Platt Perspective on Business and Technology

Connecting everywhere and all the time, and its impact on structure in markets and organizations – 5: transitioning through change as a strategic, operational initiative – 2

Posted in business and convergent technologies, strategy and planning by Timothy Platt on September 23, 2011

This is my fifth installment in a series on organization and change in the context of everywhere, all the time connected marketplaces (see Business Strategy and Operations, postings 187, 189, 190 and 193) and my second in that to specifically look at the process of organizational change per se. I ended Part 4: transitioning through change as a strategic, operational initiative – 1 with an intentionally thought provoking statement:

• You cannot make significant lasting operational change without also making congruent and supporting organizational change.

My goal in this posting is to discuss that, and starting with the word “significant.” And as a starting point, I will simply state that when an organization is so far off-track that it is in need of change management to remain competitive and survive in its marketplace, it is in need of change so profound and significant that simply adjusting a few operational processes will not suffice.

• Most organizations at least periodically need at least some minor fine tuning on what they do and how they do it, and in that case simple operational process updates are likely going to be sufficient. Consider this more cosmetic or surface change, and as a type and level of change that would come out of a steady and ongoing system of performance review when the organization is not facing or dealing with significant challenges.
• Fundamental changes in operational processes, and certainly change that requires a rethinking of the organization and what it does, call for structural organizational change too.

How do you know when you are facing need for fine tuning and simple updates and when you are looking at need for fundamental change? I would present two fundamentally distinct scenarios here in outlining a response to that question, where fundamental change would be called for.

• The challenge of sudden business-confronting change.
• The more easily overlooked but at least potentially even more dangerous challenge of gradual drift, with tipping point thresholds where loss of effectiveness and competitiveness can seem to suddenly develop. Think of this as situations where a business drifts off course and then suddenly seems to be heading over the edge of a cliff.

Sudden change and the need to respond on a very short timeframe can happen at any time. A situation that comes to mind immediately for me is where a business is lead by a strong, authoritarian central figure, whose presence has both build and maintained the organization as it has become. And then, with little warning if any that leader is suddenly gone. When a small business looses its single proprietor/owner, it usually closes – unless someone comes in to buy out what is left to rebuild and that generally because this business has held a significant marketplace opportunity and community good will. Consider a one of a kind store in a local neighborhood, such as the only local gas station, or newsstand that everyone there knows and frequents. The owner dies, or suddenly becomes ill and retires and unless someone takes over, buying the business, it is likely it will close.

That is a door closing example, but sudden challenge can also mean opportunity to respond and stay open and in business too. Consider a sudden and major change in key suppliers as a working example, where you suddenly have to scramble to keep your shelves stocked and for merchandise that your business really has depended on having available, for a significant percentage of your overall business. For a manufacturer instead of a merchant, simply replace “merchandise” with essential third party provided parts or other supplies that in this example, would be needed for you to continue to produce your products.

Either way, operational change in this type of situation would have to include finding one or more new suppliers in the immediate here and now to fill your supply chain gaps, but would also have to include preparing for this type of disruption should it ever happen again. A failure to be prepared to a now known problem of this magnitude would constitute a significant due diligence failure. And this, as noted above means short term operational process adjustments and more comprehensive organizational change too. Note: I am not necessarily talking about head count or personnel changes here, but rather about changes in how you organize and prepare, in this case adding in organizational capability where you were relying on luck and marketplace consistency around you up until now.

This type of change and need for change is generally obvious – like having a car drive through your front windows. You address the immediate concerns and issues, and follow through on this as having gone through a learning curve with deeper and more organizational adjustments to limit the likelihood of this same problem happening again. At the very least you need to prepare, where and as you can to lessen the potential impact if this type of sudden challenge recurs. But this still leaves me with the more insidious challenge of gradual drift into weakness and irrelevancy in the marketplace, and of tipping points where problems perhaps long developing come to a head. I am going to address that next in this series. And after that I am going to build from this developing framework to explicitly bring in a key part of the series title that I have not really discussed yet: the impact and implications of ubiquitous connectivity and both within the organization and as it connects with its marketplace, everywhere and all the time, on operations and organizational structure.

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