Management of change: Recognizing a need or opportunity for change

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Fig.2 PPM: Project Portfolio Management in the Organizational Context

Abstract old and not updated

Management of change is a structured approach to transitioning individuals, teams, projects, and organizations from their current state to a desired future state. It is a vital aspect of organizational transformation as it helps to mitigate the potential risks and impacts associated with change. It involves ensuring that changes are smoothly and efficiently implemented, and that the impact of changes on employees, customers, and other stakeholders is minimized. There are many theories, tools, and models in the field to provide a framework for managing change. The model presented by John Hayes views the management of change as a purposeful, constructed and often contested process that involves seven core activities.

• Recognize a need or opportunity for change.
• Diagnosing what needs to be changed and formulating a vision of a preferred future state.
• Leading and managing the people issues.
• Planning how to intervene in order to achieve the desired change.
• Implementing plans and reviewing progress.
• Sustaining the change.
• Learning.

This article focuses on the first activity of “Recognize a need or opportunity for change”. It discusses the different approaches and paradigms that organizations adopt in responding to changes, including four types of change: reactive and proactive and incremental or continuous . The article also explores the sources of change, including external factors by the use of the PEST model and Stebel's cycle of competitive behavior model and internal factors by the use of Greiner's organizational life cycle . The article highlights the importance of recognizing the need for change, monitoring indicators, and formulating the change agenda, and emphasizes the role of individuals at multiple levels of the hierarchy in the change process."

Introduction

There are many opportunities and threads that can trigger changes in an organization. These can be located both in the organization internal and external environment and affect the organization ability to recognize the need or opportunity for change. Many tools have been developed to help managers analyze internal and external threats and opportunities. Tools such as the PEST model helps manager analyze the external source of changes with focus and attention on the Political, Economic, Socio-cultural, and Technological trends. While tools such as Greiner model of Internal factors that can trigger discontinuous changes help make managers aware of the organization internal environment, how the organization component part within the organization work and how to address the different kind of problems .

(Figure xx: PEST model for analyzing external changes and Greiner model of Internal factors that can trigger discontinuous changes )

According to Hickman and Silva the problem most organizations and managers faces is not how to solve a problem when it has been identified, but that they aren’t able to recognize the problem in the first place . Organizations can be unaware of their own problems, which may have detrimental effects on the organization. Failure to recognize the need or opportunity for change can lead to internal and external misalignments, ultimately undermining the effectiveness of an organization. One reason why organizations fail to acknowledge the need or opportunity for change is that they can fall into the so-called "trap of success" and become "learning disabled”. Managers stop reflecting and become incapable of looking outside, reflecting on successes and failures, and developing new insights. This can ultimately lead to the trap of success, also referred to as the "death spiral" .

(Figure xx: The trap of success )

Sensing the need for change

Mangers are responsible for ensuring that the organization, or the part of the organization they manage, performs effectively. One way a manger can recognize the need for change is when there is a discrepancies between the actual and the desired level of performance. The problem is when managers restrict their attention to a narrow range of indicators and thereby fail to pay attention to other indicators that may be equally or even more important. This can lead to a problem where discrepancies go unrecognized because the manager's indicator field is too narrow, and the need for change is not recognized. Managers need to take into account various factors when assessing performance, including the purpose, stakeholders, level of assessment, alignment, timing, benchmarking, and constraining and enabling factors .

Purpose: Managers should focus on performance indicators that align with the purpose of their organization. While profit is a common tool to measure effectiveness, it may not be applicable in all cases. For instance, for an organization such as a hospital, mortality rate and waiting time may be more important and applicable indicators than profit.

Level of assessment: …

Stakeholder perspective: Different stakeholders use various indicators to measure an organization's effectiveness. For example, while waiting time in line might be important from a customer's perspective, investors may prioritize profit over waiting time.

Alignment: The assessment of effectiveness needs to be aligned throughout all parts of the organization. Organizational effectiveness should align with departmental effectiveness, which in turn should align with group and individual effectiveness.

Time perspective: The time perspective needs to be taken into account when assessing effectiveness. For example, Department A may currently produce more profit than Department B, but if Department B has invested in optimized production, which results in higher costs in the beginning and lower costs later on, this needs to be taken into consideration.

Benchmarking: A company may improve its output ratio and, thereby, its effectiveness. However, if this improvement is the result of a new and widely available manufacturing system that all comparable producers now also use, the effectiveness should be measured against a standard such as the company's performance relative to that of others in the field.

constraining and enabling factors : …

The Balanced Scorecard Tool

Those managing and assessing effectiveness need to take multiple factors into account such as the purpose, stakeholder perspective, alignment, time perspective, benchmarking and so on. If any of these areas are overlooked, those managing and assessing performance might fail to recognize the problem and the need for change in time. A tool many managers have adopted to help them widen the criteria they use to asses performance, is “The Balanced Scorecard” developed by Kaplan and Norton . The Balanced Scorecard approach examines performance from four perspectives:

Financial perspective: Focus on the financial objectives of the organization and help managers track the financial success. Cash flow, return of investment, and shareholder value are example of variables which can be used in this perspective. The attention is on how the organization should appear from a stakeholder holder standpoint.

Customer perspective: Focus on the customer side and help managers look at customer objectives. Customer satisfaction surveys, customer retention rates, and market share are examples of variables which can be used in this perspective. The attention is on how the organization should appear from a customer perspective.

Internal processes perspective: Focus the attention on the key operational goals and the processes needed to satisfy the shareholders and deliver the customer objectives. The inventory, quality control, and product lead time are examples of variables that can be used in this perspective.

Learning and growth perspective: Focus on the intangible drivers of future success with attention to people, systems, and organizational procedures. Training, leadership, database, skills, and organizational culture are example of variable which can be used in this perspective .

(figure xx: The Balanced Scorecard model)

How to use the tool and example cases

Apple…. Rockwater’s ……

References1

- Hayes, J. (2022). The theory and practice of change management. Bloomsbury Publishing.

- Nadler, D. A., & Tushman, M. L. (1995). Types of organizational change: From incremental improvement to discontinuous transformation. Discontinuous change: Leading organizational transformation, 15-34.

- Greiner, L. E. (1989). Evolution and revolution as organizations grow (pp. 373-387). Macmillan Education UK.

- Schneier, C. E., Shaw, D. G., Beatty, R. W., & Baird, L. S. (Eds.). (1995). Performance measurement, management, and appraisal sourcebook. Human Resource Development.

- Kaplan, R. S. (2009). Conceptual foundations of the balanced scorecard. Handbooks of management accounting research, 3, 1253-1269.

- ‘https://books.google.dk/books?hl=en&lr=&id=ZT57xSrPJ5YC&oi=fnd&pg=PA66&redir_esc=y#v=onepage&q=apple&f=false Example s.66