How Critical are leaders in bringing effective change

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Intense and rapid change is the distinguishing feature of contemporary times. The world has been experiencing intense economic, political, social and cultural change, ever since the close of the Second World War.

Intense political change has swept across the world in the last six decades. The collapse of colonialism in the 1940s was followed by the division of the world into three specific political blocs, namely the capitalist nations of North America and Western Europe, the Communist bloc led by the Soviet Union and the non aligned nations, most of whom had obtained freedom in the 1940s and 1950s after centuries of colonialist rule. The 1980s witnessed the collapse of the Soviet Union, the reunification of Germany, the death of the non aligned movement and the global economic dominance of neo liberal economies.

The wave of economic liberalisation that spread across the developing nations in the 1980s resulted in the economic emergence of China, India, and the countries of South East Asia, Latin America and East Europe. Astonishing technological advances and the spread of globalisation are resulting in the integration of various economies and in the emergence of new centres for production and services. The phenomenal export led economic growth of China has upset the economic hegemony of the western powers and propelled the country to the position of the second largest global economic power. The Internet is facilitating the exchange of ideas thoughts and services across the world and to swift cultural exchange and integration.

Such changes have forcefully impacted global economic activity and trade and commerce. The development of China into the world's factory and the evolution of India into the foremost global centre for services have led to the introduction of numerous variables into global economic activity. The economic growth and expansion of the developing countries has resulted in the creation of huge new markets that did not exist before. Such huge changes in a few decades have not just led to the development of enormous opportunities for business organisations but also to the formation of numerous business challenges.

New organisations like Google, Microsoft and Nokia have become global business leaders, even as Toyota has become the largest automobile company in the world, racing past giants like General Motors and Ford. The financial and economic crises of 2008 and 2009 resulted in the collapse of huge financial organisations that were associated for decades with financial soundness and stability. Managers of business organisations now function in an atmosphere of constant and rapid change, much of which is difficult if not impossible to forecast and predict. Peter Drucker, one of the most important of modern day management thinkers has constantly discussed the importance of change in business firms and the need for managers to work towards innovation and the bringing about of significant and beneficial organisational change. Many managers however find themselves unable to cope with the rapidity of change that is occurring around them and on ways to cope with such change as well as master it for organisational benefit.

The quote "Uncertainty has become the norm in modern day organisations and Managers are blind navigators" is taken up for discussion in this short paper. It takes up the issue of change management in organisations and the various implications of change in modern day organisations for investigation and discussion.


Organisational change is essentially prompted by external and internal change processes. Such external forces can arise on account of technological developments, alterations in the competitive environments in the organisations and social and political pressure. Technological developments often result in the creation of enormous threats to organisations, which if not handled appropriately can result in organisational obsolescence, decline and demise. The development of small and fuel efficient cars by Japanese automobile manufacturers resulted in the growth of Japanese companies like Toyota and Honda to the detriment of American car manufacturers, who clung on to their preferences for making huge gas guzzlers. Companies like Canon and Nikon took over market leadership from Kodak on the strength of their technological prowess. Manufacturers of electronic typewriters and fax machines were unable to cope with the development of the personal computer and the internet and collapsed.

The emergence of China as the low cost manufacturing centre of the world has radically changed the economic configurations and competitive environments of thousands of manufacturing organisations in the western countries. Unable to cope with the lower prices of Chinese products, western organisations in industries as diverse as fire crackers, textiles, electronic equipment and mining of Rare Earth Metals have had to face crises and close operations.

Social and political pressures create changes that can affect the working of companies. Changes in eating preferences are forcing manufacturers of high fat products and fizzy drinks to change their product lines and marketing strategies. Strong social condemnation of smoking is affecting the revenues of tobacco companies and forcing them to look for new markets and to diversify into new products.

Such pressures are exerting enormous pressures on organisations to bring in radical, long lasting, and beneficial changes in various areas of their operations. Companies are seriously investigating the possibilities of new products, services, working processes and production methods and approaches in order to avert crises and pre-empt their competitors.

