by A static environment can quickly antiquate an organization. Therefore, change is a constant and necessary requirement for organizations to stay competitive and survive in this volatile global economy. Organizational change can help streamline business processes and eliminate redundant systems or groups. However, it can also have negative consequences. To minimize the negative impacts, strategic change in an organization should always seek to achieve advancement in both business and employee performance. The overall change process should reflect a “win-win” situation for both the organization and its employees.
The Process of Change
To implement sustainable organizational change, companies employ a three-prong phased approach. The most important and difficult phase of the process is unfreezing, which involves identifying and unlearning wrong past behavior that are sometimes ingrained in an organization’s culture. The most significant indicator of success at this phase is employee acceptance. If an organization manages employee resistance promptly and effectively at this stage, it will ensure the success of the next two phases. The second phase, changing, involves replacing past behavior with new behavior through significant redevelopment and training. Refreezing, the final phase of the process, reinforces and sustains the new behavior through continued visibility and measurement of success. One reinforcement technique is the employment of a praise and reward system. Praise and reward systems elicit high performance and motivate employees to embrace change.
Employee Resistance to Change
A changing organization should not ignore the human element. It is important to change business activities within a company. If employees are not involved or are not willing to accept change, the process is likely to fail. Employees resist change because they are afraid that to lose a job or have to take on additional responsibilities that an employee is either unqualified or unequipped to handle. Using encouraging and inspiring techniques to implement change demonstrates to an employee that she is not being forced to accept change, but is an integral part of the process. An employee feels like a significant contributor in the work place environment when he is part of a successful revolution.
Employee Turnover
After a major reorganization, businesses typically undergo some employee turnover. An employee may feel that the environment is too unstable and might seek employment elsewhere where she feels more secure. High employee turnover can severely affect an organization’s productivity due to loss of skilled workers and the need to recruit and train new people. Sometimes the loss of resources can also result in loss of business revenue as an employee may take key accounts with him. To abate employee resistance and turnover, an organization should initiate a deliberated change management process that explains the significance and implications of the change and guides employees afterward.
Deteriorating Work Climate
Organizational changes that lead to ambiguity and job uncertainty create a declining work environment, which can negatively affect the economic health of an organization. The most detrimental impact is mortality, which is a clear sign that a business transformation has gone horribly wrong. An organization can die when change occurs too quickly or erratically. In a deteriorating environment, employees become self-preserving, less productive, unmotivated and fearful. Avoiding ineffective changes and implementing positive ones will promote a productive corporate culture and prevent organizational death.
Ways in Which Organizations Achieve Growth
- Licensing: “License your most advanced technology,” advised Peters, who argued that truly proprietary technologies are quickly becoming extinct. Peters and other consultants contend that competitors will soon copy whatever a company develops in the realm of technology (and other areas), so it may make good sense for a company to turn to licensing. This creates cash flow for the company to fund future research and development.
- Joint Venture/Alliance: This strategy is particularly effective for smaller firms with limited resources. Such partnerships can help small business secure the resources they need to grapple with rapid changes in demand, supply, competition, and other factors. Forming joint ventures or alliances gives all companies involved the flexibility to move on to different projects upon completion of the first, or restructure agreements to continue working together. Subcontracting, which allows firms to concentrate on those aspects of their business that they do best, is sometimes defined as a type of alliance arrangement (albeit one in which the parties involved generally wield differing levels of power). Joint ventures and other business alliances can inject partners with new ideas, access to new technologies, new approaches, and new markets, all of which can help the involved businesses to grow. Indeed, establishing joint ventures with overseas firms has been hailed as one of the most potentially rewarding ways for companies to expand their operations. Finally, some firms realize growth by acquiring other companies.
- Sell Off Old Winners: Some organizations engaged in a concerted effort to grow divest themselves of mature “cash cow” operations to focus on new and innovative product or service lines. This option may sound contradictory, but analysts note that businesses can command top prices for such tried and true assets. An addendum to this line of thinking is the divestment of older technology or products. Emerging markets in Latin America and Eastern Europe, for instance, have been favourite places for companies to sell products or technology that no longer attract high levels of interest in the United States. These markets may not yet be able to afford large quantities of state-of-the-art goods, but they can still benefit from older models.
- New Product Development: Creation of new products or services is a primary method by which companies grow. Indeed, new product development is the linchpin of most organizations’ growth strategies.
- New Markets: Some businesses are able to secure significant organizational growth by tapping into new markets. Creating additional demand for a firm’s product or service, especially in a market where competition has yet to fully develop, can spur phenomenal growth for a small company, although the competitive vacuum will generally close very quickly in these instances.
Mindset and The Five Stages of Organizational Growth
There are five basic stages of organizational growth. Along the way, there are definitely skill and strategy needs. However, the challenge in each of these stages is to avoid slipping back into a lower stage. This challenge is nearly always a result of mindset.
Stage I: Conception
Just getting an idea past being a wish or a dream and into action and reality is a major event. The conception stage is marked by creating a vision and some level of planning, developing initial partners. It is also where the first or initial customers are developed.
Mindset Challenges:
- Fear & Self-Doubt: Allowing real-feeling but unsubstantiated fears to guide decision making.
- Over-Optimism: Insufficient acceptance or exploration of inevitable challenges, investment, and effort.
- Being Closed to the Input of Others: Inability to recognize and obtain wise mentors and input.
Practical Challenges:
- Demonstrating profitability: Creating a “paper model” demonstrating how & when profitability (for-profit) or sustainability (non-profit) will be achieved.
