Change Management for SMEs? Why it is important to know.

Posted by Philip Wong on

Introduction

Research shows that internal and external forces of change are among the top challenges facing businesses around the world today in the 21st century. 

The Lean Methods Group (2018) compiled a list of some external challenges businesses face, the major ones amongst them:  uncertainty – uncertainty in the global economy, uncertainty in the credit markets, uncertainty in how new technology will disrupt their business; globalization – recognizing emergent, disruptive competitors that only a few months ago weren’t even known, designing new products and services for new customers; innovation – in the age of big data and increasing automation companies who are able to create new knowledge faster than their competitors will have an advantage in the new era (Silverstein & Samuel, 2018); and technology – because the pace of technology is improving at an exponentially increasing rate and the ability for even the best of technologists to stay informed about emerging technology is in conflict with the need to master a company’s current technology (Lean Methods Group, 2018). 

Changes in politics, economics, sociocultural, technology, legislation, the environment and demographic context all serve to confound businesses and distract them from their objectives.  Companies that resist changing risk losing their competitive advantage (Brauns, 2015).  In the fast-changing world, the strategic imperative to change is often clear:  without doing differently, companies are unlikely to succeed or last

The dilemma surrounds what businesses need to manage the changes, the knowledge, tools and expertise to design and implement change programs.  Yet despite over 25,000 books published on the topic, one in three change program fail (Dewar et al., 2018).

This paper discusses management of change in organizations, addressing barriers to change, culture and how managers can best work with these to ensure long-term successful and sustainable organizations with the ability to meet the challenges of the 21st century.

Organizational Change Models

The pace of change is quickening (Lean Methods Group, 2018) and any organization operating in this climate needs to know how to manage change effectively for business survival and growth (Brauns, 2015).

Organizational Change means turning the organisation in another direction; to fundamentally modify the way things are done; to “overhaul the structure and to provide organizational members a whole new vision for the future” (Burke, 2002, p. 1).

Internal organizational pressures can come about from the CEO setting new directions, employees indicating dissatisfaction, or poor performance (Douglas & Cacioppe, 2013).

Change is often viewed as an all-pervading, holistic and complex process that presents major challenges to any business context (Beckhard, 2006).

Since the seminal work by Lewin (1947) of organizational change – there have been a wide range of planned organizational change models.  Lewin (1947) began by describing three stages, thus:  1.  Unfreeze the organisation to ensure that employees are ready for change, 2. Execute the intended change, 3. Refreeze the organization to ensure that the change becomes permanent. 

Another model by Douglas and Cacioppe (2013) added onto Lewin’s work and set out seven steps to manage successful change as follows:  (1) pressure for change – people will not place a high priority on the desired change is there is no pressure for change; (2) a clear shared vision – to help people understand the purpose for the change and to gain commitment to it, a vision should have a purpose so that people feel their effort is contributing value to it.  A ‘whole of team’ approach needs to support the vision; (3) capacity for change – the organization must have adequate resources and skills to implement the change, including training, time and budget; (4) actionable first steps - the “small win” approach allows people to feel a sense of achievement at the beginning of the program.  “Small wins” is a recommended agile approach that enables staff to pivot quickly to the business’s most pressing issues (Eklund, Tam, & Woodcock, 2018) ;  it is important to not allow too much time to pass before people are actually required to do things differently (Douglas & Cacioppe, 2013); (5) Model the way – leaders need to practise the values and behaviours that reflect the vision.  Managers need to operate with integrity and sincerity so that staff see the actions of their managers as examples of what is expected of them; (6) reinforce and solidify change – this is a necessary ingredient that can take the form of reward or recognition from management to encourage the change to become a regular part of operations. Examples are promotion, performance review and reporting systems which can prevent staff from reverting to old behaviours, and (7) evaluate and improve – the change program must undergo constant review and monitoring for its intended objectives, else it will end poorly, with no lessons learned.

