The extent to which an organisation can be designed for change, flexibility & innovation while maintaining it’s capacity for operational efficiency
Introduction
In the fast moving consumer world that exist today, organisations must adapt to customer’s needs and wants by consistently seeking to innovate their goods and services. In the words of renowned businessman Rupert Murdoch, “The world is changing very fast. Big will not beat small anymore. It will be the fast beating the slow” (Australian Institute of Business, 2014). While ‘innovation’ of goods and services is important, an organisations propensity for ‘change’ is equally important, even more so the flexibility to achieve the two aforementioned. In essence, change and innovation are two variables that are limited by an organisations capacity for flexibility and operational efficiency. One can hypothesise, therefore, that an organisation can be designed for change and innovation if and only if it is able to maintain flexibility and operational efficiency in the process. In order to do so, the organisation must seek to balance and monitor all four variables in order to ensure that changing one does not have an adverse effect on the others.
Understanding Organisational Change
Organisational change is defined as a situation whereby a company makes a switch from its current state to a desired future state (Inc, 2017). Due to its importance, a multitude of frameworks, and concepts exist, explaining how organisations can be fundamentally improved through change.
Although products and services can often be changed, organisational change often also refers to internal changes within the staff environment, as well as the ways in which things are done within that environment. Innovation and creativity are also concepts that are extremely familiar when it comes to the concept of change (Amoros et al, 2012). In order to understand the reasons for change, it’s important to first understand the driving forces and objectives that often lead to change within an environment.
Objectives & Catalysts of Change Management
For change to occur, there needs to be a liable reason for it to happen, or a catalyst. Something that drives it forward or makes it happen. These catalysts can include a multitude of organisational events, goals, and objectives which will be discussed within this sub-section.
Mergers, acquisitions and Joint Ventures
The joining together of two or more companies through a merger, acquisition, or joint venture is seen as one way through which to elicit change within an organisation. In order to understand the three, however, similarities and differences between all the aforementioned must likewise be understood. While a merger involves the simple joining together of two companies in order to provide goods & services, an acquisition involves a bigger company dominating or taking over a smaller company as a whole, in order to be the dominant force amongst the two (Kansaal et al, 2017). A joint venture, on the other hand, involves the creation of an entirely new entity through co-operation between two companies. It is important to understand that although Mergers, acquisitions, and joint ventures all involve communication and co-operation between companies, they differ in the ways that they may elicit change(Kansaal et al,2017). Mergers result in the mixture of two or more companies, while acquisitions result in the dominant company retaining crucial entities such as its name or stock. Meanwhile, a Joint Ventures result in the creation of an entirely new entity (Smith et al, 2012)
Delocalisation of Operative Units
The delocalisation of operations in itself is defined as a situation whereby a company may wish to shift operations from its original, localised place of origin to a different location (Kilvits, 2010). Even more so, delocalisation may involve international relocation, shifting of work to low-cost, low wage countries, or closing domestic sites as a whole (Kilvits, 2010). Reasons for this may range from production costs to government taxes, levies, rules, and regulations. All in all, delocalisation itself becomes an objective of change, in order to avoid, evade, and possibly reduce extra costs that may be incurred through bureaucracy, politics and the law of the land.
Human Capital & Skill Development
As human beings, we never stop learning. It is in our natural instinct, and the same applies in the world of business. Human capital development in itself implies the creation of opportunities through which to improve personal skills and labour. Skills development is important as it tends to improve variables such as employee turnover, labour market outcomes, and total company earnings (Taylor, 2012). Human capital development can be a strong catalyst for change. A great example may be a situation through which new technology exists within a certain industry. In order to adapt to this new technology, change is required through human capital and skills development. That being said, human capital improvement itself is hard to measure, due to its unquantifiability(Westford School of Management, 2016). Another issue with human capital development is the maintenance in itself. Human Capital development can be seen as a vehicle that needs to be consistently well-oiled in order to continually function appropriately. Essentially, human capital must be brushed up through training, re-training, and skills acquisition (Taylor, 2012). Finally, the fast moving rate of technological advancements mean significant investment must be made with regards to change through human capital and skills development (Kim Yong-Jin et al, 2009). Human capital also ties well in with individual and collective efficiency, also known as the creation of an ergonomic work place.
Ergonomic Work Place
Given the rapidly changing workplace environment that exists today, it has become increasingly important to ensure efficiency of both human and physical capital, hence the term ergonomics. Reasons for possibly reduced efficiency in the work place range from workplace injuries, to an aging workforce, and increased demand on both individuals and employees (Rostykus, 2012). In order to maintain workplace ergonomics, a couple of key factors must be considered, examined and utilised. Apart from human capital and skills development, managers must be proactive and attempt to predict situations that may otherwise lead to lack of efficiency within the workplace (Rostykus, 2012).
That being said, change in itself must be understood as an individual entity, through frameworks, concepts, and methods of change application
Implementing Change
One of the fundamental ways through which change occurs is through Lewin’s 3 step change model of Unfreezing, Changing and refreezing. The diagram below illustrates:
.Kurt Lewin’s three step approach is regarded as a fundamental way through which to manage change(Cummmings et al, 2012). Although Lewins has been criticized for oversimplifying the concept itself, the foundational importance of his theory cannot be underestimated.
