Assessing the need for Organisational Change - Simply Put!

Introduction

In the Marstan Guide Introduction to Change Management, we said that there are three main stages in making an organisational change successfully.

The first of these stages is assessing the need for change. The Golden Rule of change is:

Do not make change for the sake of it – only change to bring real and identifiable benefits.

Does your organisation need to change?

The business environment is never static, so most organisations could benefit by making sensible changes from time to time.

At best, organisations that do not change fail to fulfil their potential. At worst, the organisation can fail.

The fate of your organisation cannot be left to chance, because there is a universal law which works against you.

Everybody perseveres in its state of being at rest or of moving uniformly straight forward, except insofar as it is compelled to change its state by force impressed. — Newton’s first law of motion

Put simply in business terms, Newton’s law has one of two effects:

1. If your organisation is not moving with the times, it will continue to stagnate until you do something about it.
2. If you are moving in the wrong direction, you will continue to go further off course until you do something differently.

Remember, if you keep doing the same thing, you will get the same result!

When the health or even the survival of your organisation is at stake, doing nothing is not an option, because there is another piece of perceived wisdom which works against you.

Things alter for the worse spontaneously if they cannot be altered for the better designedly. (Sir Francis Bacon)

The key drivers of change

There are a number of key drivers for change, some of which are external and some internal. The most common drivers are:

1. The economic environment.
2. Changes to legislation.
3. Increased competition.
4. Impact of growth.
5. Natural decline.

1. The economic environment

The majority of organisations are aware of the need to be wary of any downturn in the economy. They are also aware of a range of measures to combat it, such as:

1. Lowering profit expectations.
2. Reducing the size of the workforce.
3. Working harder and smarter.
4. Borrowing more money.
5. Increasing and enhancing the sales and marketing effort.

Fewer organisations tend to look closely at an upturn in the economy and work out whether they are in a position to take full advantage of the economic environment as an opportunity to grow.

It is worth noting that changes in response to the economic environment are neither easy nor fast to implement. It is better to look ahead continuously and anticipate the trends, rather than wait until it has happened.

2. Changes to legislation

There are constant changes to legislation or regulatory frameworks at both a national and international level. These changes are often mandatory, but even those that are discretionary should be seriously considered in case they become the standard that your customers want to adopt.

The key to responding to changes brought about by legislation and regulation is to anticipate it well in advance. There is usually a long lead in time to changes in the law and it is often preceded by consultations. It is important to remain alert to such developments. The best way of achieving this is to read the national press, trade press and information available on the internet for your industry sector.

3. Increased competition

Regardless of how efficient your organisation becomes or how good your product or service, there are always likely to be pressures on price, caused by competition.

It is vital that competitive pressures are analysed with great care. Have your competitors found better and more economical ways of producing the service or product to the same standard, or are they producing a poorer product or service for a lower price?

It is an understanding of this in depth which should drive your response to the competition. If you are open minded, you may find better ways of doing things and produce the same level of quality at a lower price. If you decide that you will not indulge in a “price war”, you will at least need to explain to potential customers why your product may be a little bit more expensive than your competitors.

It is important that you are constantly vigilant for information about your competitors. In particular, look at whether they are expanding or contracting. This is a clear indication of how customers are reacting to the question of price versus quality.

4. Impact of growth

As any organisation grows, there is a need to change the way in which the business operates. In small organisations, the founder of a business may have a wide range of roles and can observe almost every facet of the business. This changes as the organisation grows.

This means that even successful organisations need to adjust their structure, staffing and working methods from time to time as they continue to grow.

The key question to ask is:

Are the things that we are doing today, which have worked well for us in the past, still appropriate for today and the near future?

5. Natural decline

If an organisation is left to its own devices and does not have active management it will gradually decline.

For example, if the organisation fails to update plant, equipment and technology, staff begin to believe that if the owners and managers do not care about the business, why should they. Their morale plummets and with it goes the quality of service. Customers become aware very quickly and take their custom elsewhere; a vicious cycle has begun.

It is important the organisation asks itself from time to time:

Are there any aspects of our business that have been allowed to go “off the boil”?