Organizational Change And Innovation
Organizational change and innovation are essential for an organization’s growth and development. Upon understanding the importance organizational change and innovation, many researchers have formulated theories related to change management. Theories have critically analysed with an example of British Airways. Compare strategies with the external and internal environment. The changes taking place in British Airways explores the understanding of change management is implemented in organizations. The case study explains the dimensions of business travel and tourism and its social, economic and environmental consequences. The case study elaborates the easier approach of organizational change in right method with mutual trust and obligation between the employee and employer.
“Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging business environment, to meet the needs of markets and to fulfil stakeholder expectations.”
Johnson and Scholes (Exploring Corporate Strategy)
Organizational Strategic planning process: According to the today’s high rivalry in business environment, the large corporations not only follow the budged-oriented planning and forecast-based planning methods to survive and prosperity, but also engage in strategic planning which clearly describes objectives and assess the both internal and external situation to formulate strategy, implement the strategy, evaluate the progress, and make adjustments to make necessary to stay on track.
Mission & Objectives: The organization’s mission is expressed in the form of a mission statement that projects the organization image to the consumers. Organizational leaders can define measurable financial and strategic objectives guided by the business vision.
Environmental Scan: Scanning of the internal and external environment of an organisation is known as environmental scanning. The internal analysis reveals strengths and weaknesses and the external analysis reveals opportunities and threats of an organisation.
Strategy formulation: Once the clear representation of an organisation has been achieved, specific strategy can be devised. Michael Porter identified cost leadership, differentiation and focus as three generic strategies can be used while formulating strategy.
Strategy Implementation: For effective implementation, high level intangible terms and priority of strategy needs to be translated into more detailed policies for clear understanding at functional level of organization.
Evaluation & Control: After implantation, the results need to be measured and evaluated, with necessary changes made as required to keep on track.
SWOT Analysis: SWOT stands for strengths, weaknesses, opportunities and threats. SWOT analysis is a strategic planning method, which helps organizations in identifying and understanding their strengths and weaknesses, explore opportunities and minimise threats. It is helpful in identifying areas of development in any business.
Strengths: Organizational strengths are skills and capabilities which makes possible to conceive of and implement its strategies. Examples include strong tie-ups with the suppliers, healthy relations with the customers, reputed brand name, etc.
Weaknesses: Organizational weakness is deemed as an opposite of strength, which is important to overcome their weaknesses as it is highest importance to strive in the market. Examples include weak tie-ups with the suppliers and distributors, poor reputation among customers, weak brand name, etc.
Opportunities: Opportunities are favourable circumstances, an area or duration in which an organization can work towards higher performance and profits. Examples include unfulfilled customer needs, up to date with new technologies, favourable changes in the international trading regulations, etc.
Threats: Threats are unfavourable changes in the internal and external environment. Examples include new regulations, not able to manage the new technologies; products are not able to reach the customer satisfaction level, trade barriers, etc.
By utilizing the SWOT analysis in strategic planning towards the organizational growth, a matrix can be developed which provides an accurate understanding of organizations’ strength, weaknesses, opportunities, and threats.
In conclusion, SWOT analysis is the most important method in analysing and formulating strategy. With this, the managers can assess the internal strengths and weaknesses as well as external opportunities and threats for overall development of the organization. (Ricky Griffin, 2008)
Micro & Macro Environment:
PESTEL Analysis: PESTEL analysis means analysing the political, economical, social, technological, environmental and legal factors, which may play a big role in an organisation processes. Using these key factors organizations can identify the attractiveness of a particular industry for investment, customers’ expectations, recognise the strategic gap and opportunities in the market.
Political factors include political stability, taxation policies, legislation and regulation, government grants and fiscal incentives, and environmental regulations, and etc.
Economic factors include interest rates, inflation rate, currency exchange rates, globalization, economic growth, and etc.
Social factors include demographic change, emphasis on safety, lifestyle development, healthy management, and etc.
Technological factors include research and development activity, communication technologies, automation, operation technologies, and etc.
Environmental factors include climate, weather, and etc.
Legal factors include discrimination law, consumer law, employment law, health and safety law, and etc.
In conclusion, PESTEL analysis is a method of understanding external environment in which an organization operates and this is very important for overall development and success of an organisation.
(Ricky W. Griffin, 2007)
“Change management is an organized, systematic application of the knowledge, tools and resources of change that provides organizations with as key process to achieve their business strategy.”