- Estimating investment and risk: Estimating what will be required to achieve profitability or sustainability.
- Market Acceptance: Demonstrating that there is demand for what you offer.
- Organizational structure: Clarifying roles and responsibilities, including how decisions will be made, delegated and implemented.
- Financial management & accounting: The tools, the people, the procedures.
Stage II: Birth / Startup
The birth/startup stage is when you launch the business or non-profit. The “Open” sign is on. You’ve created a legal entity. You’ve begun to offering your products or services to the community. You are making a lot of changes and adjustments due to initial feedback. You are likely still learning about your product, your customer and your business model: What is wanted. What isn’t. What works. What doesn’t.
Mindset Challenges:
- Fear and Self Doubt: There will be new fears and challenges that emerge. Interpreting them accurately.
- Ego: When success or survival is on the line it is very easy for ego issues to emerge.
- Trust & Communication: Issues regarding communication, decision making, follow-through, accountability will all emerge here.
- Crisis-only mode: Forgetting to think, plan and act ahead only responding to urgent issues in the moment.
- Sales-only mode: Business development must happen at this stage but systems need to be clarified and developed to support the new business.
Practical Challenges:
- Managing Cash: Running out of money may be a constant threat.
- Adjusting Expectations: The realities of market demand may be slower or faster, lesser or greater than expected or planned on.
- Financial Management & Accounting: Ensuring that the tools are being used, the procedures work and are followed, that you have the right people managing your finances and books.
- Building Relationships & Credibility: Making sure you are known and attracting attention from current and future stakeholders.
- Clarifying The Value You Offer: The value of what we offer is rarely self-evident. Learning to communicate how the customer benefits in ways the customer cares about.
Stage III: Growth & Stability
You’ve made it! The start-up is over. You can walk now. Mostly. You are generating revenue, you’ve developed brand awareness and you are adding new customers. There is growing predictability in your models and approaches. You are learning what works and what doesn’t. However, competition may be a real concern. Customer loyalty may not be strongly developed. You may or may not be financially stable.
Mindset Challenges:
- Trust: Learning to delegate and let go effectively becomes very important.
- Ego: Continuing to learn to give credit and accept responsibility for problems.
- Scarcity vs abundance: Removing any elements of “survival” and “crisis” mode in favour of investment, stability, and growth.
Practical Challenges:
- Cash Flow: Sustaining financial growth and cash flow.
- Making Large Investments: Timing critical staff, facility or equipment decisions with cash flows.
- Competition: Becoming unique by distinguishing yourself from competitors in terms of service, relationship or product.
- Managing workload: Engaging the fruits of success in terms of increases in management, customers, and revenue.
- Financial management: Growth and management depend on good information.
Stage IV: Maturity and Choices
At this stage, the business or non-profit is established. Survival is not the key question. The business has customer awareness and loyalty. It has built marketing gravity so revenue is easier to obtain. It requires less effort and energy to sustain the organization. This is the point where leaders tend to either disengage, bureaucratize or expand.
Disengagement can look like an owner or executive who takes advantage of the decreased leadership need to step away. This may be less attention to detail or less time at work. This can be a good place for owners to bring in a new executive or consider a sale.
Bureaucratizing often happens as a reaction to the unpredictable and crisis mode nature of the startup and survival phases. There is a real need and opportunity for systems & structures to be developed. However, when this happens to primarily serve internal needs as opposed to external (to serve management and staff as opposed to the customer) it’ll begin to undermine the possibility of success or growth.
Expansion means utilizing existing strength, brand, and knowledge to either expand into new markets or offer new lines of services or products.
Mindset Challenges:
- Ego & Reputation: Perceptions of how “I” or “We” are seen can inhibit good decisions.
- Ossification & Complacency: Lack of creativity and rigid thinking, systems or structures that no longer best serve the customer.
- Founder Syndrome: The founder is unable to stop tinkering, changing or rebuilding when structure is needed.
- Personal Identity & self-worth: Outgoing owners or executives may stay too long.
Practical Challenges:
- Financial management: Owners or executives often extend more trust to financial managers or CFO’s at this point. Ensure that good systems & procedures are in place. That oversight remains.
- Moving into New Markets: The organization may need to move into new markets to continue to grow. This may increase management complexity.
- Adding New Products & Services: The organization may need new products or services to grow. Ensuring that competency and culture are protected is important.
- Engaging New Competition: New markets, products or services all mean engaging new competition. Time to revisit those skills.
- Developing Systems & Structure Without Becoming Rigid: Effective growth only occurs with the development of predictable systems and structure. Learn to build ones that promote growth instead of stifling it.
Stage V: Arriving & Thriving
Not every organization reaches Stage V. It is similar to Stage IV with the difference of organizational influence, recognition, and potential impact. It is often an “institution” that others depend or rely on. After successful expansions, your organization may now be at the top of its industry. It has maturity in the market, systems, and processes. It has a dominant presence. It could still be growing but it may not be. You are again in the place of determining whether or not you will stabilize or expand.
Mindset Challenges:
- Legacy: What does the leader or organization want to be known for?
- Energy: Does the leader still have the drive to expand or maintain?
- Mythical Thinking: “We can’t fail.” Organizations who’ve made it often believe that they can’t make mistakes or lose their position. They stop pursuing excellence and believe they define excellence.
- Ossification: Lack of creativity and rigid thinking, systems or structures that no longer best serve the customer.
- Personal Identity & self-worth: Outgoing owners or executives may stay too long.
- Founder syndrome: The founder is unable to stop tinkering, changing or rebuilding when structure is needed.
