Many of the opportunities and threats that trigger change can

be found in an organization’s external environment, but some

can originate from within the system itself.

Chapter 4
Recognizing a need or opportunity for
change
© John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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Strebel developed a model that managers can use to anticipate

technological and economic changes.
PEST is an analytical tool that focuses attention on:
} political
Focus on innovation
} economic
Divergence Convergence Break point
} sociocultural of offerings of offerings Attention
switches to
} technological innovation
Time
trends that managers need to be aware of.
Innovation
Break point Break point
Attention Attention
switches to switches to
efficiency efficiency

Focus on efficiency

© John Hayes (2014), The Theory and Practice of Change Management, 4th ed. © John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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The trap of success can make it difficult to

Prolonged
period of recognize the need for change
Greiner asserts that, for many organizations, the most pressing problems success
are rooted in the organization’s past decisions. Outcomes Environmental
Disturbance
Success Decreased
Organizations evolve through five predictable stages of development and each stage customer focus Declining
Syndrome Learning
brings with it a set of alignment-related issues that have to be managed if the Increased cost Poor external performance
Complacency disabled alignment
organization is to be effective. Growth through
Less innovation
COLLABORATION Arrogance
Change

Growth through Codification

NEXT
EQUILIBRIUM PERIODS COORDINATION CRISIS
Internal focus
Growth through
DELEGATION
Crisis of
RED TAPE
Death spiral
Growth through
DIRECTION Crisis of
Growth through CONTROL Do Denial
CREATIVITY Crisis of more of &
AUTONOMY
Crisis of
REVOLUTIONARY CHANGES the rationalisation
LEADERSHIP Tim e
same
(A dap ted fro m N adler & Sh aw 1995)

© John Hayes (2014), The Theory and Practice of Change Management, 4th ed. © John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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1
 It begins when individuals notice and respond to what they perceive to be
significant internal and external events. • promotes a reactive
approach to change
But the top team’s ability to recognize the need for change may be
hampered by: • limits the possibilities
• lack of diversity in functional background and experience of members
of top team for planning and
• their commitment to a strong ideology (mental model) that involving others in
marginalises dissenting views. the change process
Actively seeking out and debating alternative perspectives
and interpretations can help ensure that the possibility of
new threats or opportunities are properly considered. ©Digital Vision/Getty Images
© GETTY

© John Hayes (2014), The Theory and Practice of Change Management, 4th ed. © John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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Discrepancies between actual and desired performance can signal a } Often a fall in profits is used to signal a need for change.
need for change.

Problems can arise when

} But while religious orders and charities have to be financially
discrepancies are not recognized viable, their purpose is not to make a profit.
because managers restrict their
attention to a narrow range of
indicators. Some of the factors } Indicators of effectiveness need to be related to the purpose
that managers need to consider of the unit or the organization.
include:
© GETTY

© John Hayes (2014), The Theory and Practice of Change Management, 4th ed. © John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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} Different stakeholders (senior managers, other workers,
customers, suppliers, shareholders, local residents, regulatory
bodies) may use different indicators to assess the
effectiveness of an organization.
} Different criteria may be used to assess effectiveness at
different levels (individual, work group, department, strategic
business unit, total organization).
} The criteria used to assess effectiveness at individual or
department level need to be aligned with those used to
assess overall organizational performance.

© John Hayes (2014), The Theory and Practice of Change Management, 4th ed. © John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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 Criteria of effectiveness for each function
Purchasing Production Distribution Marketing
MINIMISE COST OF MINIMISE COST
MINIMISE COST OF & Sales } An organization that is not very profitable
DELIVERING
OBTAINING &
HOLDING REQUIRED
OF PRODUCING
REQUIRED OUTPUT OUTPUT TO
REQUIRED
MAXIMISE today may be incurring higher costs in
LEVEL & QUALITY OF ON TIME TO REVENUES FROM SALES
INPUTS SPECIFIED QUALITY LOCATIONS AT
REQUIRED TIMES
order to invest in new plant, product
In order to perform effectively, each function might pursue the following objectives:
development and training in order to
guarantee greater profits over the long
Low procurement Low High product term.
Costs Long production inventories availability & fast
runs response

Few suppliers Flexible internal

Low variety supply © ImageSource
Flexible product
Low specification to
inventories High capacity meet customer
utilisation Stable requirements
demand Misalignments between:
No overtime Marketing Sales and PRODUCTION
Marketing & Sales and DISTRIBUTION
working Marketing & Sales and PURCHASING
PRODUCTION & DISTRIBUTION

© John Hayes (2014), The Theory and Practice of Change Management, 4th ed. © John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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} Performance in one unit may need to be benchmarked against } For example, a budget airline’s decision to open a route to
performance elsewhere in order to assess how effective it is. one location rather than another might have a positive effect
on the performance of the local area unit of a car hire firm
that has little to do with factors internal to that unit. This
might need to be taken into account when assessing the
effectiveness of that unit relative to other units.

© John Hayes (2014), The Theory and Practice of Change Management, 4th ed. © John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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} Are the most appropriate criteria used to assess the

effectiveness of your unit (or university department)?

} If not, consider how this might affect the recognition of a

need for change.

© John Hayes (2014), The Theory and Practice of Change Management, 4th ed.
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