Strategy for Change Management

Keywords: Globalization, technology, change, management

Introduction

Due to growing of globalization, advance technology, and organizational consolidation, change is nowadays become a crucial part of every organization in order to survive in changing business environment. To handle the change, change management is required in transitioning for both organizational and individual level to attain future desired change (Hughes, 2006). Change at organizational level is related to strategy which will indicate organizational direction and activities (Thornhill, Lewis, Millmore and Saunders, 2000). In developing effective organization strategy, both internal and external environments have to be taken into consideration. When the strategy has been changed as adapting to changing internal and external environments, strategic change is necessity to be utilized in change management in order to align change with developed strategy. As individual change is pivotal part of organization change, change management need to be adopted at individual level in order to initiate the change and consequently obtain successful organization change.

As change agent takes responsibility of implementing change, they need to have clear understanding of strategic change concept including change models, approaches and tools in order to implement change appropriately. The essential skills required for change agent are analytical skill for analyzing change contexts, judgmental and critical thinking skills for prioritizing the contexts base on importance, and implementation, interpersonal and influencing skills for applying change to related people in the organization (Balogun and Hailey, 2008). Besides, self awareness is also important for change agent to realize the need of change from organization perspective rather than their own perception and experience.

Change Approaches and Tools

In change process, there are three states which are current state, transition state and future state as shown in FIGURE 1 and detailed in APPENDIX A (Balogun and Hailey, 2008)

The thought of how change can occur in organization can base on two main schools in which the models are punctuated equilibrium model and continuous model as illustrated in FIGURE 2 and 3 and details in APPENDIX B (Balogun and Hailey, 2008).

To access the change, there are currently a number of approaches to change such as planned, emergent, theory O, theory E, and theory Z and tools to implement change such as PESTEL, Porter’s five force analysis, change kaleidoscope, and cultural web. Due to different internal and external environment of each organization together with its changing nature, there is no best approach and tool which can be applied for all organization at all the time. In order to select appropriated approaches and tools, organization needs to consider both its external environment and internal context.

Change Approaches

Some of hi-lighted approaches to change are planned and emergent approach. For planned approach, change is deliberately developed through intentional and rational process driven from top down based on assumption of stable environment (Hayes, 2002). Its original purpose is to achieve effectiveness improvement of human operation through group application of change program (Burns, 2004). It perceives that one change which is a series of linear events can be applied for all parties (Graham, Lecture session 4 – 16 October 2009). In contrary, change from emergent approach is initiated from contingent and unpredictable environment. It is built up from interrelated several variables such as external environment and process of decision making (Graham, Lecture session 4 – 16 October 2009). The process of change in emergent approach is open-ended and continuous driven from bottom up and adapted to changing organization context (Hayes, 2002).

Change Tools

Among number of implementing tools, well-known tools which are used for analyzing organization external business environment as illustrated in APPEXDIX C are PESTEL and Porter’s five forces. For internal environment or organization context, Change kaleidoscope, Culture web and Force field analysis can be applied whereas SWOT analysis is for analyzing both internal and external environment. PESTEL will provide analysis for macro-environment factors which influence success or failure of organization including political, economic, social, technological, environment and legal (Johnson, Scholes, and Whittington, 2009). While Porter’s five forces scope down analysis to industry which organization is in. It will identify organization competitiveness and attractiveness of industry through analysis on threat of entry, threat of substitutes, power of buyers, power of suppliers and competitive rivalry. In contrary, Change kaleidoscope concerns analysis of three components which are organization context, change contextual features, and design or implementing choices for change (Balogan and Hailey, 2008). Whereas Cultural web will point out current obstacles of change and provide direction to adjust organizational culture, force field analysis is adopted to identify driving and restraining forces to change at individual level. It suggests three stage of individual attitude changing process which is unfreezing, learning, and refreezing (Balogun and Hailey, 2008). In contrast, SWOT is applied to analyze both strengths and weaknesses of organization and opportunities and threats from outside organization.

GlaxoWellcome Case Study Overview

GlaxoWellcome is a UK pharmaceutical company. It was formed in 1995 by merging of Glaxo Laboratories and Burroughs Wellcome & Company. In 2000, it was merged again with SmithKline Beecham to start UK based pharmaceutical, biological and healthcare company under the name of GlaxoSmithKline plc. GlaxoSmithKline plc is now became second world largest pharmaceutical and researched company with a wide range of pharmaceutical products. Glaxo had passed some periods of change before merging to be GlaxoWellcome and GlaxoSmithKline as following details.