Another study by Kotter (2012) described eight steps for successful change management.  Summarised in a review by Brauns (2015), Kotter’s system has eight steps:  (1) to establish a sense of urgency – that inspires people to move, to make objectives real and relevant; (2) to create a guiding team – with the right people in the team, with the right emotional commitment and the right mix of skills and levels;  (3) to develop a vision and strategy – that provides a focus on the emotional and creative aspects necessary to drive service and efficiency; (4) to communicate the change – to obtain the “buy-in” and involvement of as many staff as possible, to speak about the changes simply, to appeal and to respond to peoples’ needs (5) empower the employees for action – remove obstacles, enable constructive criticism and provide support from leaders that also reward and recognise progress and achievements; (6) create short-term wins – for aims that are easy to achieve, in bite-sized chunks.  It is important to finish current stages before starting new ones; (7) to consolidate gains and encourage thought for more change – a stage in which leaders can foster and encourage persistence and determination for ongoing continual change, highlight achieved and future milestones; (8) anchor the new approaches – that focuses on ways to reinforce the value of the successful change into the evolved organisation and culture.

Anderson and Anderson, change consultants of Fortune 1000 companies, and leading authorities on change leadership and organizational transformation with their book “ Beyond Change Management: How to Achieve Breakthrough Results Through Conscious Change Leadership”, paved a  way for transformational changes in organizations with a framework that involves:  (1) Conscious design of the change process to build commitment in the workforce first, rather than hastily jumping right to designing the solution; (2) Seeking input from stakeholders and customers early and often; (3) Integrating content and people activities into one change process from the beginning and throughout the change process; (4) Announcing early that the change process is transformational and non-linear, that there is much still unknown, and they need to seek staff engagement to get the answers; (5) Minimizing the command-and-control authoritarian approach to management and maximizing co-creation.  Explain to all stakeholders that everyone is involved together in change (6) Communicating often, in all directions and spending time face-to-face with the workforce (7) Empowering others, trusting staff to make their own decisions; (8) Listening and coaching more, tell and provide answers less (9) Walking the walking, model the way, telling the truth (10) Sharing feelings and nurturing relationships (Anderson & Anderson, 2010, 2011)

Organizational Culture

What is organizational culture?  Simply put organizational culture is a shared understanding among its people about how processes work (Woods, 2002).

Organizational change often entails a radical shifts in an organization’s values, cultures, structure, leadership, practices, routines and people; because an organization is easily identifiable as a system composed of different elements that interact with each other (Canterino, Cirella, & Baruch, 2018).  There may also be varying degrees of culture change (Schein, 2004). 

Change happens because an organization typically has some problems that need addressing, or new goals that need to be achieved.  But all human systems attempt to maintain equilibrium to maximize their autonomy against their environment, and culture is the means whereby the set of shared assumptions is a stabilizing force for individuals and groups in organizations.  Culture is one of the ways in which a group or organization ‘preserves its integrity and autonomy, differentiates itself from other groups, and provides itself an identity’ (Schein, 2004, p. 320).

Schein (2004) said barriers to change can result from this disequilibrium or Lewin (1947)’s ‘unfreezing’ of behaviours.  Diversity in the workforce creates further problems of integration and control for management, in that the leader now has to bring into alignment organizational members who for any number of reasons – such as education, function, or experience, who may have genuinely different points of view – groups that Schein (2004) called ‘functional subcultures’.

These points of view may be genuine felt, as: fear of loss of power and control (groups and/or individuals); loss of security and comfort; reallocation of resources; threat of redistribution of control and power; mistrust and misunderstanding; fear of the unknown; selective information processing; peer pressure; inertia; heavy workload; and/or time to perform the change process (Sutevski, 2010); and often, also because of the entrenched manner in which things are typically done within an organisation (Kim & Mauborgne, 2005).

To address these fears within individuals and subcultural groups requires ‘cultural humility from the leader, and the ability not only to perceive subcultural differences but also to respect them’ (Schein, 2004, p. 278).

To facilitate common understanding across genuine subcultural differences are predictable and can be analysed.  To get marketing and sales to work effectively together requires more than a proper reward and incentive system.  It requires the ‘development of a common language and common shared experiences’ (Schein, 2004, p. 282).  Schein (2004) continues to suggest that leaders must recognise these cultural issues as inevitable consequences of the organization; and have the humility to accept them as real issues to be dealt with, yet at the same time to be able to stimulate the necessary dialogue to foster cross-cultural understanding. Shared and common understanding of goals can go a long way to bringing about successful organizational development.

