Strategic Management: Formulation and Implementation

Changing Strategy

A change in organizational strategy is a planned attempt to alter the organization's alignment with its environment. Moreover, organizations evolve through a lifecycle, with each evolving stage raising change challenges. The strategy an organization adopts will be in influenced by the firm's product life cycle (see section "The Stages of Changes").

Change might be focused on any area of strategy. For example, an organization might change its strategy goals. It may revise a particular business strategy for example, by dropping a differentiation strategy and adopting cost of leadership.

Other changes in organizational strategy would be enter into a joint venture, partnership or to move into international markets. Finally, an altered functional strategy might reflect changes in debt or changes in spending on research and development.

Key Organizational Change Components

According Richard L. Daft, these key components can be categorized as one of four kinds:

Technology changes
A technology change pertains to the organization's production process how the organization does it work. These changes are designed to make the production of product or service more efficient. The general rule is that technology change is bottom up. The bottomup approach means that ideas are developed at lower organizational levels and channelled upward for approval. A topdown approach to technology change usually does not work. To managers are not close to the production process and lack expertise in technological developments.
New product changes
A product change is a change in the organization's product or service output. Newproduct innovations have major implication for an organization, because the often are an outcome of a new strategy and may define a new market.

The introduction of a new product is difficult. In most industries, only about one in eight new product ideas are successful. Product innovations require expertise from several departments simultaneously. It failure is often the result of failed corporation.

Organizations that successfully develop new products have the following characteristics:

  1. people in marketing have a good understanding of customer needs;
  2. technical specialists are aware of recent technological developments and make effective use of new technology;
  3. members from key departments research, manufacturing, marketing cooperate in the development of the new product.

One approach to successful newproduct innovation is called the horizontal linkage model. This model suggests that research, manufacturing, and marketing must simultaneously develop new products. When the horizontal linkage model is used, the decision to develop a new product is a joint one.

Innovation is becoming a major strategic weapon in the global market place. Time based competition means delivering product and services faster than competitors, giving companies a significant strategic advantage.

The teamwork required for the horizontal linkage model is a major component of using rapid innovation to beat the competition with speed.

Structural changes
These changes pertain to the hierarchy of authority, goals, structural characteristics, administrative procedures, and management systems. Successful structural change is through a topdown approach, which is distinct from technology change (bottom up) and new products (horizontal). The need for change is perceived by higher managers, who then take the initiative to propose and implement it.
Cultural / people changes
These changes refer to a change in employees values, norms, attitudes, beliefs, and behavior. Culture change pertains to the organization as whole; people change pertains to just a few employees, such as when a handful of middle managers are sent to training course to improve their leadership skills. Training is the most frequently used tool for changing the organizations's mindset.