The Challenge of Strategic Change

1
The Challengeof Strategic Change

• Gerry Johnson
• University of Strathclyde
• Graduate School of Business
• Glasgow, UK

2
Patterns of Strategy Development
3
Why ..after 30 years of advice on how to
design strategies?
4
Strategy As Design

• Thinking precedes action
• Strategy making is deliberate
• Strategy is logical and clear
• Top managers are strategic decision makers and
  directors of strategy
• Organisations are mechanistic and hierarchical

5
Strategy As Design Highlights

• The potential benefits of systematic thinking to
  handle complexity and uncertainty

6
A Planning Framework for Strategic Management
7
Strategy As Design Highlights

• The potential benefits of systematic thinking to
  handle complexity and uncertainty
• The need for planning and control

8
The Benefits of Strategic Planning

• A structured means of analysis and thinking
• Taking a long term view
• A means of control
• and co-ordination
• and communication

9
But there are Dangers

• The neglect of cultural and political dimension
  of organisations
• Delegating responsibility to specialists
• Failure to achieve ownership of plans
• Detail rather than vision

10

11
Strategy As Design Highlights

• The potential benefits of systematic thinking to
  handle complexity and uncertainty
• The need for planning and control
• The benefits of analytic tools and techniques

12
Patterns of Strategy Development
13
If the rate of external change exceeds the rate
of internal change, then you have got problems.
Lew Gerstner, IBMBad management or
inevitable?
14
Strategies Are Also Built On

• Individualand
• Collective

Experience
15
Strategies Are Also Built On Experience

• Individual
• Collective

16
Paradigm

• The beliefs and assumptions held in common and
  taken for granted in
• an organisation

17
Opportunities and threats
Strengths and weaknesses
THE PARADIGM
STRATEGY
Environmental forces
Organisational capabilities
PERFORMANCE
18
If Unsatisfactory
(After J-C Spender)
19
The Cultural Web of an Organisation
Stories
Symbols
Paradigm
Power Structures
Rituals Routines
Control System
Organisational Structures
20
The Cultural Web of an Organisation
Stories
Symbols

• Head Office
• Exec Dining Rooms
• Silver Tray Size
• Office Size
• Branch Layout

• Disasters of the past
• Guys with bad debts get chopped

Power Structures
Rituals Routines
Paradigm

• Provider of safe lifetime employment
• Mistakes Death
• Avoid Risk
• Professional status/ integrity

• Process before sales
• Secure lending
• Appointment and promotions procedures
• Mortgage relief

• Regional Directors
• The long serving Mafia

Control System
Organisational Structures

• Control heavy
• Branch manuals
• No exceptions to standard procedures
• Inspectors

• Top heavy
• Hierarchical
• Top down
• Strict grading

21
Elements of the Cultural Web

• The routine ways that members of the organisation
  behave towards each other, and that link
  different parts of the organisation. These are
  the way we do things around here which at their
  best lubricate the working organisation, and may
  provide a distinctive and beneficial
  organisational competency. However they can also
  represent a taken-for-grantedness about how
  things should happen which is extremely difficult
  to change and highly protective of core
  assumptions in the paradigm.
• The rituals of organisational life, such as
  training programmes, promotion and assessment
  which point to what is most important in the
  organisation, reinforce the way we do things
  around here and signal what is especially
  valued.
• The stories told by members of the organisation
  to each other, to outsiders, to new recruits and
  so on, which embed the present in its
  organisational history and flag up important
  events and personalities, as well as mavericks
  who deviate from the norm.

22
Elements of the Cultural Web

• Other symbolic aspects of organisations such as
  logos, offices, cars and titles or the type of
  language and terminology commonly used these
  symbols become a short-hand representation of the
  nature of the organisation.
• The control systems, measurements and reward
  systems that emphasize what is important in the
  organisation, and focus attention and activity.
• Power structures are also likely to be associated
  with the key constructs of the paradigm. the most
  powerful managerial groupings in the organisation
  are likely to be ones most associated with core
  assumptions and beliefs about what is important.
• In turn the formal organisational structure, or
  the more informal ways in which the organisations
  work are likely to reflect power structures and
  again, delineate important relationships and
  emphasize what is important in the organisation.

The paradigm is the set of assumptions, held in
common and taken for granted in an organisation
which lies within a cultural web which bonds
these assumptions to the day to day action of
organisational life.
23
Implications

• Organisational culture can be the basis of core
  competences underpinning competitive advantage.
• Or the cause of strategic drift.
• In the absence of you managing the culture, it
  will manage you.
• But is it manageable?

24
Some Key Questions and Conclusions
25
What is the Type of Change Required?
26
Types of Change
End Result
Transformation
Re-alignment
Incremental
Evolution
Adaptation
Nature
Big Bang
Revolution
Re-Construction
27
If Unsatisfactory
(After J-C Spender)
28
The Importance of Irreversibility in Evolution
29
What Levers for Change?
30
Diagnosis
Mapping required changes From what is
To what is needed
31
Everyday Reality
Top Executive Reality
32

• Strategies need to change at the point of
  delivery
• Changing structures and systems is inadequate

33
Conclusion

• Strategy as design aids thinking
• Strategy as experience explains the challenge of
  strategic change