Models of Strategic Change

The market is increasingly becoming complex and with the current saturation with various industrial players, it has become difficult for businesses to maintain their market share and improve their competitiveness. Such complexities make change inevitable in every business. However, there is for all the stakeholders to understand the need for change and support organizational recommendations. The paper discussed several models and linked them to practices: the Kotter’s 8 steps of change, Lewin’s change management, and McKinsey 7-S models. To apply the models, a fictitious organization has been considered: Monte Microfinance. The effectiveness of change in any organization depends on how the management uses various management practices to manage resistance considering it is the major factor that could compromise the success of change. Thus, different recommendations are discussed.

Table of Contents

Executive Summary. 2

Company Overview.. 4

Introduction. 4

Task 1: Understanding the Background to Organizational Strategic Change. 5

1. 1 Discuss Models of strategic change. 5

1. Kotter’s 8 Steps of Change Model 5

2. Lewin’s Change Management Model 6

3. McKinsey 7-S Model 6

1.2 Evaluate the relevance of models of strategic change to organizations in the current economy 7

The Kotter’s 8-Step Model 7

McKinsey 7-S Model 8

Kurt Lewin’s Model 8

1.3 Assess the value of using strategic intervention techniques in the organization. 9

Team Development Interventions. 9

Techno-Structural Interventions. 10

Leadership Development Interventions. 10

Task 2 Understanding Issues Relating to Strategic Change. 11

2.1 Examine the need for this strategic change in the organization. 11

Changes in the Market 11

Increased Competition. 12

Customer Expectations and Competitive Edge. 12

Reduce Customer Base and Quality Degradation. 12

2.2 Assess the factors that are driving the need for a strategic change in the organization. 13

Changes in the Market Dynamics. 13

Economic Pressures. 13

Management Complexities. 13

2.3 Assess the implications of the strategic change have on the organizational resources. 14

Restructuring of the Human Resource. 14

Training the Staff. 14

Redundancies. 15

3.1 Develop systems to involve stakeholders in the planning of change. 15

3.2 Develop a change management strategy with stakeholders. 15

Brainstorming. 16

Semi-structured Interviews. 16

Diagrams. 16

3.3 Evaluate the systems used to involve stakeholders in the planning of change. 16

3.4 Create a strategy for managing resistance to change. 17

Task 4: Appropriate Change Model and Implementation. 18

4.1 Develop an appropriate model for change. 18

4.2 Plan to implement the needed change. 18

4.3 Developing appropriate measures for monitoring progress. 19

Conclusion. 19

References. 20

Business Strategic Change

Company Overview

The banking industry is increasingly becoming competitive as new businesses emerge. Monte Microfinance one of the players in the industry although with limited market coverage. Over the years, the business has witnessed significant changes in its management structure, but has failed to meet the needs of the stakeholders. Therefore, in a bid to enhance efficiency and performance of the business in the banking sector, the shares were sold to various owners. The industry has been changing as the competitors develop new products and services to exploit the untapped market segments. The business has undergone through significant restructuring to enhance its organizational structure for performance and operations. With competition in the market, change is inevitable, and it should be aligned with the needs of the customers. However, to ensure that change is valid, stakeholder involvement is vital since it brings understanding and support required to penetrate the market.

Introduction

With the continued shifts in the market dynamics, change has become an inevitable factor for most organizations. Change refers to a process of transitioning from the current to a new state with the aim of delivering quality services and meeting the ever-changing needs of the customers (Cameron & Green, 2015, p.101). Change is a complex, multifaceted phenomenon that requires integration of all the stakeholders to ensure that people work together to prevent resistance and bring the desired change. Nonetheless, the strategic change is a systematic and planned restructuring that occurs within the business to achieve the needed objectives.