First Stage of Change at Glaxo in 1994

The first part of change was driven from increasing competition, patent expiration of its hi-light product Zantac, government legislation, and organizational change of it key customer National Health Service (NHS) in responding to government legislation in year 1988. With employee confidence in senior management competency to cope with these issues, they perceived of unnecessary for their involvement to achieve future desired change. Together with slow decision making of separated functions, the organization was unable to response to change effectively. Senior manager therefore had initially created change awareness among employees by employing RATIO program (Role clarity, Acceptance of change, Teamwork, Innovation, and Output orientation). From program, employee had learned new behaviors and applied it in their own jobs. Consequently, sense of ownership was created. The program was reinforced with a range of support change initiatives such as relating value statement with behavior, cross function project group, and encouraging more communication among functions with new office interior design. Moreover, outdoor development course suggested by outside consultant was successfully introduced for senior manager to experience and have more understanding on different behaviors. It was replicated to 700 employees in later period. However, employee interviews after change activities demonstrated that, although RATIO program seems to success in creating culture change awareness, further fundamental change needed to follow (Hailey and Balogun, 2002).

Second Stage of Change at Glaxo in 1997

The second change of Glaxo was developed in 1997 through organizational restructuring and business reengineering programmes after merging with Wellcome Company. Organizational restructuring reduced Glaxo’s hierarchical level from 7 to 4. Its strategy was shifted from focusing on only individual product to disease management which is working collaboration with customers and reducing R&D expenses through coalition with universities and bio technology organizations. Complimentary service began to be offered and relationship with key customers was developed. Employee behavior and attitude had been realigned with new strategy though team working process, improving customer interaction skill, working in networked organization, and higher business responsibility. New individual evaluation and reward system, training with increasing coaching and consulting activities for each team, and computer based personal feedback package were initiated. In business reengineering process, Glaxo has adopted “Customer Focus” view to analyze customer demands for process improvement and new potential customer identification purpose. From internal merging, 5 regional divisions were created to reflect organization structure of NHS as a part of its business reengineering (Hailey and Balogun, 2002).

Evaluation of Emergent and Planned Approach

As mentioned above, emergent approach to change is initiated from contingency in working and unpredictable environment without prior deliberately planning. It is beneficial to organization as change can be implemented in shorter period of time and more fluid in working process than planned approach. Change from planned approach needs to be planned through different stages and base on group performance. Therefore, in circumstance such as economic crisis that rapid transformation is needed, emergent approach is more appropriate for implementing change. However, in some case, emergent approach has limitation on practical difficulty due to uncertainty of changing factors, loss of management control and failure of implementation from lack of application skill. By return, planned approach assembles its limitation on loss of management control as its control is driven from top to bottom. Planned approach comprises of 4 interrelated complex elements which are field theory, group dynamics, action research and three-step models. While field theory and group dynamics used to analyze formation, motivation and maintenance of social group, action research and three stop models of change which are unfreezing, learning, and refreezing, work together to change of social group behavior and create long term change. Planned approach is appropriate for organization structure change rather than emergent approach (Burns, 2004).

Application of Emergent Approach to Glaxo Case Study

Glaxo had applied combination of emergent and planned approach in different phrases of first and second stage. As change was originated from contingency of changing business environment, emergent approach had been applied in Glaxo at beginning of its first change stage through initiating of change awareness and second change stage through developing of reengineering programmes and organizational restructuring. However, planned approach was undertaken in combination to complete organization structure change in long term. The employee behavior had been analyzed and unfreezing step of change is implemented through employment of RATIO programme in first stage. This was to create readiness for further transformational change which had been executed in second stage through change activities and new adopted systems in restructuring and reengineering programme.

Change Kaleidoscope

To apply change successfully, organization context needs to be analyzed in order to select appropriate implementing options. Change kaleidoscope can be utilized effectively as it provides both available range of implementing options and contextual features analysis. Change awareness from organization aspect is encouraged by using this tool in which model and details can be referred from APPENDIX D. Organization need to examine contextual constraints and enablers to change in order to evaluate its change ability and consider implementing choices of path, start point, style, target, interventions and roles. Using Kaleidoscope allows organization to understand the reason why design choice is appropriate or inappropriate to particular context. Kaleidoscope is normally used by change agent group to solve change problem through three steps which are assessing contextual enablers and constraints, determining change path, and selecting other change choices. However, to achieve complete change design, other tools such as cultural web need to be implemented together with Kaleidoscope. Although Kaleidoscope establishes well structure for transition state, challenges of this tool is occurred from interventions of other changes during processing which need to be synchronized over the time. Due to complexity and resource consuming in transitioning, competencies of analytical, judgmental, and implementation skills cannot be deficient for change agent. In addition, even though Kaleidoscope can be implemented in different change circumstance, it is most appropriate to planned change which aims to achieve particular goal (Hailey and Balogun, 2002).

