & Garcia-Lorenzo, 2010, p. 215). The modern world is very fast-paced and always evolving which means that emergent change is the best change initiative that should be adopted by modern organizations.

Complexity asserts that companies are required to develop operable structures that will survive in different environments. The environments will differ in terms of country, rate of economic development, language, political systems, and government regulations, infrastructure, and cultural norms. The complexity of the environment means that decision-makers will operate from a deficit because they do not have access to all the information (Wilczek, 2019, p. 88). The existence of complexity increases the risk of failure, and it becomes expensive to evaluate the different alternatives (Baumann & Siggelkow, 2013, p. 116). While the changes are complex, they are still evolutionary which means that the organization must always be ready to adapt in relation to new information.

The uncertainty of the environment also challenges change management. There are three types of uncertainty within an environment. First, the low uncertainty environment, which is very simple and has a few departments as well as a mechanistic structure (Michel, 2014). Second, a low to moderate uncertainty environment where there are more departments, more roles, and coordination is needed, and there is need for proper planning. Third, high uncertainty environment where there is high instability, the organization is very large and has many departments, there is a high number of management personnel, and the organization must be able to respond quickly to the complex changes (Jabnoum, Khalifa, & Yusuf, 2003, p. 20). As the organization grows, it moves from low uncertainty environment to a high uncertainty environment.

Beyond that the high uncertainty process, there is chaos. Chaos is a continuous process of “convergence and divergence, stability and instability, and evolution and revolution” (Thietart & Forgues, 1995, p. 19). The modern business environment is best described as being chaotic, which means that decision-makers should not assume that there is a standard formula for success. The change decisions must be context-specific which means that even in the same organization, what may work for one will not work for another. Chaotic environments will need highly skilled leaders who are adept at communication the vision and the mission of the company. Peter Drucker stated, “Long-range planning does not deal with the future decision, but with the future of present decisions” (Shore, 2014). In the context of chaotic environments, the quote asserts that while managers may not know how the future of the organization will be, the decisions that they make now will shape the efficacy of future decisions. Therefore, managers must make the best decisions that they can based on the information that they currently have.

Determinism and Voluntarist Approaches

Determinism states that manage and company stakeholders are simply pawns that are influenced by change, and they do not have the ability to initiate and secure change (Goswami, Nishad, & Selvaratnam, 2014, p.1). The main forces of change are outside the organization which means that the manager’s ability to influence change is quite limited. Therefore, management action cannot be utilized in such an environment because it plays little to no role change (Goswami, Nishad, & Selvaratnam, 2014, p.1). On the other hand, there are voluntarist approaches that assume that managers are the principal decision-makers that affect the fate of the organization (Muller & Kunisch, 2017, p. 460). The voluntarist approach rejects the idea that managers are powerless and reasserts the role of human agency in shaping change within the organization.

Change Management Models

There are three change management models. First, Lewin’s Change Management Model. The model has been covered above, so it will only be described. The model is made up of three stages, which are unfreezing-change-refreezing (Hussain et al. 2018, p. 124). It is a simple process to apply and can be utilized by any organization.

Second, the McKinsey 7-S Model. The model is made up of 7 stages, strategy, structure, systems, shared values, style, staff, and skills (Anastasia, 2015). Ravanfar (2015, p. 1) notes that strategy involves the created plan; structure revolves around the way in which the organization is structured; systems involves creating the tools that are needed to ensure that the change succeeds in day-to-day activities; shared values refer to the main/core organizational values that will guide the change; style refers to manner in which the changes will be adopted; staff refers to the employees since they are the ones that will enact the change. McKinsey 7-S Model is more comprehensive that Lewin’s Change Management Model since it adds more aspects to the changes.

Brief Case Study on Nokia Failing to Adapt to Change and Maintaining Competitive Advantage

Nokia was the most dominant mobile phone maker at the beginning of the 21st Century. Peltonen (2018) notes that in 2007, Nokia’s mobile division was the leading mobile device manufacturer with a 40% market share. Nokia was on track to continue being the world’s leading mobile phone manufacturer until they made a mistake in choosing not to adapt to change. The change that they failed to adapt to is switching to the Android OS because they chose to remain with their Symbian OS (Peltonen, 2018). At that time, it seemed like it was the right move given that they were on the top. Moreover, the Symbian OS was created in-house while the Android OS was created by Google. What Nokia failed to realise is that the market was changing, and consumers wanted a different thing. Their devices were always technologically advanced in terms of hardware, but they failed to switch to the Android OS, and that gradually led to their downfall as other companies such as Samsung, Huawei, Techno, and Infinix continued to adopt the OS.

Competitive advantage refers to an advantage gained by an organization when it can provide the same value as its competitors but in a unique manner such as lower prices or differentiation of products (Amadeo, 2019). Nokia had a competitive advantage in terms of hardware, but they were overtaken when the other companies adopted the Android OS which was easier to use for consumers. When companies have competitive advantage, they should strive to keep it; otherwise, they will lose market share, lose customers, and eventually lose revenue and profits. Companies can maintain competitive advantage by offering lower prices, differentiating their products from their competition, and focusing on a specific target market (Amadeo, 2019). In doing so, the company secures its future, unlike what Nokia did.

Conclusion

The market will always change and adapt depending on various factors. Organizations must be aware of the immutability of that fact and ensure that they have set the proper systems in place that will guide the company through change. Some changes will be planned, but many will be emergent where the organization will be adapting to the market in different ways. Properly applied change management will help organization gain or maintain a competitive advantage. If nothing else, the proper motivation to change is that it may solidify the current customer base, attract new customers, lead to an increase in revenue and eventually lead to more profits.

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