Task 1: Understanding the Background to Organizational Strategic Change

1. 1 Discuss Models of strategic change

1. Kotter’s 8 Steps of Change Model

John Kotter developed the model in 1995 for successful and powerful implementation of change. Most businesses have been trying to transform their strategies with no success and with the need to remain sustainable in the market, Kotter developed the model to ensure proper implementation of change (Mento, Jones & Dirndorfer, 2002, p.51). The model involves a series of eight steps to execute the required change.

The first step is creating a sense of urgency, which involves identifying potential threats while examining various opportunities.

The second is building a powerful coalition, which involves integrating visionary leaders belonging to diverse backgrounds.

The third is creating a vision for change to put things on the right path while providing direction to the other employees.

The fourth step is communicating the vision, which ensures that other members of the organization understand the need for change.

The fifth step is removing the obstacles especially the factors associated with resistance to change.

The sixth step is creating short-term wins and celebrating success at early stages of change.

The seventh step is building on change, which involves working on a change to build it to full potential.

The eight-step is anchoring the change, which includes incorporating change into the organizational core values and beliefs.

Figure 1: Kotter’s 8 Steps of Change Model

2. Lewin’s Change Management Model

The model was developed the 1950s by psychologist Kurt Lewin while citing that individuals often prefer and function within specific safety zones. The model includes three critical elements: unfreezing, change, and refreezing (Burnes, 2004, p.981).

Unfreezing is the preparation stage of change where the management challenges the status quo of the business. The process involves making the stakeholders realize the need for change. The focus is usually on the core values, attitudes, and beliefs.

Once the change is initiated, people accept it and look for solutions to the challenges realized at the initial stage. The stage usually takes much time since it involves a series of steps.

Refreezing occurs after the successful implementation of change. The stage involves making the change stable and business refrozen. There are incorporation and institutionalization of change into business operations.

Figure 2: Lewin’s Change Management Model

3. McKinsey 7-S Model

The McKinsey and Company developed the 7-S Model in the 1980s as an integrated approach to ensure that all organizational segments work in coordination (Mento, Jones & Dirndorfer, 2002, p.48). The hard elements associated with the model are systems, strategy, and structure which are easy to identify in the organization and are under the control of management. On the other hand, the soft elements are skills, shared values, staff, and style of the business which are difficult to describe since they are intangible. To ensure successful improvement and change implementation in the company, there is a need that all elements work together and in alignment. Mutual reinforcement of these factors is vital.

Figure 3: McKinsey 7-S Model

1.2 Evaluate the relevance of models of strategic change to organizations in the current economy

Based on the research conducted by Kotter, change is a gradual process that takes considerable time. Changes start with the need to tackle organizational problems. An effective change depends on the explicit communication and vision as essential elements. The current economies are increasingly becoming complex, dynamic, and competitive due to recessions, which force industries to change drastically. To make change happen, organizations need to motivate its staff and make changes that also handle the needs of the other stakeholders. Failures in the change strategies could affect the overall performance of the business. The relevance of the models is described below:

The Kotter’s 8-Step Model

The model has been used extensively to initiate organizational, developmental, and incremental changes. Kotter’s model is useful in bringing change in the organization, especially when conducting major restructuring, improving the quality of business systems, and developing organizational products and services. One of the businesses that use Kotter’s model is the General Motors (GM) that has been able to generate the sense of urgency to change its processes through analyzing the external and internal factors, building on the teams to cut the cost, and creating a vision for making the company as the world’s industrial player. The cultural changes integrated into the company are embedded in its core values.

McKinsey 7-S Model

The model is sufficient to bring organization-wide and transformational changes. The model considers various elements of the business and can be used in changing the traditional hierarchy to the self-directed teams. Based on the previous management practices, the 7-S model is proper for a revolutionary change. However, it is costly and could afflict the economy. One of the companies that use the model is Coca-Cola that has been keen to restructure different business processes. To remain competitive and relevant in meeting the needs of the customers, the company uses corporate, costs and revenue, functional, and business and operational strategies in various operations. With its organizational structure, to control and direct the employees while increasing coordination to facilitate the achievement of business objectives (Rasche, Rehder, Wagner, Müller, & Madani, 2018, p.116). The recent development of the management system has been effective to run different business processes. The style Coca Cola uses is embedded in its culture, teams, and passion and with properly integrated human resource management (HRM) policies, the employees are motivated through rewarding them and training and development.

