Strategic Change

LTP004N Strategic Management in SportWeek 10 Spring Semester 2010

Managing Strategic Change - Outline

• Differences in scope of strategic change• Effect of organisational context/field on design of

strategic change programmes• Forcefield analysis• Leadership styles• Role of change agents and styles of managing change• Levers for influencing strategic change• Unintended consequences of change programmes

Managing Strategic Change

• Tendency towards organisational inertia and resistance to change

• Top and middle managers (and below) are responsible for strategic change

• Need to link the strategic and the operational aspects of the organisation

• Managing change is context dependent

Key Elements in Managing Strategic Change

Exhibit 10.1

Diagnosing the Change Situation• Why is strategic change needed?• Change in environment, field, competition, stakeholders etc.• Basis of strategy

– Strategic purpose/strategic intent– Bases of competitive advantage

• Specific possible directions and methods of strategy development

• Changes in structures, processes, relationships, resources and activities required – To translate strategic thinking into action

Catalysts and Opportunities• A catalyst is a change in the business environment calling for

reassessing a company's goals, strategies and the options for reaching those goals

–Changes in technology, changes in regulation, external accidents are all catalysts

–New management with new ideas on strategy can act as catalysts

• Opportunities are organisation specific and are expressed as a potentially favorable solution to a problem, or negation of potential threats

• New opportunities involve change– incremental– evolutionary– reconstructive– revolutionary

Dynamics of Change

ExternalEnvironment• General• Field

Internal Context•Culture•Structure

Internal Operations• Resources incl people• Stakeholders• Governance

Strategic Outcome

Strategy Development (Response)

PESTEL Resources 5 Forces Culture/ArchetypesFields Lenses

Types of Change

Source: Adapted from J. Balogun and V. Hope Hailey, Exploring Strategic Change, Prentice Hall, 1999.

Paradigms and Strategy Formulation

The Paradigm

Strengths & Weaknesses

Capabilities

Opportunities & Threats

Environmental Forces

StrategyStrategy

PerformancePerformance

Types of Change – Sport Examples

Incremental

Big Bang

Nature of ChangeIn Time

Scope of Change in Org Paradigm

Realignment Transformation

Adaptation

Reconstruction

UK Rugby League in Summer

Twenty/20 cricket

Premier League Soccer

LTA

Foster Report on UK AthleticsWorld Series Cricket

Olympics post LA

Evolution

Revolution

The Governance of Cricket pre-1977• International Cricket Conference

– Key members: England, Australia, New Zealand, India, West Indies

• England – Test Match and Country Cricket Board (TCCB), Australia – Australian Cricket Board (A.C.B.)– Both systems delegate structures

• Values: amateurism, gentlemanliness, civility• Each board main organiser of National cricket sides and tours

overseas and custodian of game in respective nations• The main form of cricket was 5 day test matches and management

viewed the game through an experience lens

Players ‘are not professionals… they were invited to play and if they don’t like the conditions there are

500,000 other cricketers in Australia who would love to take their place’

- Alan Barnes (A.C.B. Secretary (CEO) 1975)

The Context: Cricket players, payments and commercial returns

• Great disparity in cricketer’s earnings as payments were not contractually organised– Individuals to play were selected by the Boards

• Aus Tour Payments– 1969/70 – 123/wk (23 weeks)– 1977 – 573/wk (19 weeks)

• Aus Domestic Payments– 1970/71 – 180 per test– 1977/78 – 2012 per test (including sponsor bonus of 1212)

• Players share of gate receipts %– 1970/71 - 2.95– 1977 - 5.75

All payments are in AU$

Kerry Packer

“Cricket is going to get revolutionised whether [the establishment] like it or not. There is nothing they can do to stop me. Not a goddamn thing”

World Series Cricket

• Kerry Packer wanted the rights to the broadcast of cricket in Australia for Channel 9, he approached ACB with substantial offer and was rejected

• After rejection Packer approached the world’s best 50 players (resources) to form a break-away series (An ideas lens)

• The players who had felt for years that they were exploited by their boards signed to his series (especially the West Indies)

• The Governing Bodies fought this in court and lost– The players decision was supported in the High Court who focused on the

players ‘right to earn a living’ over the rights of the Boards to provide a reasonable contest

– on the assumption that not having the best players would ruin their cricket

• Packer created the World Series Cricket tournament; played in a variety of formats (test and limited over matches)

WSC 1977-1978

• First series played to very small crowds at non-traditional test venues– Board’s still controlled supply of traditional test grounds and ran

concurrent competition with second string side

• Innovative broadcast and match formats gradually gained interest– Initial attendances were very low (see previous)

• The Australian governing body continued as normal with a make-shift team (strike breakers) and decent crowds– However commercial sources were unhappy with additional competition

WSC 1978-1979

• WSC ended with creation of Benson & Hedges World Cup series (a triangular one day series) in 1979/80 and the awarding of TV rights to Channel 9

• Players returned to their boards without penalties and were signed onto contracts

• The contract element changed the relationship between the governing body and the players

• The sport gradually became more professional in the management of commercial organisations, players and the authorities

Stanford, ICL or IPL, is it happening again? International Twenty-20 Series

• Stanford Twenty-20– Collapse and Fraud?