Application of Change Kaleidoscope to Glaxo Case Study – First Stage of Change

From Glaxo’s first stage of change, contextual enablers and constraints can be identified from applying Kaleidoscope as following details. Contextual features which are enablers to change are time, scope, diversity, and capacity whereas preservation and readiness is key constraints and power and capability is neutral (Hailey and Balogun, 2002).

1. Time (+) – Although change needs to be implemented as responding to changing business environment, there is no huge urgency.
2. Scope (+) – As scope of change is realignment of employee behavior, challenge is lesser which enable to change.
3. Preservation (-) – Preservation is constraint to change of Glaxo since talented workforce have to be preserved as know-how of organization.
4. Diversity (+) – Change is required for sales division only. Therefore, diversity is low and enabler for change.
5. Capability (n) – From low experience of change management in sales divisions with highly educated workforce, capability is marked as neutral.
6. Capacity (+) – Glaxo is affluent enough for investment on change programme so mark for capacity is positive.
7. Readiness (-) – Due to low change awareness of employee, readiness is negative to change.
8. Power (n) – With high volume of employee preservation, power of directors to impose change is limited consequence of neutral mark for power.

Considering nature and result of change, Glaxo made decision to initially employ big bang reconstruction path from senior management to generate change readiness for long term transformation in second stage by employing RATIO program. It was likely that senior management employed intervention rather than direction to create change awareness and sense of ownership. Also, constraint of low capability was overcome by adopting of outdoor development course suggested by outside consultants.

Application of Change Kaleidoscope to Glaxo Case Study – Second Stage of Change

After change awareness had been created in first stage, Glaxo developed further fundamental change in which analysis of time, diversity, capacity and power is remained the same while remaining features are changed as following details.

1. Time (+) – There is no urgency for change so the mark is still positive
2. Scope (-) – Scope turns to be constraint due to challenges from long-term transformational change
3. Preservation (n) – Although Glaxo has preserved high volume of talents workforce, changing in workforce is increasingly realized. Level of preservation therefore is lower.
4. Diversity (+) – Glaxo is still homogeneous organization.
5. Capability (+) – Capability has been improved by implementing RATIO programme and outdoor development course.
6. Capacity (+) – Glaxo still maintains its strong capacity for investment.
7. Readiness (+) – Employees awareness is created through RATIO programme. The readiness for change is therefore improved.
8. Power (n) – The senior management power is remained the same.

From result and nature of change, Glaxo had considered taking evolution path for further fundamental change and other implementing choices are chosen as below elucidated

1. Change path – Glaxo had taken evolution path through reconstructing and reengineering programme in order to develop long term transformational change. There is transformation of Glaxo brand and image though increasing customer focus and relationship. However, the attitude survey showed that there is no substantial change in employee values.
2. Starting point – The starting point of change is still mandated from top management.
3. Style – The style of change was judged to be participation from collaboration in real implementation although consideration of organizational strategy and change process were still made by senior management.
4. Target – Target of change is employee behavior and levels of outputs.
5. Intervention – Glaxo use interventions for power structure through restructuring, control systems through applying new appraisal and evaluation system, routines and rituals through coaching and counseling, and symbol to achieve effective change.
6. Roles – Since Glaxo change is operated by senior management and outside consultant, change roles therefore are combination of change champion and external facilitation.

Conclusion

Glaxo has undergone major two stages of changes. Emergent approach has been applied in combination with planned approach in order to achieve successful long term organization change and Change Kaleidoscope is used as a tool to implement change. Kaleidoscope model used to conduct analysis of each Glaxo’s contextual features in order to determine most appropriate implementation options available. In the first stage, it creates change readiness among employees and change organization structure from reconstruction to be evolution in second stage. However, the satisfied level of change is not achieve since the embedded of organization value is not radically change cause from insufficient change target and the deviation of conducting personal development from business strategy. Moreover, there is critical point on over optimistic of Glaxo base on its success in pharmaceutical industry, change capacity, expiration of Zantac patent, and anticipation of faster change in NHS
(Hailey and Balogun, 2002).

Summary

In current changing business environment driven from a range of factors, there are various approaches and tools use to manage changes. Due to different internal and external environments, each organization has to consider and analyze their own environment in order to adopt the most appropriate approach and tool to implement change successfully. For Glaxo case study, both emergent and planned approaches to change has been applied to complete long term transformational change. Change Kaleidoscope tool is used to analyze its contextual feature and select the most suitable design choices to implement the change. After executing change, Glaxo achieve increasing level of change awareness in first level of change and achieved a level of transformational change in second stage although it is not reach the preferable level due to insufficient change target, deviation of personal development from business strategy and over optimistic vision of Glaxo.