Kurt Lewin’s Model

The model presents practical and straightforward elements that drive organizational outstanding change process. According to Lewin, the change process involves creating a perception of the required change, moving towards the new direction, establishing, and solidifying new organizational behaviors (Burnes, 2004, p.979). Lewin’s model is used for subsystem, remedial, and unplanned changes and covers different business processes: departmental reorganization, implementation of new approaches, and improving business processes. Monte Microfinance uses the model to change its operations. With advanced and automation of various business processes, the business decided to cut down on its staff to freeze the pay. To ensure the success of the process, the overall financial picture of the business should be evident to the workers. Downsizing the employees involved cutting down the rewards and benefits offered to the workers. By reducing the staff, the company refroze various job profile and setting goals and objectives within the confine of organizational resources.

1.3 Assess the value of using strategic intervention techniques in the organization

Human resources are considered the most essential and irreplaceable organizational assets. Strategic business interventions are necessary when adjusting to the changes within the business. Managing change is a complex process that is vital in achieving business success. However, to meet the needed outcome, there is a need to use organizational development strategies. Strategic interventions apply to the changing environment to enhance the value for a change. Some of the critical strategic interventions include team development, techno-structural, and leadership development.

Team Development Interventions

Teams are increasingly becoming essential determinants of organizational success. Groups are necessary to enhance business communication and cohesiveness of the elements to make them highly effective. Team development interventions are used to improve the performance of the teams. Monte Microfinance uses team development strategy to promote employee diversity within the organization and ensuring that they work in collaboration by respecting the diverging values of each other while sharing important common beliefs. In addition, team development is an intervention where the members of the organization examine the goals, procedures, structures, beliefs, cultures, and interpersonal links to enhance their ability to work together efficiently and effectively. However, team development interventions involve culmination of different tools used in training and creating associated objectives.

Techno-Structural Interventions

Techno-structural interventions are essential to improve business effectiveness and employee performance through focusing on structure and technology. Technology has become vital in determining business efficiency and competitiveness in the ever-changing business environment. Through the year, Monte Microfinance has been focusing on training and development as its strategic approaches to the changing technological environment. The processes involve redesigning business activities by training the workers to ensure that they provide efficient customer services while aiming to increase organizational profitability. The techno-structural interventions depend on the improvement approaches with the idea of shaping business elements to fit the current situation and ensure future development of the business. The focus of techno-structural procedures includes improving corporate technology and structure.

Leadership Development Interventions

Leadership and management are essential elements in determining organizational success. To realize the needed change, leaders must excel in aligning business leadership, strategy, and culture, develop capabilities required around the teams, and keeping the employees on board. The management and leadership development interventions are essential to improve business performance by focusing on organizational leadership (Flakke, 2008, p.122). Monte Microfinance introduced high-performance leadership system that aimed to identify skilled, talented, and experienced senior employees in the organization for providing support to the management and leadership. In every organization, leadership and management are essential for accountability, communication management, and motivation in the organization. With the changes in the market, leadership and management development interventions for Monte Microfinance should focus on improving self-awareness of change needs with regards to competencies associated with leadership success.

Task 2 Understanding Issues Relating to Strategic Change

2.1 Examine the need for this strategic change in the organization

There are many issues influencing consumer tastes and preferences in the market and to remain profitable and maintain the market share, business should change their processes and realign them with the rising consumer demands. The banking industry is one those significantly affected by technological changes, and for Monte Microfinance to remain relevant in the market, it needs to ensure that its processes aim at meeting the new needs of the customers. In the global market, Monte Microfinance faces significant challenges including economic recession, increased competition, reduced customer base, and changes in the expectations of the customers.

