Change Management Business Essay

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Change is inevitable. Nothing is permanent except the change. It is the duty of the management to manage change properly. Organizations must keep a close watch on the environment and incorporate suitable changes if the situation so demands. Change is a continuous phenomenon. Organizations must be proactive in affecting change. Even in most stable organizations change is necessary just to keep the level of stability. The major environmental forces, which make the change necessary, are technology, market forces and socio-economic factors. Resistance to change is not desirable. It is counter productive for growth and destructive in nature. Managers must evolve policies to affect change. According to Barney and Griffin, "the primary reason cited for organizational problems is the failure by managers to properly anticipate or respond to forces for change.

Understanding Change

Change refers to any alteration which occurs in over all work environment of an organization. It may relate to change in technology, organizational structure, working processes, work environment, organizational policy and even the roles people play. Introduction of change in one part in an organization forces change in other part. If the change is beneficial people accept it willingly. If it is not desirable, there is great resistance. If it is of no consequence to the people, they may adopt an attitude of indifference. If they consider the change detrimental to their growth and prosperity, they may resist through counter pressure. This reaction is based not necessarily on the reality or facts but on their perception.

The change therefore should be sufficiently strong enough to overcome the counter pressure. Due to advancement of technology and social environment change has become a necessity. If the change takes place, a balance or equilibrium is achieved by the organization. Thus people learn to expect various environment relationships within the organization. They learn adaptation. The essence is that when people feel that there is need to change, and when they

change, they actually are adjusting to changed situation thus equilibrium is achieved with the changed environment. This process carries on and is never ending because change takes place continuously.

Organizational Growth as a Kind of Change

Grainier has evolved a theory of change by considering 'growth' as a factor for change. He has identified various problems at each stage of evolution. The solution to the problem brings about the change. To illustrate, he quotes an organization that desires to achieve 'growth'. Initially growth is achieved through creativity of founders who are usually entrepreneurial oriented but that creates a problem of leadership. To tie over the problem of leadership, management hires top class managerial personnel who take charge of the situation. Over a period of time it comes to the notice that excessive leadership creates a situation of concentration of power in the organization. With the effect the subordinates have to wait for the decision on a trivial issue. Therefore a change is necessitated and that leads to delegation of authority to subordinates.

To achievement of organizational growth, the organization has to change its strategy beginning from entrepreneurship, leadership - delegation - autonomy of work group's collaboration leading to the current strategy of self control, self discipline and individual work ethics. It is important to understand that each change that takes place is associated with unforeseeable problems. It will also be seen that change is necessary at every stage. If that was not implemented the organization will not be able to achieve growth. Greiner's model is explained above.

Lewin, three-step model

Kurt Lewin (1951) developed his ideas about organizational change from the perspective of the organism metaphor. His model of organizational change is well known and much quoted by managers today. Lewin is responsible for introducing force field analysis, which examines the driving and resisting forces in any change situation. The underlying principle is that driving forces must outweigh resisting forces in any situation if change is to happen.

Nadler and Tushman, congruence model: political, organism

Nadler and Tushman's congruence model takes a different approach to looking at the factors influencing the success of the change process (Nadler and Tushman, 1997). This model aims to help us understand the dynamics of what happens in an organization when we try to change it. This model is based on the belief that organizations can be viewed as sets of interacting sub-systems that scan and sense changes in the external environment. This model sits firmly in the open systems school of thought, which uses the organism metaphor to understand organizational behaviour. However, the political backdrop is not ignored; it appears as one of the sub-systems.

William Bridges, managing the transition: machine,

Organism, flux and transformation Bridges (1991) makes a clear distinction between planned change and transition. He labels transition as the more complex of the two, and focuses on enhancing our understanding of what goes on during transition and of how we can manage this process more effectively. In this way, he manages to separate the mechanistic functional changes from the natural human process of becoming emotionally aware of change and adapting to the new way of things.


Xerox's Office Products Division (Xerox OPD) pursued new business opportunities created by the emerging electronic information technologies. The division made word processors, facsimile machines, and electric typewriters, and introduced several new products and systems for the nascent office automation market.