• Indian Cricket League– Rebel league

• Indian Premier League– Approved by BCCI

Roger Draper at the LTA • UK tennis received millions of lottery money but ended up with Britain no

male junior ranked inside the world top 100 by 2006• ‘Sport is big business – business is about change’• Immediately sacked three key figures in the organisation

– “When you are running a business there are some things you can take your time over, but there are others over which you must take urgent and important decisions”

• Mandate: to harmonise the factions of the British game • Vision – 5-7 year time frame ‘to fill Trafalgar Square’ with a Wimbledon

champion with the LTA acknowledged as best sporting organisation globally• Alignment of resources and stakeholders

– 3 key elements: coaches, talent and facilities and supporting experts• Draper at Sport England was a critic of the National Training Centre at

Roehampton, a £40m investment – “What was the point of building a brilliant new university if you were going to cut

back on your teachers and your primary schools and your secondary school and then wonder why no A-grade students were coming through?”

• Draper is seen by experts to be fighting the sport’s natural conservatism and petty bickering

Styles of Leadership – Main Schools

Situational Based Leadership

Organisational development means situations change, means leadership focus must also change

Linking Leadership Style with Culture

Flexibility

Control

Internal External FOCUS

Man

agem

ent S

tyle

Mentor Role

Facilitator Role

Innovator Role

Broker Role

Producer Role

Director Role

Open System

Rational GoalInternal Process Model

Human Relations Model

Quinn, Rohrbaugh

Monitor Role

Coordinator Role

Charismatic & Transformational Leadership

Charismatic leadership• Impression management (behaviours designed to display leader competence);• Articulation of ideological goals;• Defining subordinate roles in terms of ideological values;• Engaging in role modelling behavior;• Communicating high expectations and confidence in subordinates; and• Engaging in behaviour designed to arouse appropriate follower motives(e.G.,

Need for achievement)

Transformational Leadership• Transmitting a sense of mission;• Delegation of authority, coaching and teaching; and• Emphasizing problem solving and use of reasoning• Challenge to status quo

Problems: Difficulties & ‘Messes’

Difficulties.• These are characterised by

‘hard complexity’• Short timescale• There are lots of factors and

variables• But they can be meaningfully

quantified• Optimal solutions can be

developed

Messes.• These are characterised by

soft complexity• Timescales uncertain• People’s description of events

is ambiguous• There are multiple

interpretations and reconstructions of what the problem is.

• Stakeholder groups will see things according to their stake in the problem

• Thus there are many different ideas about what kind of solutions there might be

Introducing Change

Influence of Context on Strategic Change

Exhibit 10.3

Forcefield Analysis

Exhibit 10.4

Managing Change and Resistance

Bedfellows

Adversaries

Allies

Opponents• Understand position• Don’t evaluate• Don’t make demands• Patience or removal

• Disagreement• Keep relationships• Restate positions• Joint problem solving

•‘Marriage of Convenience’ • Seek cooperation• Continually clarify goals and gain ‘Buy-in’

• Confirm agreement• Openness• Don’t take for granted

Agr

eem

ent t

o C

hang

e

High

Low

Trust HighLow

‘Fencesitters’• Explanations• Negotiation • Move to

other box

Different strategies for different groups

•The ‘forcefield’ of change is balanced between• Positive factors driving change – vision, opportunity, benefits• Resisting factors – culture, power loss, • New factors – customer input, openness of debate, questioning

Three Stages of Change

• Initiating Change– Diagnosis– Creating perceived ‘Need for Change’ – crisis?– Generating Vision of Future – desirable AND achievable, inspirational AND

aspirational, includes why world is changing– Focus on stakeholder support, clarifying goals and markets, prioritisation of

key outcomes• Managing Change

– Communicating the Vision– Creating the change team and resources– Empowering staff– Create short term wins – and publicise them

• Sustaining Change– Importance of learning in the organisation: speed and diffusion– Individual and organisational level (capture and embedding in routines)

Styles of Managing ChangeStyle Means/Context Benefits Problems When effective

Education/

Communic-ation

Briefings

Internalisation

Trust

Overcome lack of information

Time consuming

Unclear

Incremental change/long duration/horizontal transforma-tional changeCollabora-

tion/Parti-cipation

Involve in developing strategy

Ownership/

improved quality

Time/Within current

paradigm

Inter-

vention

Change agent coordinates/

controls

Guided but with involvement

Perceived

manipulation

Incremental/

non-crisis transformation

Direction Use authority to set direction

Clarity and speed

No accept-ance/ill conceived

Transforma-tional change

Coercion/

Edict

Explicit use of power through edict

May succeed in crisis

Least success unless crisis

Crisis/rapid transform/auto-cratic culture

Roles in Managing Change (1)