Changes in the Market

Global markets are increasingly becoming complex due to challenges associated with globalization. Customer tastes and preferences are changing forcing businesses to shift their operations to new approaches to retain and increase their customer base. Most countries are experiencing recession and increased inflation, which affects the prices of products offered, lead to job losses, and some extent bankruptcy. These economic crises triggered a structural change in the organization. Consequently, they reduce the overall profitability of the business and along with increased prices of the raw materials, change remains key to realizing the full organizational potential.

Increased Competition

The banking industry enjoys well-established businesses and huge customer base. With many players, the level of competition is high considering increased demand for new models of financial transactions, quality, and customer service. Monte Microfinance competes with other players in the market offering mobile money services, which makes it difficult to penetrate new market niches. Accordingly, the business needs to change its strategic business process and segment the market to realize its actual customers. Improving customer service is vital to survive in the ever-competitive business environment.

Customer Expectations and Competitive Edge

Each business aims to make a profit by meeting the ever-changing needs of the customers. There are many new industrial players in the market competing for a portion of the industrial market share. Therefore, Monte Microfinance needs to understand the expectation of the customers and adjust its practices to meet the new standards. Competition is healthy in the market but could be fatal for some businesses if they remain monotonous and use outdated business practices. Thus, it is essential to change the face of competition by developing appropriate competitive advantage against the competitors.

Reduced Customer Base and Quality Degradation

Quality is one of the critical factors that determine organizational customers base, loyalty, and referrals. Most multinational corporations have invested heavily in delivering quality products and services to the customers. Business is all about maintaining and satisfying the needs of customers. Due to the recent global economic crises, consumer purchase behavior has changed especially in the major markets, and with the current competition, quality has remained the main factor to achieve business objectives. Poor quality could disfigure the brand image and reputation in the market. Therefore, the changes that Monte Microfinance makes should be keen on ensuring the production of quality products.

2.2 Assess the factors that are driving the need for a strategic change in the organization

Changes in the Market Dynamics

Some of the significant changes in the market are the technological advancement and environmental factors. Technology has changed business production, marketing, and outsourcing (Flakke, 2008, p.121). Each business needs to upgrade its activities to keep the pace with technological advancement to remain relevant in the ever-competitive market. Currently, the company operates under high pressure due to low-cost products and services offered by the emerging competitors. Due to economic challenges, most customers prefer cheap products that meet their needs. To counter these challenges, change is inevitable.

Economic Pressures

The primary factor driving for change is the economic pressure that forces businesses to realign their practices with the new market needs (Kreutzer, Neugebauer & Pattloch, 2018, p.25). With increasing cost of production, most enterprises are keen to cut down the number of employees and benefits offered to them and change their strategic operations to remain competitive in the market. In addition, increased cost of raw materials is forcing businesses to raise the prices of their products to meet their expenses. However, considering that the industry is price sensitive, Monte Microfinance should leverage on the quality of its products and services.

Management Complexities

Management approach is vital in achieving business objectives. The change in the organization was initiated by retrenching some employees that saw many workers lost their jobs in a bid to reduce the cost of production. Each business is complex since they pursue multiple goals. Therefore, the role of the is to navigate, manage, and solve different complexities in the organization to ensure that the business meets its objectives while delivering the needed results. The complexities of Monte Microfinance are operational, outcome, environmental, stakeholder, and organizational complications, which greatly influence business success.

2.3 Assess the implications of the strategic change have on the organizational resources

If the business fails to respond to the needed changes, different resource implications could occur. Some of the consequences include restructuring the company, interviewing, and hiring new workers, training the employees, and redundancies.

Restructuring of the Human Resource

If the business does not respond to the recommended change, it may face severe consequences in the market and lose its customer base. To recover from the challenges, restructuring the human resource is inevitable (Cameron & Green, 2015, p.59). Failure to support an encourage the change process means being ready to change the overall organizational structure. The process consumes much time and costly, which could lead to pressing business problems.