APPENDIX A: Change Process (Balogun and Hailey, 2008)

Current state will identify organization current competitive position, internal context and need for change. The desired change will be generated at future state through transition state in which the process can be designed after organizational current status is understood and future desired change is specified (Balogun and Hailey, 2008).

APPENDIX B: Punctuated Equilibrium Model of Change and Continuous Model of Change

Punctuated equilibrium model performs that interspersed change occurs periodically through convergent and revolutionary change. While convergent change creates continued minor changes through a period of time by adapting from current operation, it is punctuated by revolutionary change which is radical change emerged from simultaneously changing of organization strategy, structure, systems and culture triggered mostly by approaching crisis (Balogun and Hailey, 2008). The revolutionary change is major change during disequilibrium situation (Hayes, 2002) and will be characterized as new equilibrium for next period of change. Due to longer period of convergent change, inertia and resistance of change is formed whereas immediated new way of operation is generated from revolutionary change (Balogun and Hailey, 2008). In perspective of continuous model which is appropriate for organization in industry with intensified competition and advance technology, change needs to be implemented continuously in order to survive in rapid changing environment. In comparison, punctuated equilibrium model is appropriate for organization in industry which requires low frequency of change subjected to competitive condition and where competitive advantage can be maintained over a period of time without requirement for substantial change (Balogun and Hailey, 2008).

APPENDIX C: Layer of Business Environment (Johnson, Scholes, and Whittington, 2009)

The external business environment of organization composes of macro-environment at the highest layer, industry or sector at second layer and competitors at third layer.

APPENDIX D: Change Kaleidoscope (Graham, Lecture session4 – 16 October 2009)

Change Kaleidoscope model composes of outer ring and inner ring. The outer ring indicates organization contextual features which are time, scope, preservation, diversity, capability, capacity, readiness, and power. Whereas inner ring provides design or implementing choices which are change path, change start point, change style, change target, change levers and change roles. The details of organization contextual features and implementing choices will be as followings (Balogun and Hailey, 2008)

Organization Contextual Features (Balogun and Hailey, 2008)

1. Time – The period of time which change need to be accomplished
2. Scope – The degree of change which can be separated into realignment and transformation
3. Preservation – The organization assets, practices, or characteristics which needed to be retained during change
4. Diversity – The level of difference among groups of employees and divisions, who/which will be effected of change, in terms of attitudes, values, and norms
5. Capability – The organization competency to implement change in terms of managerial skills and personal knowledge and ability
6. Capacity – Organization resources needed for change investment including cash, human resources, and time
7. Readiness – Employee’s level of change awareness and readiness
8. Power – The power needed for initiating change

Design or Implementing Choices (Balogun and Hailey, 2008)

1. Change Path – The types of changes can be categorized into 4 types of change base on nature and result of change which are Evolution, Adaptation, Revolution, and Reconstruction as shown below
2. Change Start Point – Change start point indicate where the change is initiated which can be divided as following
1. Top-down change – Change is initiated from top management
2. Bottom-up change – Change is initiated from bottom line
3. Pockets of good practice – Change is initiated by taking advantage of good practicing in individual part of organization as model for remaining parts
4. Pilot sites – Change is initially implementing in only one individual part of organization
3. Change Style – The way to manage process of change can be divided into 5 styles as following
1. Education and Delegation – Small group briefing and discussing of change applied to gain change support from employee
2. Collaboration – High employee involvement on decision of what and how to change
3. Participation – Limited employee involvement on decision of how to delivery desired change
4. Direction – Directing and controlling of change from change leader
5. Coercion – Imposing of change with authority
4. Change Target – There are 3 types of change targets which are outputs, behaviors, and values
5. Change Levers – The level of levers and intervention needed for organization change. The cultural web can be applied to indentify organization culture and current change barrier. From below of culture web, intervention into all components of culture web which are symbols, power structures, organizational structures, control systems, routines and rituals, and stories, is inevitable to develop change successfully.

Cultural Web (Graham, Lecture session4 – 16 October 2009)

1. Change Roles – The roles of change agent can be categorized into 4 different roles as followings
1. Change Champion – Key leaders play vital roles in success of change
2. External Facilitation – External consultant has play important role to effect change in organization
3. Change Action Team – Change is lead by a group of people
4. Functional Delegation – A particular function is delegated to take responsibility on change

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