This article offers a practical explanation of strategic change. After reading, you will have a basic understanding of this powerful change management tool.
What is Strategic Change?
Strategic change is the implementing of changes to important characteristics of a business, for instance in response to new market threats or opportunities. Upper management and the Chief Executive Officer in particular bear responsibility for strategic change.
The planning and implementing of strategic change is an important aspect of the role of manager. Strategic change is basically having a certain strategy and then making changes to it. A strategy is a long-term plan to achieve certain objectives. Strategies are aimed at the future, and should be aimed at lasting change. This is necessary to stay relevant in a highly evolving market.
Strategic change management is the process whereby the strategy is managed in a structured manner to achieve organisational objectives and missions. A well-known model for strategic change management are the steps in John Kotter’s 8-Step Process for Leading Change.
The need for strategic change
One aspect of strategic chance is that it’s hard to predict and control. That’s why many organisations prepare for all potential scenarios. Strategic change management is essential for the durability of companies. If companies fail to embrace strategic change – Nokia being a prominent example in the smartphone industry – they will fall behind and eventually get pushed out of the market. Unless businesses prepare for sudden, unpredictable, and radical changes, they won’t survive. Many companies claim to be changing, but only implement change on a surface level.
Role of strategic change management
Businesses can’t predict exactly what will happen in the future, so decisions are made based on knowledge, facts, and scenarios. Those scenario are particularly important. What if this and this were to happen? How would that impact our operations?
It might seem like looking for a needle in a haystack, but many large companies have successfully survived changes by predicting something that may have seemed very unlikely at the time. Risk management is also part of this. If a company thinks that something will happen in the future, it can respond in one of two ways: accept the risk, or reduce the risk.
A suitable tool for analysing what might happen in the future is the What-If Analysis.
Tools for strategic change management
An organisation might come up with the perfect five-year plan day, but the next day something might happen that changes everything. That’s why management has to manage all those plans and change them when needed. This is necessary if you want to stay relevant in your industry. Every industry will have new opportunities, and it’s important that the strategic plan is flexible enough to benefit from these.
A key part of this is identifying new opportunities, as well as threats. They then have to initiate a change plan. Below we’ve listed some tools that can help support these processes.
A SWOT analysis creates an overview of an organisation’s threats and opportunities, as well as its strengths and weaknesses. A company’s strengths can be used to take advantage of new opportunities. These strengths can also be used to minimise threats. By taking advantage of new opportunities, the organisation’s weaknesses are lessened.
Kotter 8-step Model
With the John Kotter 8-step model, the required change can be implemented, either to capitalise on new developments or to minimise threats. The model for strategic change management consists of eight steps. The first three steps of the model are all about creating the right environment for change. The following four steps are about involving and stimulating the organisation and its employees. The final step is the implementing and maintaining of sustainable change.
A clear management vision
That same John Kotter, Harvard Business School professor, notes that any project that involves change requires a clear vision. A change vision is how the organisation, department, product or service will look in the future when a specific change has occurred. This vision describes the organisation’s desired state. The concept of a change vision is important to link the essential steps and activities that are necessary for the desired outcome; strategic change management. It’s important that the change vision is unambiguous and solid for upper management as well as all other employees.
Creating and sharing a change vision
There are a number of best practices when it comes to creating a robust and durable change vision:
- Ensure that the vision is easy to understand;
- The vision has to be easy to share;
- The vision has to be intellectually strong;
- Ensure the vision is emotionally appealing.
The message that the change vision has to communicate should be easy to understand. The message also has to be logical, specific, and explain why the change is necessary in relation to today. It’s also important to be succinct. If the message is written on paper, it shouldn’t take up more than half a page. If the message is communicated verbally, it shouldn’t take more than 60 seconds. The message itself has to be strong and to the point, and have emotional appeal. An intellectually strong vision means that the vision is logical and correct.
Strategic leadership mainly refers to managers’ ability to push through a strategic change vision for the organisation and communicate it to employees. The goal of strategic leadership is, among other things, to stimulate employee motivation by engaging them with the strategy.
One of the core aspects of strategic leadership is the developing and stimulating of an open environment in which employees predict the organisation’s needs in the context of their own job. Managers can use various rewards or incentives to encourage employees to deliver quality.
Functional strategic leadership refers to managers’ ability to recognise the potential of employees and tie it to specific activities. This requires a high level of objectivity and the ability to monitor the entire work environment.
To summarise strategic change management
Strategic change refers to implementing changes in important aspects of a business. Managing and adapting strategies is also called strategic change management. In most cases, upper management is responsible for strategic changes. They should also effectively communicate the robust change vision to the entire organisation.
Strategic change is necessary to anticipate changing market conditions. There are a number of tools available for this. Change in a strategic respect is often prompted by developments in the internal and external environment of a business. These can be identified using a SWOT Analysis. After a proper plan has been prepared in order to act on these changes, John Kotter’s 8-step model can be used to actually implement it.
Now It’s Your Turn
What do you think? Are you familiar with this explanation of strategic change management? Do your recognise the necessity of change and anticipating threats and opportunities? Can you give examples of businesses that excel at this? Which other models for strategic change do you know? Do you have any tips or additional comments?
Share your experience and knowledge in the comments box below.
- Anderson, P., & Tushman, M. L. (Eds.). (2004). Managing strategic innovation and change: A collection of readings. Oxford University Press.
- Goetsch, D. L., & Davis, S. (2014). Quality management for organizational excellence: Introduction to total quality.
- Tichy, N. (1983). The essentials of strategic change management. Journal of Business strategy, 3(4), 55-67.
- Wiersema, M. F., & Bantel, K. A. (1992). Top management team demography and corporate strategic change. Academy of Management journal, 35(1), 91-121.
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