For decades, global corporations have been on a quest to find and secure unique competitive advantages that will set them apart from their competition. While there are many examples of great successes in this, in most cases the results have been fleeting. Even when competitive advantages have endured for more than a decade, the most competent competitors generally catch up and become a threat to the leader. For instance, Canon became a major threat to Xerox during the 1980s even though Xerox had a ten-year lead on its competitor.

As a result, in 2001, Xerox, the well-known copier company, was near bankruptcy. A combination of aggressive Japanese competitors selling low-price copiers and it shift toward digital copying that made the old light-lens copying process that Xerox had pioneered obsolete, was leading to plummeting sales. Xerox was losing billions of dollars and its board desperately searched for a new CEO who could change the way the company operated and revitalize its product line.

The person they chose to transform the company was Anne Mulcahy, a 26-year Xerox veteran who had begun her career as it salesperson, transferred into human resource management, and then used her leadership abilities to work her way up to become its president. The biggest challenge Mulcahy faced was how to save billions of dollars by reducing Xerox's huge operating costs while at the same time investing billions of dollars in R&D to innovate new kinds of copiers. Only by simultaneously achieving both of these objectives could she save the company. To find solutions to the problem, she focused her efforts on involving and listening to Xerox's employees and customers.

Mulcahy began a series of meetings with Xerox employees and told them that tough times were ahead and that layoffs would be necessary in the short run. At the same time she emphasized that only their suggestions, creative responses, and hard work to find ways to reduce costs could help save the company.

Xerox corporate executives attributed their poor track record of new business creation to lack of a consistent emphasis, which gave new initiatives insufficient time to succeed. Xerox seems to have reversed the decline and embarked upon a recovery. How did such former powerhouses lose their effectiveness'! The main explanation for such decline is almost most always an organization's inability to change in response to changing environmental conditions like increased competition. Research suggests that one of the main reasons for some organizations' inability to change is organizational inertia or the tendency to maintain status quo. Impediments to change that calls inertia are found at the organization group and individual levels.

Individuals within an organization may be inclined to resist change because of uncertainty, selective perception, and force of habit. This organization sends executives off to ordeals in the wilderness, called outdoor training, as a development tool. Xerox executives and managers to the outdoors for stays of several days or even weeks. The rationale for these wilderness excursions is as follows: For individuals, such experiences can increase self-confidence and help them reevaluate personal goals and efforts. For work units, a shared risk outside the office environment can create a sense of teamwork.

To help discover how the company should best invest its R&D budget, she made reaching out to customers her other main priority. From the top down she insisted that managers, engineers, and salespeople must work with customers to find out what they wanted most from copiers. She implemented an approach called "Focus 500" that requires Xerox's top 200 executives to go out into the field and visit its top 500 customers and to develop an ongoing relationship with them. She reinforced this as a major priority by such means as issuing standing orders that even if Xerox executives were in important meetings, they should immediately go to the phone and meet the needs of their assigned customers. By listening closely to both employees and customers, Mulcahy, and Xerox's managers, researchers, and engineers gained new insights that have transformed its product line.

Mulcahy decided to focus the R&D budget on producing two new major kinds of product, a new line of digital color copying machines for use by medium and large businesses, and low-end copiers that offer a print quality, speed, and price that even Japanese competitors cannot match. Xerox also invested in developing an efficient sales and service network to support its new copiers and manage customer relationships. At the same time, Xerox has cut 26 percent from corporate overhead, and 29 percent from R&D since 2000, and has reduced its workforce from 95,000 to 55,000.

But 2005 it seemed that Mulcahy and her managers did choose the right turnaround plan to save the company. Their risky gamble on two new main lines of copiers, and a painful downsizing and reorganization have paid off. Xerox is now the leader in the high-end and low-end of the digital copying market and over two-thirds of Xerox revenues now come from products and services developed since 20001. Xerox's profits are still not high, however, because of intense price competition in copiers from companies like lexmark, Canon, and HP. However, it now can build from a position of strength, and its employees who have worked so hard to turn around the company see that their efforts have paid off, and that their jobs and futures seem secure. Indeed, by 2006 the company was hiring 1,000 new workers each quarter as demand for its products increased. One other outcome of Mulcahy's change strategy has been to build a new company culture based on the use of total quality management that emphasizes the continuous improvement or work processes.