Training the Staff

Training and development are some of the critical roles of the business to ensure the industry competes to the required standards. Training is costly and time-consuming. If the working within the organization understands the significance of the change, there is no need to incur huge costs training them. However, with the ever-changing market dynamics, the existing staff should be given little training to new changes, which is not costly.

Redundancies

To ensure effective of change, the employees need to accept and realize its importance. If they do not, redundancies could occur, which affects organizational ability to meet its objective. The business may also experience redundancies if the management fails to take appropriate steps for change in time, which could, in turn, affect business performance.

3.1 Develop systems to involve stakeholders in the planning of change

Stakeholders are those influenced directly or indirectly with various business processes. Stakeholders are also interest groups with considerable influence on the management practices. For Monte Microfinace, Mendelow’s stakeholder theory has been considered. The theory suggests that the business should analyze its stakeholder groups based on power (the ability to influence organizational resources) and interest (how they are interested in organizational projects). All the stakeholders may have equal powers but different interests. To use the tool, there is need to create a grid map of stakeholders to identify those who are important. The High Power and High Interest stakeholders should be managed closely to satisfy their needs. The High Power, Less Interest stakeholders should be satisfied. The Low Power, Highly Interested stakeholders should be informed to ensure that there are no arising issues. The Low Power, Less Interested stakeholders should be monitored to keep check their levels of interest or power change.

Figure 4: Diagrammatical Representation of Mendelow’s Stakeholder Theory

3.2 Develop a change management strategy with stakeholders

Change management is one of the challenges experienced by most businesses. To bring the needed strategic change, Monte Microfinance should consider brainstorming, semi-structured interviews, and diagrams.

Brainstorming

Stakeholders are essential in ensuring the business achieves the needed change. Brainstorming assists to generate ideas and issues affecting the stakeholders. The method takes the form of sessions in which the management records essential points, and consequently, the points are sorted and prioritized depending on the needs of the business. The administration can then convene a meeting with the focus groups to discuss specific aspects.

Semi-structured Interviews

The approach involves using an informal checklist of the issues in guiding an interview with the stakeholders while allowing essential problems to arise. The method is vital for reconfirmation, identifying common ground, tradeoffs, and involving important parties. These practices ensure that each decision made by the management considers the views of the stakeholders.

Diagrams

Diagram may assist the stakeholders to have a quick grasp of what the business is planning or discussing. The method is essential is stimulating discussions by both literate and illiterate stakeholders. Generally, the diagram approach helps to visualize business processes since it provides a focus for attention. Moreover, it includes discussing business problems and stimulating ideas to assist in the decision-making process.

3.3 Evaluate the systems used to involve stakeholders in the planning of change

The stakeholder approach is essential to explain the rule of economic activities and the connection between competitive advantage and stakeholder value. Early engagement with the stakeholders assists in setting constructive steps to ensure their participation until completion of the change activities (Schermerhorn, 2013, p.142). However, the process should be managed and driven by a well-defined strategy. For Monte Microfinance, the stakeholder circle has been recommended. Stakeholder circle is vital in gaining stakeholder commitment and developing an organizational management strategy. The method involves a series of steps including identifying the stakeholders, prioritizing them based on their power and interest, and mapping the profile. Mapping involves profiling how the stakeholders will be affected, the support they offer, and what change means to them. The next step is the engagement strategy where the management decides ways to address the issues of stakeholders to gain their support and commitment. Optimizing the help of the stakeholders is also essential (Harvard Business School, 2006, p.54). However, the management needs to have clear and specific goals before communicating them to the stakeholders. The final stage is monitoring the strategy, which means going back to the stakeholders and ensuring that they support organizational change.

