Strategic Change Management
Strategic Change Management Implementation Process
Strategic change management has always been a challenging task for firms. It is not good enough to have a great strategy; the firm must be able to execute the strategy. Many leaders assume that if they state what the strategy is the people below them will just go ahead and implement. This is wishful thinking. Strategic change involves clear communication, changes in routines, changes in culture and changes in attitude: human beings hate change. Unfortunately for firms, the need to quickly and smoothly implement strategic change is becoming increasingly important. The rapid development and adoption of new technologies and increased competition from the BRIC economies are changing the competitive environment. The firms that can adapt effectively will be the ones that survive; those that are slow and clumsy will die.
The process outlined here is based on the work of Professor Alexander Roberts of Edinburgh Business School. More extensive details on strategic change management and making strategies work can be found through the Edinburgh Business School website.
Overview of the process
Review the strategy
- Clarify with those involved what the strategy and the desired outcomes are. Don’t take it as a given that everyone understands that strategy and the expected outcomes. Don’t be surprised if you find that people have interpreted the meaning of the strategy in different ways. If there is no shared understanding of the strategy and its purpose, don’t be surprised to see people pulling in different directions.
Environmental scanning
- What are the external forces that might affect the outcome?
- Measure and track these forces using Key Environmental Indicators (KEI)
- Be prepared to make changes to strategy if environment factors demand them
Critical Success Factors (CSF)
- Things that go right in order to reach objectives
- Can be organization based, industry based or environmental based
- Between 3 and 5 CSFs is ideal. Too many CSFs cause confusion
- Measure with a set of indicators for each CSF. Key Performance Indicators (KPI) might contain financial and non-financial measures
Critical Business Activities (CBA)
- CBAs are the activities that need to be done to make CSFs successful (e.g. logistics, HR)
- Measure and track with Activity Performance Indicators (API). Each CBA needs a set of APIs. These can be financial or non-financial. In fact it is important to have some non-financial APIs. Financial measures often give signals that do not reflect the holistic value of the activity to achieving goals.
Notes on using the process
Successful identification of CBAs underpinning CSF is key to success or failure of strategic change management. CBAs should be viewed from a wider strategic organizational standpoint. Why?
- Financial emphasis and cost reporting creates a strong functional and departmental emphasis
- Day-to-day management focuses on the department first then the function
- Danger of concentrating on efficiency of parts rather than effectiveness of the whole
- Narrow focus creates the opportunity for “empire building”
- CBAs often cross functional boundaries
Human factors
Human factors are essential to change and implementing strategic change management efforts.
- People can assist or impede change
- Need to motivate people to implement the changes
- There will probably be a need to change the culture to fit the goals
- Culture change requires time and leadership
- If the culture risk are too high then a different strategy may be required
- The reward system will need to be aligned to the overall corporate goals
- Rewards need a performance measurement system to be effective
- The measurement system and the reward system need to be carefully designed to avoid conflict of interest (e.g. personal or departmental rewards misaligned with corporate goals might lead to people being rewarded for sabotaging the strategy)
Finally, remember that Peter Drucker said “What gets measured gets managed”. Measuring CSFs will lead to success.