LECTURE# 40

1. LECTURE# 40

2. Dunphy used the following typology for the causation for revolutionary change: Environmental Creep: Environment itself changing incrementally and become imperceptible to managers. Therefore the degree of change over time may be large and require major adjustment. Organization creep: The organization itself may move out of strategic alignment with an environment which remain relatively stable. Diversification, Acquisition, Merger, Shut downs: Diversification ,often involves a major structural shift from a functional to a divisional structure. But the structures are radically different so incremental change is not realistic possibility.

3. Same is the case with acquisition, merger and shut down as large scale additions or subtractions also preclude incrementalist approach. Industry reorganization An organization may be adjusting appropriately with industrial structure but what if the structure change dramatically deregulation or nationalization or opening of borders and trade liberalization like WTO. Major Technological Breakthroughs - Organization might have invested in current technology while major new technology break through occurs, which may dramatically change production costs. This creates problems for old organization with older technology while creating potential for new investors e.g. mini-mills in the steel industry.

4. Managerial implications (Francis & Bessant ): -Transformation means profound fundamental changes in thought and actions, which creates an irreversible discontinuity in the experience of a system in multiple dimensions of organization strategy, structure culture and work processes. Key variable: - Thought and actions - Irreversible discontinuity - Multiple dimensions Require five organizational and managerial competencies 1. Recognize the challenge 2. Determine a transformational strategy 3. Require Extensive innovation 4. Manage Systemic change 5. Upgrade leadership process

5. 1. Recognize the challenge Most organizations face strategic dilemmas not in state of organization readiness" face pre-action barriers”. Avoidance top managers cannot move away from their tested ways of doing business. Indecision problem of leadership & decision making amongst competing alternatives. Poverty cost of investment is very high, poor finances, technology solutions e.g. licensing , maintenance ,up gradation, training etc. Insularity high powered leadership are least equipped to be the leaders of transformation Inability transformation is a demanding task. Steady state managers do not have appropriate skills and values. 2. Determine a transformational strategy:

6. 1. Reconfigure the value stream which involves making major changes in the positioning of the firm with suppliers, partners or down stream agents. - May have to train, give technology indoctrinate suppliers. • Value stream analysis helps in detecting inefficiencies and improving them. • Enables organizations to operate at rock bottom costs. 2- Redefine the driving force of the business • Have to change their strategic orientation must revise their strategic driving force , and innovate their mission. • Example In Scandinavian country A company in 1865 was concerned with pulp and paper industry after 100 years it entered telecommunications and since late1990s is the industry leader outmaneuvering other leading telecom players.

7. 3 Reconstruct the competencies of the business: Competencies are underlying attributes that enables difficult things done in a reliably and economic way. • Strategic competence • CSF are there in every industry for instance oil companies have competence in finding oil by interpreting complex geological data to reduce the risk of drilling at wrong place. Pharmaceutical in R& D to discover new compound. One Computer firm transformed itself from memory company to processor company. • Hence the development of new competence is essential. 4 Redefine the value proposition to the existing or new customers • Knowing your customer well and then influence them. • Whether to focus the existing customer or new one. • On BCG matrix cash cows or on stars.