GE Capital is an organization that values inclusion of groups and individuals for tier intellectual diversity, for problem-solving, and for normalizing best practices for operational effectiveness (Moffatt, DUCERE).

The "Leaders" role in change management

But markets are changing faster than organizations can reinvent themselves.  There is a growing gap between the leaders we have and the leaders we need (Rosen & Swann, 2018).

In their comprehensive an coherent framework for mapping the development of organisations Cacioppe and Edwards (2005) highlighted the role that leaders  play in transformative change to create shifts in fundamental activities, systems, culture and beliefs in the organisation as a whole.

Leaders at Level 6 - Cooperating Cacioppe and Edwards (2005,Table III) are conscious of the needs of others, seek consensus but are not manipulative.  There is cooperation in decision-making and commitment is present.

Levels 7:  Visioning (Yellow) Values-based foresight – is the stage in which leaders have visionary links to the industry and community; and have awareness of the entire spectrum of human needs, balanced conscious activity and has the capability to cater for individual and team wellbeing.  The result for organizational behaviour is commitment to actions and goals; considerable trust; and clear, open, two-way communication (Cacioppe & Edwards, 2005, p. 101)

At Level 8. Integral (Turquoise) leaders have gained wisdom in leadership behaviour and seek to fulfil the needs of staff, customers, owners and the community.  The organisation is compassionate, and the culture supports balanced growth, care and commitment to active improvement in the community (Cacioppe & Edwards, 2005).

Tuohy (2014) wrote that leaders can do a better job when they recognise the psychological levels of awareness.  Roughly related to the levels described by Cacioppe and Edwards (2005), (Tuohy, 2014) says ‘conscious incompetence’ is a stage where an individual knows that they don’t know something which is also where many employees fight change, no matter how positive it will be to the company.  At the level of ‘conscious competence’ the individual has progressed to an educated level of awareness.  Not only do they know what needs to be done, but they are away of their role in producing a quality output, making choices and talking openly about their concerns.  At the highest level of ‘unconscious competence’ leaders have reached a level of mastery where their competence is second nature.  The individual has enough experience that he or she can perform the tasks easily and unconsciously.  They have embraced the new changes made; can refer to the standard operating procedures without having to sight them; can see areas for improvement to those procedures; and are able to demonstrate effectively to new employees how things work and why things are done the way they are.  Not because “it’s always how we do it”, but rather in a program of continuous improvement (Training Industry, 2017; Tuohy, 2014).

Conclusion

Faced with the requirement for speed, uncertainty, complex information, technology, competition and globalization, organizations are not adapting well to change.  There are high failure rates in organizational transformation (Anderson & Anderson, 2011; Rosen & Swann, 2018); at least sixty to seventy percent of change efforts fail (Hughes, 2011) or fail to achieve their desired results (Anderson & Anderson, 2011).

The primary culprit for failure is our lack of awareness.  Too often people are stuck in old patterns of seeing and acting.  By deeper levels of learning, humans can create an awareness of the larger whole, leading to actions that can help shape its evolution and the future (Senge, Scharmer, Jaworski, & Flowers, 2005).  To see a different future, we need to be open to the present.  Change initiatives fail because people cannot see the reality they face (Augustine, 2016; Senge et al., 2005).

Anderson and Anderson (2011), foremost thought leaders in organizational change management, explain that the conscious approach to leadership can achieve breakthrough results.  Conscious change leadership starts with a fundamental shift in how leaders perceives reality. It calls for greater self-awareness, a more expansive leadership mindset and worldview.  Without the shift in awareness, leaders are constantly blindsided by the dynamics of transformation; and because they do not see or understand these dynamics, they cannot lead through them (Anderson & Anderson, 2011, p. 51).

To become innovators and leaders in a world of disruption, change and uncertainty, one needs to be able to see new ways towards a future yet to emerge.

Reference List

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