One of the most important functions of modern day leaderships constitutes the planning and implementation of organisational change. Competent and far sighted organisational managers constantly scan their environments, try to forecast emerging changes, assess the impact of such changes and initiate organisational changes, not just to cope with emerging changes but also to take market leadership and enhance competitive advantage. Such change processes can be of various types and could involve the development of an innovative culture, the downsizing of organisational workforce, the introduction or elimination of new and existing work processes, the introduction of new technologies, entry into new markets or even the closure of organisational departments or businesses. These change management initiatives generally depend upon the analysis of organisational leaderships on the existing state of affairs of their organisations, their vision of where their organisations should be and the implementation of various change processes to take their organisations from where they presently are to where they are envisioned to be. Jack Welch took over as chairman and CEO of GE in 1981. He took over a once great company that was beset with various problems in areas like product suitability, product range, operational efficiencies, costs, and workforce productivity. He visualised a company that would be lean and devoid of inefficiencies fat and clutter, operate on the cutting edge of technology, and be the market leader in all its chosen areas of operations. He thereafter instituted a series of changes that led to the growth of GE into one of the foremost companies of the world and to growth of shareholder wealth by 200 billion US Dollars. Steve Jobs came back to head Apple Computers in … after years in the wilderness and visualised the creation of a constantly innovating organisation. Apple introduced a slew of brilliant and innovative products in the next decade and overtook Microsoft in market capitalisation.

Not all change initiatives are as successful as the ones crafted by Welch and Jobs. Studies actually reveal that the majority of organisational change initiatives are unsuccessful in achieving all or some of their originally planned organisational change objectives. Whilst some change initiatives of course fail because of their inherent defects and impracticality, the failure of most change objectives occurs because of organisational resistance to change.

With organisations comprising of numerous individuals, organisational attitudes to change, whether resistant or supportive, arise from the collective attitudes of organisational members, especially members of the workforce to proposed change initiatives. Members of business firms have their professional and personal priorities and preferences that can be affected by organisational change initiatives. Apart from such preferences and priorities, they have their own attitudes and perceptions about the impact of workplace developments on their lives. Workforce members are in the first place likely to be threatened by change initiatives that could have affect their employment and render them redundant. Numerous organisations constantly engage in change management initiatives through introduction of technology, purchase of equipment, streamlining of work processes, and direct downsizing, which can specifically lead to termination of employees and reduction of workforce strength. Workforce members who can be impacted by such developments will naturally be displeased and resist such initiatives in direct and indirect ways. Apart from being threatened in their basic employment by such changes, members of the workforce could be apprehensive about change measures that could result in (a) their being required to learn new technologies and processes, (b) involve changes in reporting relationships, (c) require greater work responsibilities and output, and (d) involve change in location, separation from families, and need to adjust to new working environments.

The importance of change and its effective management has resulted in the evolution of a number of theories for its effective management. Whilst Drucker wrote extensively on the need for organisational managements to constantly work towards bringing about beneficial change, experts like Lewin and Kotter proposed change management processes that would help organisations to implement change effectively. Lewin advanced a three stage theory of change management that require organisations to implement change initiatives in three phases, namely unfreeze, change and freeze. Lewin argued that change always results in substantial organisational disturbance that can lead to adverse repercussions if handled without appropriate care. He stated that organisations should first make their environments open to change by unfreezing existing working conditions and processes. This period of unfreezing should be followed by the implementation of the change process and thereafter by the freezing of the change environment through establishment and institutionalisation of all changes. Kotter's change management, whilst similar to Lewin's is far more extensive and breaks the change management process into 8 specific stages that organisations should initiate in sequence to bring about beneficial and effective change.

Whilst most change management theories emphasise the need for careful planning and implementation of change, there is wide agreement among experts on the role of leaders in change management processes. High levels of leadership quality are required in organisational managements for the effective conduct of change management initiatives. It is the job of leaders, especially of organisations in crisis situations, to assess their environment carefully, develop their vision of where they wish to take their organisations, and formulate change initiatives to bring about organisational transformation from existing to proposed states. Leaders must have a compelling vision of change, which they should convey to all organisational members with clarity and transparency on the benefits, as well as implications of change. Effective leaders should, apart from communicating their vision and the change management initiatives, build organisational consensus for change and motivate organisational members to support and be involved in change management processes in order to bring about their effective and successful completion. Leaders employ a range of management techniques to involve and motivate organisational members to adopt and embrace change, which include (a) total commitment of organisational resources to change initiatives, (b) building of change champions across organisations, (c) encouraging discussion on the benefits of the change, as also on its unavoidable adverse effects for some employees, (d) taking sincere and committed action to assist affected employees, (e) using specific teams for bringing about change in a planned and phased manner, and (e) being personally committed to change objectives.

The examples of Jack Welch and Steve Jobs represent the criticality of leaders in bringing about effective change.