In this continuously evolving business environment, change management should be a process and must not be viewed as an intermittent project with a beginning and an end. Only then can businesses survive
Change is the only constant — be it in life or business. In this dynamic landscape, all businesses, whether small start-ups or large organisations, at some point or another, need to change their strategies and vision and go through a transformation process to stay alive and relevant by aligning people, processes and technology. Although change has been a part of businesses for long, it is the speed that has rendered transformation as an important and integrated business function. What took radio 38 years to reach a user base of 50 million people was achieved by television in 13 years and the internet in just five years. Today, the challenge is speed of transformation and all organisations have to gear up to face it and come on tops.
The current business world is quite demanding for companies. Faced with a “two-speed world” — rapid growth in emerging economies and slower growth in developed countries — firms have to develop unique strategies for each environment. In addition, digitisation and globalisation are blurring the lines between sectors as well as between traditional competitor groups. New technology is changing consumer behaviour, empowering start-ups, making pricing more transparent and reducing product life cycles. Additionally, owing to changing costs, evolving demand and unfolding trade restrictions, companies must rethink — and continually reassess — their operational footprint. To survive in this shifting environment and to keep up with the pace, most businesses must transform — either in strategy, operating model, organisation, people, or processes — and this generally results in the alteration of their growth trajectory. For most companies, it is an ongoing, adaptive process as market conditions continue to change.
Nokia is a prime example of ‘serial’ business transformation. Having reinvented itself several times in its 150-year history, this company, which once dominated the mobile phone industry, embarked on its most radical transformation till date by exiting the business in 2014. The device business had been moving towards a difficult stalemate, generating dissatisfactory results and requiring increasing amounts of capital, which Nokia no longer had. When Microsoft expressed interest in taking over Nokia’s device business, it sold its mobile business for $7.2 billion and simultaneously orchestrated another deal to buy out Siemens from the Nokia Siemens Networks (NSN), a 50-50 joint venture with Siemens, giving Nokia 100 per cent control over the unit and forming the cash-generating core to fund the journey of the new firm. After surviving a near-death experience and abandoning phones, this corporate phoenix has re-emerged as one of the world’s largest telecom network service providers by renewing portfolio strategy, corporate and capital structure, robust business plans and a new management team. Its enterprise value has grown manifold since bottoming out in July 2012 and the company has returned billions of dollars of cash to its shareholders.
Since change is the new normal for corporates today, how can an organisation embark on this journey? The first critical step is to get the right strategic vision and be able to anticipate the requirements of customers and strategies to achieve them. A sound strategy is necessary for a broad range of enterprise-wide investment decisions, resource allocations and performance expectations and helps to derive value from the transformation. It also includes defining the depth and scope of the changes and the redesign of internal processes and structures.
Even though there are a number of change management models, there is only a 30 per cent chance that change management in an organisation is successful. In addition, employee resistance is one of the major challenges in change management. So is something wrong with the employees or the change management system? In reality, there has been no proper development of the capacity of managers to actually implement the change management programmes. Outsourcing of the change management process to consultants has been detrimental to the strengthening of the managers’ ability to manage change and be accountable for the same. This approach is the single largest determinant of the failure of the change management programmes.
Many large organisations are not comfortable with any changes as their main focus is on control ability, routinisation, stability and risk-avoidance. How can employees, who are used to these habits, take to change easily? Change and stability do not go hand -in-hand and the result will be friction and organisational fatigue.
Since we are discussing change management, traditional change management theories should also look at improving or changing themselves.The traditional top-down approach does not take into account any suggestions from general employees of the company and change management comes from the top. This needs to be changed to incorporate ideas of the employees. The organisational environment should be open to creativity and divergent thinking. Critical feedback, that endures detection of flaws and continuous learning and adaptation, should be an integral part of the process. Otherwise, companies can fail big in their effort to bring about change. And most importantly, change management should be a continuous process and cannot be viewed as an intermittent project, with a beginning and an end.
In this continuously evolving business environment, change management is important. Making it happen effectively, however, needs to be a core competence of managers and their role has changed from the ability to complete change projects to design the organisation in a way that enables continuous adaptation of an ever-evolving environment.
(The writer is Assistant Professor, Amity University)