Organization change is the movement of an organization away from its present state and toward some desired future state to increase its effectiveness. Why does an organization need to change the way it performs its activities? The business environment is constantly changing and the organization must adapt to these forces in order to survive. Xerox's lower costs have been achieved by its employees' never-ending efforts to find better, more reliable, and more efficient ways of performing the thousands of specific tasks involved in making and selling copiers. The result has also been an increase in the quality of its copiers, which is vital to its customers. Xerox's new adaptive culture emphasizes the values of customer service and commitment to employees.

The business environment

The business environment has two parts, external and internal. First, consider the influence of the external business environment, which includes customers, competitors, and other industry and competitive forces, as well as the legal, regulatory, technological, and economic environment. Customer pressures spur new business creation. But pressures from existing customers also make it difficult to pursue disruptive technologies that lead to new markets. And pressures encountered in co-developing a product with the customer, in competing with the customer, and in dealing with intimidation by the customer dampen new business creation. The threat of substitute products and services, and industry rivalry, spur new business creation.

Concerns about product liability dampen new business creation whereas strong patents encourage it. Government regulations facilitate new business creation by encouraging innovation or hinder it with bureaucratic procedures and delays. Sometimes they do both! The absence of industry standards makes it difficult to introduce new products if customers hesitate to make purchases in anticipation of such standards. Successful industry players create industry standards or adapt quickly to emerging standards. Those who anticipate technology trends find new business opportunities in markets that others view as "mature." Those who ignore these trends end up as somebody else's lunch. Adverse economic conditions inhibit new business creation by biasing the thinking and actions of top managers toward survival and near-term results. External advisors such as management consultants either facilitate or hinder new business creation depending on their assessments and agendas.

Industry standards help new business creation

Lack of an industry standard creates customer hesitation it is difficult to introduce new products in an emerging market if there is customer hesitation. Buyers are wary of committing to products that they fear might be incompatible with an industry standard that might eventually emerge. This was one of the reasons why Xerox took so much longer to sell its new products. During that time IBM has made product announcements; Wang [the number two player in the market] has made product announcements; and other competitors have come to the marketplace with a whole array of new products - which just slows down the customer's decision-making process.

New technology spurs new business creation

It is difficult to foresee the impact of new technology the champions of the Star professional workstation at Xerox were convinced the new electronic information technology they were bringing to the office automation marketplace would render Xerox's huge investments and position in the copier business based on chemical technology - obsolete.

Xerox over the next decade or so, a reasonable slice, however defined of the information system business? We went into PCs, for example, not because word processing alone was an attractive business; it is. But word processing was an essential ingredient for the broader information system we call the "Office of the Future." There's no such specific office of the future; it was the concept of the future...I've been very steadfast over the last few years to say that we must get ourselves in competitive shape with new products at the right manufacturing costs, the right development costs, in the copier business - because that's gonna pay the shot, so to speak, for what happens in certain other areas of information systems. And I think the outside world sees that we have a very much stronger competitive position in copying - a very large, still growing business - than we had a few years ago. Thus, while Xerox corporate executives viewed the new electronic information technology as an opportunity to enter a new market (office automation).

Internal Environment

Next, consider the influence of the internal business environment, which refers to the condition of the division's existing business (whether it is growing, maturing, or declining), the relative amount and stage of development of the division's new initiatives, the availability of resources, and other internal factors such as the fear that new products might cannibalize existing business, or the bias toward product innovation versus process innovation. When the existing business is growing, there is a tendency to neglect new business creation. However, when the existing business matures, top managers want new business creation "on demand" in order to rekindle growth. Unfortunately, new business cannot be created "on demand." This is one advantage of independent entrepreneurship - there is no existing business to worry about! Introduction of new products, despite the fear of cannibalization of the existing business, helps in two ways. First, it pre-empts or counteracts similar moves by competitors. Second, it provides access to new customers, some of whom end up buying existing products because of their availability! New business creation is hindered if sufficient resources are not available for it, or if several new initiatives have been introduced to the market recently - because then the focus shifts to improving their performance to ensure their success. Both product innovation and process innovation spur new business creation. Several factors in the internal business environment influence new business creation. The influence of the existing business Existing business as a drag and a distraction that hurts new business creation. The demands of the existing business can take management's attention away from new business creation.