Michael E. Porter developed a five forces tool called “porter’s five forces” to understand the industry in which a firm operates. According to the Michael E. Porter, competition is often looked at too narrowly by managers and the five forces say that competing with direct competitors. The five forces give a holistic way of looking any industry and understanding the structural underlining drivers of profitability and drivers. With clear understanding of this model, an organisation can develop the competitive edge over its rivals and identify whether new products or businesses have the potential to be benefit or not. The five forces are supplier power, buyer power, competitive rivalry, threat of substitution, and threat of new entry. These five competitive forces give a frame work for identifying the most important industry developments and for foreseeing their impact on industry attractiveness.
Michael E. Porter (On Competition)
Framework for Change:
The job role of senior managers is to take decisions in favour of achieving the goals and make sure that the formulating strategies are implemented in the appropriate manner. The above-mentioned theories help the senior managers to approach change in a more structured way. Nevertheless, rather than sticking of organisational theories, managers have a broad range of choice and prudence.
Resistance in Change:
Change tends to be resisted when it affects interpersonal and job relations, but the manner of change is often important than the change itself. Change will not be effective unless the affected areas are committed to change. By creating supportive atmosphere, close working with affected areas by the change must work out a new value system we can reach the goal of successful change.
According to the Lewin’s model, change means three stages: unfreezing, transition and refreezing. Unfreeze – supporting people to replace the old behaviour with new one, which provides a sense of psychological safety and motivated to change. Transition – people start looking at things in a different way and may learn new concepts or behavioural models in this stage. Refreeze – stabilization of change via integration of changed behaviour into the normal way of doing things. Change will fall back to prior level unless the change is internalized and institutionalized after execution. Some of the organisational resistance factors are inactive structure, inactive group, threat to expertise, poor power relations, and limited forces of change.
There are number of organizations in the world in which there has been constant change and innovation. British Airways is one such organisation that has constantly changes in its strategy, structure, culture, management and technology. It has also employed various techniques to deal with such changes.
Background Information: In 1919, Aircraft Transport and Travel Limited (AT&T) launched world’s first daily international air service. In 1924, four major airline companies in Britain – Handley Page, Instone, AT&T and British Air Marine Navigation merged together into a single airlines company called Imperial Airways. This airline grew in size and gained rapid reputation. The airlines not only dominated the operations in Britain, but also dominated across the different parts in the world encircling routes to Australia and Canada. In 1935, British Airways Ltd was formed with the merger of three airlines and extremely competed with the Imperial Airways. However, in 1939, British government nationalised the two airlines and formed British Overseas Airways Corporation. The BOAC separated into two entities as British European Airways (operates within Europe) and BOAC (operates rest of the world). With the rising oil prices and industrial concerns, BOAC and British European Airways decided to merge into British Airways in 1976 and a Concord was introduced. This was referred as to as the new supersonic era. In April 1984, British Airways was made into British Airways Plc by shares offered to public. Now, British Airways is the United Kingdom’s largest international scheduled airlines and operates more than 550 destinations across the world. British Airways has more than 280 aircrafts and has more than 40,000 employees. The corporate headquarter is located in London and its main hubs are Heathrow and Gatwick. British Airways has owned around 240,000 shareholders including 50% of shares owned by the BA’s existing employees.
Strategies of British Airways: New strategies were adopted at each level of the organisation. British Airways top managers are certainly reviewing their strategies to identify the areas of improvement. Functional strategies aim at providing British Airways’ products with competitive advantages in terms of superior quality, innovation, efficiency and customer responsiveness.
In airline industry, formal corporate strategy was that of vertical integration with lack of independent providers for specialized activities brought about the creation of in-house services with secure markets, therefore lacking up-to-date technology or cost efficiency. With the new corporate strategy, outsourcing activities to reduce costs and elevate competitiveness, and on developing partnerships with major airlines to increase the use of each partner’s assets and better serve customers.
SWOT Analysis of British Airways:
Strengths: British Airways strength includes purchased fast-rate new fleet of aircrafts to praise comfortable travelling of customers. British Airways operational research declared that level of knowledge and analytical skills performed by the organization and employees becomes it strength. Strong focus in customer areas while in purchasing high-end technology for air service strengthens the business orientation.
Weaknesses: Lacking marketing strategy is one of many weaknesses on organizations business and service. Even though the great infrastructure hosted British Airways need to attract more customers with better market schemes. Furthermore limited knowledge of simulation technology, knowledge lost through internal staff moves, and difficulty to enhance specialist airline technology are the weaknesses.
Threats: Threats are seen in centralized management, bureaucratic system and poor decision making. Rapid changes on technology and customer behaviour can also be a threat if not interpreted quickly. Major threats are trade union strikes.