• Change Agent– Individual or group that effects strategic change in an organisation

• Strategic leadership– The process of influencing an organisation in its efforts towards achieving

an aim or goal– Charismatic leaders or Instrumental or transactional leaders– Removal of previous management– Changes in status symbols e.g. car parking, office space– Open communication – Rewards– Behaviours which reinforce new ways of doing things– Funding of supporting initiatives e.g. training– Resource allocation decisions– Support of change agents and teams

Roles in Managing Change (2)• Middle managers

– Facilitators or blockers?– 5 roles in managing strategic change

• Implementation and control• Translators of strategy• Reinterpretation and adjustment of strategy• Relevance bridge between top managers and lower managers• Advisors to senior management on blockages and requirements• Source of new ideas as closer to changing environment (RAP theory)

– Top managers have to accept remoteness from where change occurs and focus on overall vision and monitoring effects

• Outsiders, e.g. new CEO, new management, consultants, key influencers (stakeholders)

Strategic Leadership ApproachesFocus of attention

Indicative behaviour

Role of other managers

Implications for change mgt

Strategy Strategy analysis/

formulation

Scanning markets/

technology

Day-to-day operations

Delegated

Human assets

Developing people

Right people

Coherent culture

Strategy development devolved

Recruit/develop people to manage locally

Expertise Expertise as source of

comp. adv.

Improve expertise via systems

Immersion in/

managem’t of expertise area

Change in line with expertise approach

Control Set procedures/measures

Monitor performance for uniformity

Ensure uniform perf. vs. measures

Change monitored and controlled

Change Continual change

Communication/motivation

Change agents/open to change

Change central to the approach

Source: Adapted from Farkas & Wetlaufer 1996

Challenging the taken for granted• Need to change the paradigm

– Get people to see the realities• Mechanisms

– Evidence from strategic analysis– Analysing what people take for granted

• Workshop sessions• Bring into open• Debate and challenge

– Scenario planning to overcome bias and cultural assumptions– Bringing managers face to face with reality (customers)

Changing organisational routines

• Routines are the “way we do things around here”– Can become core rigidities– Difficult to adapt to new strategies

• Mechanisms– Identify critical success factors and underlying competences– Bring strategy down to operational levels– Changes in routines make strategy meaningful– Doing is better than thinking– Education/communication less powerful than involving people – Persistent extending and bending existing ways of doing things

Communicating and Monitoring Change• Effective communication possibly single most important factor

for overcoming resistance• Importance of clarity of vision and strategic intent• Choices of media – effectiveness depends on complexity of

change• Involvement of members of organisation in strategy

development process• Two-way process – feedback is important• Emotional aspects important – emotions can induce negative or

positive responses• Need to monitor change programmes

Effective and Ineffective Communication of Change

Exhibit 10.10

Source: Adapted from R.H. Lengel and R.L. Daft, ‘The selection of communication media as an executive skill’, Academy of Management Executive, vol. 2, no. 3 (1998), pp. 225–232.

Why does Change Fail?• Over 70% of transformational change programmes fail• Common causes

– Ritualisation and overload– Hijacking for different purposes– Erosion over time – loss of impetus– Reinvention – take over of change by established beliefs– ‘Ivory tower’ – too far removed from reality of business– Inattention to symbols of change– Lack of control over initiatives- inconsistency and confusion– Compliance but not change – superficial change

• Remedies– Close monitoring of change outcomes– Understanding the culture– Involving people- doing, not being ‘done to’– Acknowledge the challenge and create ‘realistic aspirations’– Flexibility and willingness to improve the original plan

Key Points• Need to tailor approaches, styles and means of change

to context• Strategic change differs in scope and nature• Diagnosis of organisational context and field• Analysis to identify blockages and levers• Different roles and styles for managing change• Levers for strategic change depend on type and context

of change

Kotter on Management of ChangeEstablish a Sense of

UrgencyRealistic assesmentCrises, opportunity

Empower others to ActRemove Obstacles

Change systems / structuresEncourage risk taking, new

ideas and action

Form a Guiding Coalition

Group with power to lead change, working as a team

Create Short Term Wins

Viable improvementReward for those involved

Create a VisionTo direct change effort

Create strategies to realise it

Consolidate and Continue to Change

Credibility to do moreHire new employees

Reinvigorate change process

Communicate that Vision

Use every vehicle availableCoalition demonstrates new

behaviours

Institutionalise The New

Link new ways to successEnsure leadership

succession