But once it was in good shape, it freed up time to get into new products., it was explained why Xerox's existing copier business was a drag on OPD's ability to compete in the office automation race: I think one of the things that were very, very difficult for Xerox - always had been - was that the copier business was one with tremendously long product cycles, and tremendously high demands for end-user customer support, but very big profit margins. And you had a lot of time to make changes, and you could afford to be very logistics conscious in terms of what you did. That was the way it was determined that we would run the Xerox Corporation for quite a little while. And that wasn't a bad way to run it then, when it was an oligarchy. But you can't use that kind of scheme in the fast-paced, highly competitive office automation business. And yet, the industry culture didn't allow Xerox to change very easily. These things have natural roots and it's not hard to understand why that industry culture pre-existed. And it's also not hard to understand why it was terrible baggage in the office automation business.

New technology spurs new business creation it is difficult to foresee the impact of new technology the champion of the Star professional workstation at Xerox and others were convinced the new electronic information technology they were bringing to the office automation marketplace would render Xerox's huge investments and position in the copier business based on chemical technology obsolete. Xerox like other companies facing the digital revolution, needed to transform itself and change in order to survive and prosper. In an era when technology is advancing rapidly, most organizations are confronting the need to learn new ways to reduce cost and offer better goods and services to customers.

Xerox corporate executives saw things differently. There was no disagreement about the critical importance of the office automation market for Xerox. But these corporate executives did not believe the copier business had to be abandoned to succeed in office automation. They saw the real challenge as succeeding in office automation while fighting off the Japanese competitive attack on the copier business.

Change in strategy

However, Mulcahy's hope is that Xerox will once again take its place as one of the most admired companies in the world. She done so through alliances with external organizations as necessary, the Xerox is able to benefit from its existing network ties. Using its present relationships it persuades existing alliance partners to help in developing the new venture. In part, this is because the venturing corporation may be able to provide benefits to the alliance partner in other ways, through transactions and resource sharing involving other lines of business. In addition, alliance partners may view corporate ventures as more attractive because they have the assets of the parent corporation behind them and thus are more likely to be operated at a large scale.

The need to change is a fact of life that most organizations have to deal with. Indeed. In today's environment organization cannot afford to change only when their performance is deteriorating: they need to continuously predict and anticipate the need for change. There are many reasons why organizations change and many types of change they can pursue like restructuring, reengineering. "E-engineering, innovation and total quality management.


Globalization is a growing phenomenon resulting in the rapid spread of information and knowledge, high expectations from customers and stake-holders, hyper-competition, dramatically increased dependence on supply networks, and a breathtaking rate of change. These changes are forcing corporations to become more connected with their customers, stakeholders, suppliers, distributors, and other partners. Connectedness in thought and action is now, more than ever, crucial for staying in touch with reality. Business leaders once had the time to watch events unfold, contemplate strategies and actions, and then take deliberate responses. Today, they must proactively analyze market and stakeholder expectations and provide solutions for future requirements. Only by being well connected to the breadth of the business environment over a product's full life cycle can a corporation be on the leading edge of change.

Xerox is one of the branding success stories of the 20th century. As with many other similar successes, the company did't just creates a product, it invented a whole new category. Indeed, such is Xerox's achievement that its brand name has become a part of everyday speech. In the United States, Xerox is a verb, used when people are copying paper. For years, Xerox had competed on the superior quality of its copier products. Then, when the company's rivals had caught up, it competed on the superior quality of its brand. And as soon as a company makes the transition from a simple product manufacturer, to a global brand, it has to live with the consequences. It can't just create a strong perception and then undermine that perception by embarking on other categories.

Indeed, the strategy which followed that disastrous meeting cost Xerox billions. Although the company now seems to accept its fate as a 'copier brand', it spent years exploring other, profitless avenues. As a result, competitors such as Canon and IBM have made serious in roads into the copier market, with their high-speed machines. However, providing Xerox can keep its focus on copiers and direct its technological ambitions towards this narrow, but still lucrative market, it could still dominate in the future.