WeeKoh

1 Hour to exam, and I have prepared the above question for it. Might as well publish it here in case I die in the examination hall because it never came out.

When we speak to people working in management position, most would have the sentiment that in a changing world, the only constant is change. In our business environment today, it is constantly changing, and organisation have to change in accordance to the environment they operate in to gain competitive advantage against their competitor, or else they would be forced to change by ceasing to exist in the business environment.

In this article, I will discuss first introduce change management, the reason why change management is popularized, and finally, the problem with this approach of change management.

Change Management

Changes in an organisation traditionally imply technological, social & economical changes. Changes in an organization are difficult as different member in the organization perceived areas needing change differently. Changes in most case create winners and losers, and there will certainly be groups of people feeling threatened by change and fear the uncertainty associated with it. This creates an organizational inertia, where changes are hard to execute due to employees resistance towards it. Therefore, to make changes happen, an organized, systematic application of the knowledge, tools and resources of change is necessary to manage change. Patterns and structures of change needs to be identified and control, and issues and problems in each stage should be predicted to accelerate the change and also, minimize the pain involve in changes.

There are several models associated with Change Management. For this section, I am going to discuss about the most popular concept of change management, which is Lewin’s classic model of Unfreeze-Change-Refreeze.

Unfreeze-Change-Refreeze

Lewin described change as a three-step process, first being Unfreeze, then Change, followed finally by Refreeze. This model assumes that organizations and the members in it has achieved equilibrium and stasis, with the members there feeling relatively safe and in control.

The first stage of change management is to Unfreeze, which involves overcoming inertia and dismantling the existing mindset of the members in the organisation. There are bound to be many defence mechanism & opposition set up by the members of the organization, and there is a need to soften and overcome it by the means of communicating with them the need, the benefits and the roadmap of how to change to influence them to share the same viewpoint of the organization.

The second stage is where change occurs. This is a journey of the people out of their comfort zone to a something new, and is usually the most difficult part of change management. This period is typically one with lots of confusion and transition. Some employees might even be comfortable with this temporary environment, where they could blame everything to changes.

The third stage is to refreeze. This is to put the root down and establish a new place of stability. Change should constantly be reinforced so that it would be part of the employees’ everyday life. At this stage, organization should be on a higher level, and should be frozen so that they would remain there and not slip down to the pre-change level.

Why is Change Management popularize and what are the problems with this approaches?

Change Management, however, has reached a new level of popularity that is describe by some as a fetish. Change in today’s world context is taken for granted, where the general consensus is that in a changing world, the only constant is change.

In this section, we are going to look at several approach people use in Change Management and how this approaches could cause problem for the organization. We are first, going to discuss about the problem with the Organization in Crisis approach, then competitive advantages.

Organization in Crisis – The Heroic Manager

It is seen that either organizations change voluntarily, or risk being force to take drastic change by the environment. Take for example in the automotive industry. With the rising of oil prices, there was a demand shift of big SUV & mini-trucks traditionally bought by the Americans to smaller, fuel efficient cars. Also, foreign brands like Toyota & Honda sales of small cars also soared, gaining a market share of the total automakers industry. Looking at these signs, the Big 3 of US automakers, Ford, GM & Chrysler should work on producing the cars that consumer wants. However, they still continue to produce big SUV & mini-trucks, their traditional forte. Looking at their trouble now, with retrenchment of over 40,000 employees worldwide, and a multi-billion dollar loan from the government, one could wonder how things would have turn out differently if they followed the signs and change first, before change changes them.

Managers who wants to proposed often paint the picture that the organization is in crisis. In a crisis, change is seen as inevitable, and it is seen that they have to change to survive.

Often, however, the reality is usually far more mundane then what the managers perceived. It may not be clear whether the organization is doing well or badly, and there is no standard measure of how an organization does in the market.

The problem with this approach is that often time, it is the interest of the managers to be seen as the “hero” of the organization to gain recognition and possible advancement in their career. However, most managers often do not stay in the organisation long enough to see the results of effect of change.

Also often, organization themselves do exaggerate the benefits and downplay the negative in change management. This is so that they would look good in the eyes of the general public and of course, most importantly, the shareholders.

In such a scenario, often, changes are not necessary but are done anyway. With too many of such programs going on in an organization, it might be counterproductive as there is no clear direction of how the organization is going to work, and the culture and identity the organization spend so many years to develop could be wipe out.

Alan Greenspan, formal Chairman of US Federal Reserve (Feds), lead the Feds during the boom years of the economy. He was hailed “Hero” by the Americans by endorsing tax cuts & lowering interest rates of the Feds. This leads to massive borrowing due to low interest rate, and causes inflation in prices for the housing market. During the downfall of the economy, he had already retired, and the problem of his policy change is passed on to his successor.

Competitive Advantage – The Copycats

Many organization change because their competitor are doing so. Many does it y the ways of “benchmarking”, which aims to measure and match an organization existing product and procedure with their competitors, especially the ones that are perceived as leaders in that particular field. Therefore, once a competitor change in anyway, most competitor also follow the change so as not to let the other company gain any competitive advantage over them.

The problem with this is that this could at best lead to equality between 2 organizations, but not to advantage over each other. Also, if their main intention is to gain competitive advantage, they should examine at the root cause of why their competition wants to change in the first place, and not the changes they have implemented. Finally, often times, today’s successful company could be tomorrow’s failure, and it might not be a wise decision to just follow the leader.

Back my earlier illustration; this could be the reason why almost all the members of the financial market is hardly hit. Most banks are doing exactly what each other is doing, relaxing credit requirements, making it easier for people to buy houses, overheating the property market. When the property bubble burst, every bank is affected, because no one wants to lose their profit & market share in the housing market loan to their competition.

Conclusion

Change Management is of course necessary to accelerate change and ease the pain associated with it. However, many organization changes for the wrong reasons, and serves more of the management vested interest then the organization itself. I believe a good company would be one who consults with the major stakeholders of the companies before implementation of changes which would result in long term problems.