3.4 Create a strategy for managing resistance to change

Every change must experience resistance to be effective. Change resistance is a natural process considering that most do not want to come out of their comfort zones. Most stakeholders often do not want to see the new image of the company. Even while restructuring and downsizing the company, it was difficult for some employees to accept the new organizational structure. Some of the ways to reduce resistance include involving interested parties in the planning process and incorporating their ideas in the decision-making process and clearly defining the need for change and communicate the strategic decisions to the stakeholders. The business should also address the needs of those involved, allow the development of flexible designs, emphasize on the positive side of change, educate the stakeholders about change, and train and develop the stakeholders on the need the change.

Task 4: Appropriate Change Model and Implementation

4.1 Develop an appropriate model for change

For Monte Micofinance, the most appropriate model is Kurt Lewin’s model of change. The model has three critical phases: unfreezing, change, and refreezing. Unfreezing is the preparation stage, which involves challenging the status quo through making the employees realize the need for change. The model often challenges the core values, beliefs, and attitude (Burnes, 2004, p.984). At Monte Microfinace, the process of cutting down the employees is freezing the pay although the financial picture of the business should be made clear to the employees. Change is the second stage. Once the change is initiated, stakeholders start to accept the need for change and look for solutions of various problems affecting the business. The process takes time since it is an extensive process. Monte Microfinance downsized its workforce to cut down the benefits it offers. Refreezing is the final stage, which occurs once the change is stable. When it reduced the number of workers, the business refroze job profiles.

4.2 Plan to implement the needed change

Once the change has been designed, it is vital that the business implements the change. Change implementation demonstrates whether the change is successful or not (Kreutzer, Neugebauer & Pattloch, 2018, p.77). However, there is a need for careful planning to ensure effective implementation. For Monte Microfinance, the implementation process involves gaining support from the stakeholders who are essential in the decision-making process and support the needed change. There is a need to provide them with adequate information to adopt the recommended changes. The business also requires a schedule plan with a timeframe to ensure effective implementation of the program. Change requires commitment from the stakeholders. Proper communication strategy is vital to facilitate feedback mechanism. Performance, change processes, and obstacles should be monitored and evaluated.

Figure 5: Organizational Change Management Plan

4.3 Developing appropriate measures for monitoring progress

Considering the resistances associated with change, there is a need to integrate measures for monitoring the change process (Cameron & Green, 2015, p.97). Some of the methods include goal-based evaluation, outcome-based evaluation, and process-based approach. For Monte Microfinance, the outcome-based method should be considered since it measures the outcome of the proposed business change. The strategy highlights whether the change affects business processes. However, while monitoring performance, the management needs to set SMART objectives and review them regularly. There is also a need to benchmark the goals to compare performance, establish appropriate key performance indicators (KPI), and conduct a 360 degree on performance feedback analysis.

Conclusion

With the changing market dynamics, businesses are shifting their operations from the traditional product to customer focus. Change is an inevitable process that each company needs to consider to remain competitive and relevant in the market. In the report, different change models are discussed, the applications in various enterprises including Monte Microfinance. Different change factors are also considered: the factors driving change and resource implications if the company fails to implement change. The paper also addressed the significance of stakeholders in change management and various change implementation strategies.

Annex

Gantt Chart

Deployment Timeline

Jan-March

Apr-June

Jul-Sept

Oct-Dec

Start-up: Alignments, training, readiness assessment

Early success: Training plan, methodology decision, practitioner selection, deployment plan

Adoption: Change execution, practitioner mentoring, benefit validation, project follow-ups

Self-sufficiency: Change assessment, employee development, smooth institutional operations

References

Burnes, B. (2004). Kurt Lewin and the Planned Approach to Change: A Re-appraisal. Journal of Management Studies, 41(6), 977-1002.

Cameron, E., & Green, M. (2015). Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Philadelphia, PA: Kogan Page.

Flakke, E. (2008). The Challenge of Organisational Change: A comparative study of private organisations’ reflections on change processes. Mas