Change Basics: Chapter I – What is Change (Pt.2)

Recently I decided to start a totally new topic here on my Blog. This new topic, Change Basics, is dedicated to bring Change, Change Management and Change Communications closer to all people that are really new to this topic. So let this be a short lecture on the real essence of Change, just like back in college… I already wrote an introduction chapter and will now continue with “What is Change (Pt.2).

Chapter I – What is Change (Part 2)

What doesn’t drive Change is the attitude that, `If it ain’t broke, don’t fix it’. Yes, `it’ may be working now but is it doing so sufficiently well and will it do so in the future? You may need to reconsider the meaning of the term `ain’t broke’.

Change has many causes, for example

  • Ice Age forced adaptation (hairy mammoth, man discovered how to use caves, skins and fire)

In business change is influenced by, for example

  • New competition
  • Price changes
  • Technology
  • Regulation
  • Consumer demand

There are many drivers, both internal and external, that force changes on an organisation.

Change Drivers
Change Drivers

Factors driving change include

  • New shareholders may force a change as with the Chase Manhattan Bank in 1995
  • The appointment of new management almost always causes change as the `new broom sweeps clean’
  • Competition may force it, eg: home delivery of fast food (pizza), direct insurance sales or banking
  • A change in the market may force it, eg: privatisation, liberalisation of rules (telecoms, UK Stock Exchange, `Big Bang’)

The Burning Plattform

Typically there must be a `burning platform’ to cause the change to accepted practices. This phrase comes from the Piper Alpha disaster in the North Sea
where the only survivors were those who leapt off the rig in defiance of instructions and into the sea which was freezing cold and alight with oil. The burning platform forced a reappraisal of existing rules and the status quo. For a company, the burning platform could be a combination of things or one overriding concern, eg: disclosure of commissions in Life and Pensions transactions.

Ask yourself

  • Why Change: For your organisation, list the reasons why it might have to change
  • How to change: Having listed the reasons why your organisation might have to change, now list how it might change

Examples – Why Change

Life company

  • Increasing competition from banks, direct sales operations
  • Disclosure of policy costs to public
  • Change by customers to other, unregulated, products

Retailer

  • Change in consumer preferences (eg: vegetarianism)
  • Climatic changes (warmer winters lead to less demand for, eg: furs)
  • Out of town outlets put pressure on smaller independent retailers
  • Opening up of the single European market increases competition

Manufacturer

  • Competition has reduced costs by say 35%
  • Cheaper overseas producers
  • Technological developments render products obsolete
  • New environmental/safety rules

Public Sector

  • Impending privatisation
  • Government imposing market forces onto it

Examples – How to change

Life company

  • Reduce expenses portion of costs
  • Reappraise distribution channels
  • Offer new products, form joint ventures

Retailer

  • Offer new products, advertise in new markets
  • Change stock to reflect environment, change perception of goods to fashion rather than necessities
  • Form town loyalty cards, link with others to increase price leverage in purchasing
  • Export goods, negotiate with importers so as to offer same goods as competitors

Manufacturer

  • Review overheads and cut
  • Source overseas/invest in technology
  • Change products/invest in technology/produce next generation products

Public sector

  • Prepare staff by introducing norms and management performance
  • Consult staff and explain changes
  • Recruit external staff from private sector

No matter which actions are chosen, there are potentially enormous implications. Therefore, there is a need to manage the change in an effective manner.


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