Opportunities: Availability of vast services and products create an opportunity to utilize them properly. In British Airways virtual reality could provide a new use for simulation, getting network software and sharing knowledge through special groups are opportunities, which can be utilized further enhance the company’s growth. Online check-in for families with ‘Fast Bag Drop’ facility, introducing baggage policies by standardizing the size of baggage to reduce queue time in airports are some of opportunities for British Airways.
Porter’s five forces model applied to British Airways external environment
High Risk of Entry
Considerable start-up capital
High financial risks
Large economies of scale
Control through Airport slots
Low Power of Supplies
BA sets terms and conditions, e.g. takes 130 days to pay suppliers
Rises with Industry stakeout and operators will complete on cost and differentiation
High Power of Buyers
Due to a weaker demand while the number of operator stabilises
new communication means, e.g. teleconferencing
Source: Adapted from Michael Porter’s model.
Change Management – British Airways
By signing the joint business agreement in revenue and cost sharing and with Iberia British Airways spread the choice of air timings, better connections and short journey timings for customers travelling between London and Spain.
British Airways has changed the uniform for more than 25000 staff and the new uniform will cost 30% less than the previous one, which continues to generate long term cost savings while bringing a new smart look to the staff.
Expanding the operations through launching BA CityFlyer and operating from the Docklands to six UK and European destinations in 2007.
In 2008, introduced Online Boarding Pass (OBP) along with technology enabled PDF with e-fax and mail services to customers’ convenience and time saving. Formerly, passengers would need to have access to a printer at the time of online check-in to produce their boarding pass. The Online Boarding Pass facility helped the customers in a great way as they did not have to wait in queue. Now they can take advantage of the freedom of online check-in.
British Airways also aims on cutting down 95% of energy consumption on air handling by installing in-flight stimulator cells at its training centre in Heathrow Airport and new technology equipment also being used to reduce the noise emission.
Cost cutting on staff pay
Nearly 7,000 British Airways staff have taken an early opportunity to apply for voluntary pay cuts in support of the airline’s cost reduction programme.
Of the 40,000-strong workforce, 6,940 employees had volunteered for unpaid leave, part-time working or unpaid work by June 24. Their actions will save the company up to £10 million.
Willie Walsh, British Airways’ chief executive, said: “This is a fantastic first response. I want to thank everyone who has volunteered to help us pull through this difficult period.
“This response clearly shows the significant difference individuals can make.”
Options were made available for staff to volunteer for between one and four weeks unpaid leave or unpaid work, with the pay deduction spread over three or six months.
The options also included switches to part-time working or longer periods of unpaid leave. Staff will have further opportunities to take part in the programme later in the year.
British Airways is to increase its flying schedule for the period of Unite’s strikes as larger volumes of cabin crew call the airline to offer to work in support of the company’s contingency operation.
Following Unite’s decision to call strikes for March 20, 21 and 22, the airline published its flying schedules for the affected period on Monday, aiming to fly 60 per cent of its customers as planned.
Since Monday, the number of cabin crew offering to work as normal has increased significantly – and is expected to grow further.
British Airways is also pleased that the number of other airlines offering their help for the strike period through charters or provision of spare seats has increased from 50 on Monday to more than 60.
These developments have enabled the airline to reinstate some previously cancelled flights and provide extra capacity for both longhaul and shorthaul destinations. For example, this will allow the airline to fly home more competitors and supporters from the Winter Paralympics in Vancouver.
Willie Walsh, British Airways chief executive, said: “The determination of our colleagues across the whole business to keep the flag flying this weekend is increasing.
“I am delighted by the numbers of cabin crew who have been getting in touch with us to express their disillusion with Unite’s position. Our crews just want to work as normal, do their usual terrific job and look after our customers.
“We will now have the potential to fly more than 4,000 additional customers per day and serve more destinations. We believe this is a helpful move at a time when customers are facing rising fares with alternative carriers.”
“Morale among our operations teams is high. Yesterday was our most punctual day at Heathrow for months, thanks to the efforts of all parts of the airline.”
Technological changes and innovation have been witnessed in British Airways from the past five years. British Airways has invested large amounts in new technology and terminal facilities.
Exploring the knowledge and facilitation commencements in British Airways supported the decisions and management process.
Another major technological change introduced by British Airways was implementation of management solutions from Calidris in 2007, which helped to create industry’s first Order Data Stores (ODS), which stores the customer’s information in improving the level of customer service and minimising the duplicate bookings.