Strategies for Managing Change

 

Introduction

 

Most managers would agree that change has been their central preoccupation as far back as they can remember, and that managing change is the raisan d'etre of management.

 

But since the late 1990s a new kind of turbulence has increasingly made itself felt.  Unlike the earlier changes, which arose out of uncertainties in one's own traditional business, the new turbulence came from unaccustomed and unfamiliar sources; from foreign technologies, from foreign competitors, from governments.

 

An increasing number of such changes posed major threats or opportunities of the firm's technology, major loss of market share, drastic increase in the cost of doing business, a chance to get a major jump on competitors, or a ground floor entry into a new industry.

 

The speed with which such threats/opportunities develop has been increasing to a point where the structured processes, which we have been discussing up to now, may no longer be capable of perceiving and responding to them fast enough, before the threat has made a major impact on the firm, or the opportunity has been missed.

 

Now, we turn our attention to such unfamiliar, momentous and fast changes.  The concern of this chapter is to focus on different ways in which firms respond to such changes.

 

If, for whatever reasons, the firm fails to respond to a threat that has manifested itself, the losses caused by it will continue to accumulate.  Sooner or later, most firms will take countermeasures.  If the lost sales are irreplaceable, the solution is to stop the product line and to eliminate costs, which no longer generate income.  If more positive options are available, the solution is to develop new products which will use capacities and capabilities made idle by the threat.  A more difficult response is to divest from the obsolete part of the operation while, at the same time, replacing the lost profit with totally new activities.  The preferable alternative, though not always available, is to convert the threat into an opportunity: to devise a response, which not only replaces but enhances profits and sales.  Thus a firm with foresight, which anticipates the shift to new energy sources, can change to the new sources ahead of competitors and increase its market share at their expense.