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Managing Change By Professor Colin Coulson-Thomas As a business expands its capabilities, cash flow, management and governance should be regularly reviewed. Some enterprises outgrow their founders and letting go can be painful. Change is assumed to be necessary, desirable and beneficial and ‘the management of change’ has become a lucrative area for consultants. In larger firms mangers may be assessed and rewarded according to the amount of change they bring about. However, owner managers should tread warily as change can be disruptive and costly. It can distract people who should be focused upon other priorities. When mismanaged change can be stressful and destructive. Few changes affect everyone in the same way. There may be obvious ‘winners’ and clear ‘losers’. Those who are satisfied – and they may include key employees and important customers - may favour the status quo while the frustrated such as ambitious people who feel blocked may be eager for radical action. Whether as shareholders, directors or managers the members of a board may be divided between those who are for or against particular changes. The impacts of change may not be immediately apparent. There might be hidden consequences. The really disadvantaged may be painfully aware of adverse effects. Those who duck confrontation may be reluctant to face them. When the benefits of change are widely spread the advantaged may not even be conscious of them. Marginal beneficiaries may lack the motivation to prevent blocking action by those who are adversely effected. People who are indifferent or ambivalent may simply ‘go with the flow’. Their goodwill may be steadily eroded by the imposition of a succession of changes that are not justified and which appear trivial. Much will depend upon the purposes of change and the capacity of the people involved to adapt. Directors should question the rationale for proposed changes, and ask whether an impact analysis has been undertaken of their likely implications (1). Are the potential consequences for employees, customers, suppliers, business partners and investors adequately assessed? Particular attention should be paid to the interests of existing and potential customers. Who is responsible for maintaining the factors that perpetuate and strengthen those relationships that are most significant for the business? When new models are introduced will the spare parts they may need for earlier products still be available? An exodus of mainstream producers from a marketplace creates opportunities for niche suppliers to fill gaps and exploit ‘tail ends’ (1). Perhaps there will be enough enthusiasts to form owners clubs, open swap shops, establish steam railways or re-stage historic battles. Customers sometimes have more regard for a company’s offerings than its managers. Entrepreneurs and smaller businesses can sometimes take decisions more quickly than larger companies. They may get in first while competitors wait for a consensus to form in favour of a proposed development. However, introducing changes without thought as to their costs or consequences can do great harm. An ‘end-to-end’ perspective is required. Altering a task at one point in a process, or introducing a new activity, may cause problems for those operating elsewhere, either within the same process or in a related or dependent one. Some champion change. Others undermine it. Change can disorientate and disrupt, even when it is beneficial. People may only be able to take so much of it. Business leaders need to think carefully about how much change they can handled before negative consequences wipes out desired gains. Change for change’s sake should be avoided. For continuities sake a growing business may need to build upon an existing reputation and safeguard core values. Unnecessary activity should be avoided. Steps may need to be taken to protect what is important and prevent the compromise of cherished beliefs. What are the businesses anchor points? What is the cement that holds its people together? Might changes result in the loss of strategically important knowledge and understanding? Is sufficient effort devoted to building longer-term relationships with customers, suppliers, investors and business partners (2)? Directors need to achieve a balance between change and continuity (1). How easy is it for people to speak up against change? Directors should distinguish between goals, values, objectives, policies and activities that need to be changed and those that should be continued (1). Some people ‘follow the herd’. Once a clear majority favours a particular course of action the uncommitted climb aboard the bandwagon. Members of the majority may be naive or mistaken regarding their best long-term interests. Preferences and priorities can change. Nothing is more frustrating than to find that certain options have been lost because a selected course of action cannot be reversed. Companies sometimes attempt to change too much. Is there sufficient continuity for people to have a sense of identity, belonging, direction and purpose? Are conscious efforts made to provide enough continuity for people not to feel threatened and insecure? People should only be expected to make demanding changes for good reason. The visions and rationales that are offered by many boards are excessively general. Effort should be concentrated where it is most likely to make a difference (2). Justifiable changes are those which focus upon the critical success factors for achieving key corporate objectives and delivering greater customer and shareholder value. Winning business is particularly important for growing businesses. The key factors for winning competitive bids and building successful key and strategic account relationships in various commercial sectors and professions have been identified in a series of practical reports produced by the Winning Business Research Programme team (3). People need to be motivated, prepared, and equipped to achieve the changes they are expected to bring about. However, a recent survey of corporate learning strategies and activities reveals that while general ‘change’ programmes are becoming more common bespoke initiatives and specific tools to help individuals bring about particular changes are few and far between (4). Changes occurring all around us present both challenges or opportunities (1). Boards should identify significant trends and developments, consider who are likely to be ‘gainers’ and ‘losers’ and assess whether alternative offerings would mitigate undesirable impacts and enable people to take fuller advantage of new possibilities (1). Enough people might be affected to represent a potential target market for products and services tailored to their particular interests. Contemporary conditions are favourable to minority interests (1). Traditional barriers to entry are falling. Because they are healthier and are living longer, people will have more time for further careers, additional causes, and new enthusiasms (5). Entrepreneurs should consider whether particular minorities or interest groups might be set alight with their vision. As a business grows its directors will be unable to become directly involved in the many and varied activities that more bespoke and imaginative responses to a greater variety of requirements will demand. Corporate organisations need to transform themselves into incubators of enterprise and communities of entrepreneurs (5). Different venture teams should be empowered and enabled to bring about whatever changes are required to enable them to achieve their objectives and deliver value to their customers. References:
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