Unfreeze
The first step hear requires the organisation to simply admit to themselves that change is important, and needed. often times, this requires a soft landing approach due to the fact that some employees may approach with scepticism and doubt. During this stage, negotiations may be made as to what kind of change may occur
Change
This area involves the change in itself as it occurs within the context of the three step model. Here it is time for people to embrace and accept that changes that may occur, despite the fact that they may not all agree with it. During this stage, negotiations could be made as to the extent to which the change may be implied.
Refreeze
Finally, the refreeze involves simple acceptance of change that has already occurred, and even more so acceptance of the fact that nothing else can be done to reverse what has already happened. In essence, this is where what has been put in place is cemented.
Overcoming Resistance to Change
In the same way that catalysts may fuel the fire that is change, there may also be factors that may lead to the resistance of change. Often times, people may react in different ways to the existence of change within an environment they find themselves in. Again, with the threes top model in mind, it s important that the change is frozen solid, in order to avoid boycott, or further resistance that may look to damage the work that has already been set in stone. (Amoros et al, 2012)
Flexibility
A flexible organisation is defined as one that is easily adaptable to changes within it’s immediate environment (Riviera et al, 2014) Organisationla flexibility has always been regarded as an important factor within the strategic management field (Daft & Lewin, 1994).Given the rapidly changing and developing organisational environment that exists in the world today, it becomes increasingly important for companies and organisations alike to be able to remain flexible, in order to adapt to whatever changes they may experience within the environment.
Furthermore, the relationship between flexibility and change cannot be ignored. As changes in the internal, or external environment occur, an organisation must express flexibility in its ability to deal with and handle whatever situations they may come across.
Flexibility becomes a key aspect of maintaining operational efficiency within an organisational environment. What this implies is that flexibility, within itself, plays its own crucial role in determining an organisation’s capacity for success.
Flexibility in itself can be broken down into several sub-categories that further explain it’s role in keeping an organisation operationally efficient. Such are explained below.
Modular Organisation
A modular organisation often involves the creation or implementation of a changeable organisational structure, where the size and complexity of the organisational structure are dependent on the invident that may have occurred, the severity of the incident itself, and even more so, the specifics of the hazard that may have been created by the incident.(FEMA, 2013). The image below explains:
As the image above shows, Scene 1 involes the organisation with one overhead branch, and three below, making a total of four attributes. Scene two, however, offers a three-step structure, where the organisation has now modulated into a more flexible scenario, featuring 5 interdependent attributes.
Expansion & Contraction
Expansion and Contraction is another common way through which organisations may express operational efficiency through flexibility. This, as written on the tin, involves a numerical increase or decrease in the workforce, usually dependent on what kind of change the organisation may have already experienced. (FEMA, 2013)
An example could be an increase in the size of a hurricane that occurs. As a result of this change, flexibility will need to be expressed by the organisation in charge, through expansion. The organisation in charge will need to expand their workforce in order to adequately deal with the act of God that has occurred, and may need to further contract the workforce In the future, depending on their ability to respond to the aforementioned.
Expansion and contraction offers a simple yet lean, flexible, and adequate way to deal with organisational change while maintaining, and possibly improving operational efficiency all together.
Activation of Organisational Elements
This involves the creation or implementation of a way through which to activate elements within an organisation that may otherwise be non-functional, docile or inactive. The scenario here involves the creation and establishment of an organisational structure with both functional, and non-functional units. In this scenario, the non-functional units can often be activated depending on the situation at hand and the need for these non-functional units. Here, a non-functional unit doesn’t necessarily imply a unit that doesn’t work at all, but simply one that may be activated on an as-need basis. (FEMA, 2013)
A great example of this can be seen in the military, during a hostage situation. Oftentimes, people may find themselves in a situation where a Special Forces Unit that is otherwise docile may need to be activated in order to deal with the situation at hand.
Within itself, flexibility offers the chance for organisations to make changes within the environment that they otherwise may not be able to make. This essentially means that organisations can do whatever things they may need to in order to succeed within the work place, and ultimately, maintain operational efficiency. Flexibility offers the chance for organisations to express their adaptability to change within a specific environment. Furthermore, it also expresses their ability to adapt to certain situations.
Conclusion on Flexibility
Essentially, flexibility becomes important within any environment as in order to be flexible, one must be able to change rapidly, in order to properly adapt to whatever situations may exist within the immediate or past environment. This may involve many different things, ranging from acts of God to whatever other things may elicit change within an environment. Often times, it becomes important to understand, relate to, and associate with the environment around an organisation in order to know when to adequately elicit these factors of flexibility.
Innovation
Innovation is defined as a series of processes which focus on the creation and implementation of new or improved products, services, processes, positions, and paradigms (Elrha, 2018). Here, it becomes important to understand and realise the differences between change, and innovation. While change involves completely altering something form its original state, innovation often implies improving something, while keeping some or all aspects the same. Alternatively, innovation is described as simply taking a specific idea and improving it (UK-CPI, 2012).
Within itself, innovation becomes extremely important and crucial
o Social Framework Conditions in Change Management and Innovation
LEAN ORGANISATION
SIX SIGMA APPROACH
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Effective Management Of Change During Merger And Acquisition
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