Organisational Change as Competitive Advantage

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Home > Articles > Organisational Change as Competitive Advantage

 Organisational Change as Competitive Advantage

Susan Goldsworthy and Walter McFarland | Today's Manager
September 1, 2017

​In the 21st century, the ability of an organisation to optimise its performance is highly related to its proficiency to change.



The pace of change in the 21st century is forcing organisations everywhere to focus on and improve their capabilities to change. This attention to organisational change in both research and practice is creating new knowledge and insight about how organisations can successfully adapt to their ever-changing business environments.

In spite of this focus, the practice of organisational change remains in its early stages. One indication of this is the fact that scholars and practitioners have no common definition of organisational change or common taxonomy. For example, when some organisations (referred to here as “fast followers*”) speak about change, they are referring to an internal process for implementation—often referred to as change management. Change management activities are not focussed on changing the market, but on reacting to market changes. The difference between good and great change management hinges on the ability of an organisation to react to market changes quickly, effectively, and with fewer resources than its competitors.

Other organisations mean something entirely different when they speak about organisational change (we refer to these organisations as “market leaders”). These organisations are focussed on using change to lead the market rather than follow it. Great strategic change means initiating shifts that yield various types of market advantage, and creating a brand that is seen as innovative and market leading.

Although the two types of organisational strategies mentioned above (fast-follower* and market leader) use change very differently, both use great organisational change to increase their competitive advantage. In the next section, we discuss the role of change in achieving each of these strategies in more detail. We argue that regardless of the strategy that an organisation employs, great change capabilities create real competitive advantage.

Your organisation, regardless of its industry, geography, or size can use change to improve its performance and stature if it chooses to do so.

Competitive Advantage from Great Change Management
As noted, some organisations position themselves in their market as “fast-followers*.” Oxford Dictionaries define a fast follower* as: “a company that quickly imitates the innovations of its competitors.” 1

In this strategy, the organisation focusses not on leading its industry, but on being a fast and effective follower of other companies. For organisations adopting this strategy, a great change management capability is critical because the organisation must be able to change frequently and effectively. Once senior management agrees that a market change is coming and can define the nature of the change, it is the job of internal change management processes to ensure that the organisation responds effectively. Although many organisations have some form of internal change management, we believe that great change management possesses seve-ral unique features:

  • It learns. By this we mean that the organisation has built practices into its change management regime that enables it to learn from each new change management exercise—and to remember and apply this new lesson in the future. Simply said, the organisation is constantly improving its knowledge about how to better change itself.
  • It includes the entire workforce. In this way, the organisation builds more capacity to change over time. In addition, organisation-specific training is created, used, and continuously updated.
  • It is integrated into the human resource system. Change management is identified as a key competency and people are assessed on and rewarded for their change management performance.
  • It employs performance metrics. Over time, the organisation is able to chart its progress in conducting change efforts faster, better, and with fewer resources.
  • It is viewed as important. The best organisations take care to emphasise the importance of change management. Leaders model change management competence and showcase employee successes. In this way, the organisation builds a change-based culture over time.

Organisations which are great at change management are constantly improving their ability to perform change, actively involving people, and integrating change into their cultures. These organisations achieve competitive advantage by performing change management better, faster, and with fewer resources than competitors.

Competitive Advantage from Great Strategic Change
While some organisations assume a strategy of “fast-follower*”, others adopt a strategy of “market-leader.” Oxford Dictionaries define a market leader as: “The company selling the largest quantity of a particular product.” 2

For our purposes here, however, the phrase ‘market leader’ also refers to companies desiring to assume the position of market leader—and see strategic change as a tool for achieving this. These organisations seek to gain competitive advantage by leading the direction of the market and casting their brand as innovative and “first to move.” We note that relatively few organisations adopt a strategy of market-leader, but suggest that for those who do, great strategic change is crucial for success. We believe that a great strategic change capability has these features:

  • It demands constant and accurate environmental
    scanning. The best organisations pay constant attention to their markets and the factors affecting them. These organisations focus on protecting themselves from surprise, and on being the first to see and react to new opportunities for change.
  • It demands active participation by the workforce.
    Responsibility for making small and medium changes is delegated to the workforce. This action engages the workforce and enables senior management to focus on strategic opportunities.
  • It demands creation of a cadre of change leaders. These leaders from across all organisational levels are trained to lead the largest and most complex change efforts—including disruptive change. They are responsible for creating additional change expertise in the workforce over time.
  • It is people-centric. Great organisations use change as an opportunity to develop and engage the workforce. The goal of people development is to create an integrated “change-enabled” organisation in which every person is equipped to detect and act on opportunities to improve organisational performance.

Organisations great at strategic organisational change are able to transform themselves into systems optimised for detecting, creating, and accomplishing the changes needed to maintain their position as industry leaders.

Conclusion
In the 21st century, the ability of an organisation to optimise its performance is highly related to its proficiency to change. Organisations adopting a “fast-follower*” strategy can only achieve it if they have a robust and constantly improving change management capability. The source of their competitive advantage is their ability to change faster, better, and with fewer resources than their competitors.

Organisations adopting a “market leader” strategy can only achieve it if they have the ability to detect and actualise new and non-conventional opportunities. These opportunities may demand complex and large-scale change. The source of their competitive advantage is not just moving first, but moving best.

Although other organisations may choose different strategies, it is hard to imagine any strategy that is not dependent on some form of robust change capability to succeed. We believe that a key feature of the 21st century is the ability of organisations to create and use organisational change capabilities for competitive advantage.

Regardless of the strategy chosen, we believe that these factors are critical in building a robust change capability: the ability to constantly learn and improve, the ability to use change efforts to develop and engage people, the ability to integrate organisational change competence into the formal HR system, and the abili-ty to integrate change into the organisation’s operating model and culture.


References
1 Oxford Dictionaries under “fast follower”, https://www.oxforddictionaries.com/.

2 Ibid. under “market leader.”

*‘Fast follower’ refers to the noun (i.e.: Organisations that are fast followers of change), while ‘fast-follower’ refers to the hyphenated modifier (i.e.: fast-follower strategy).

 

Ms Goldsworthy and Mr McFarland are co-authors of the award-winning book—Choosing Change: How Leaders and Organizations Drive Results One Person at a Time.

IMAGE: 123RF

 

Ms Susan Goldsworthy is an international executive coach, multiple award-winning author, and former Olympic finalist with extensive global business experience at senior management levels. She is also an associate of Genesis Advisers and World Institute for Action Learning board member.

Mr Walter McFarland is founder of Windmill Human Performance and an Associate Fellow at Oxford University, Said Business School. He is the co-author of Choosing Change and the former Board Chair of the Association for Talent Development.

Copyright © 2017 Singapore Institute of Management

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Today's Manager Issue 3, 2017

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