Managing and Leading Change in Organizations

A review of the sustainability of organizational development and change initiated by the management.

‘Change is the only constant in life’ or so, said an ancient Greek philosopher, Heraclitus, ages ago in the fifth century B.C.

That maxim holds good even today and will probably continue to hold good in the future as well. When we consider a business and its sustainability, change is the predominant feature that is evident. Much like an individual, an organization is also born, goes through a difficult process of survival during the initial years and then goes on to fulfill its potential and in many cases, exceed it. What makes that possible is the organizational leadership’s willingness and ability to accept change and act accordingly among others.

Every organization works within a broad niche and acquires a certain percentage of the market it operates in. Over a period of time, it either becomes the market leader or one of the top players in its niche. There is no way this can happen without a lot of effort and sense of purpose which are virtues that only the leaders of the organization can visualize and implement. In a competitive market, there is a constant pressure on the competitors to not just hold on to their respective market shares but also to grab additional market share, which is possible only when they appreciate the rules of adaptation and change in such a competitive environment.

Backward integration

One common feature in most growing companies is the prevalence of a strategy called backward integration. It’s nothing but increasing the footprint of the organization within the larger niche. For instance, when FedEx, the logistics major, decided to purchase RPS, it had the fast turnaround local shipping business in mind. This was nothing but integration backwards to enlarge organizational footprint as the FedEx management felt the need to change their approach toward small local shipments in the age of ecommerce which will control a substantial part of global logistics business in future. They knew they had to do it to sustain their business.

Backward integration is the first major decision for any successful business that has managed to come out of a difficult initial period. It is also the first major change in the approach of the said business as it begins to see the growth opportunities more positively and optimistically. However, an aggressive company could use backward integration as a tool to gain monopoly in the niche, which is not an ideal situation according to most people. These situations lead to hostile takeovers that in turn, cause uncalled for turbulence in the stock markets.

Use of green energy

We are in the era of ‘carbon credits’ which certify companies adopting different strategies aimed at environment protection and use of renewable sources of energy. This transition is not easy for a huge establishment to perform but willingness and ability of the organizational leadership often makes it possible. For massive organizations used to cheaper and more easily available energy from hydrocarbons and smokestacks, such radical shifts to green energy can earn them massive carbon credits in the form of subsidies and easier bankrolling.

To observers watching the organization from the outside, this might appear to be an easy decision, given the strong logic behind going green. However, for those running the business, it is a decision that can only be taken after going into painstaking details about how to replace the conventional sources of energy with green energy resources. Such decisions can make or break their organizations as well as their careers but if the leadership has the willingness and ability as well as the reasons to go green, nothing can stop them from making the change.

Ethical sourcing of products

In the fast evolving global economy, product sourcing is becoming increasingly localized. Many fast growing third world economies are building up huge export surpluses in their trade with western countries but there is also an intriguing side to their trading practices. In many of these third world economies there is rampant use of child labor to produce goods that are eventually exported to the West. Exposure of such dubious trade practices by volunteer organizations has caused the necessary outrage but for the sourcing company it is a new challenge and ideal to live with.

For a retailing company making huge profits through the sale of products it imports from a third world supplier that uses child labor, it’s difficult to put a stop to all such supplies overnight; more so, if the law hasn’t yet caught up with what’s going on. In such a situation, if the management can rise above petty commercial considerations and proactively decide to stop sourcing products from suppliers who use child labor, it would not just be a welcome change but will indicate high ethical standards and win the business a lot of market goodwill.

Change for the sake of change most often doesn’t make business sense. For instance, if an airline company decides to hire only former models as its in-flight crew just to make news and win headlines, and eventually price their tickets way above the prevailing market rates, it will prove to be a loss-making proposition before long. In course of time the business might end up in unacceptable losses and shut down. To begin with, the former models would only be available at much higher wages than the average flight steward, thereby pushing up the cost unnecessarily.

A look into the histories of most successful business conglomerates would show that their leaderships made the right decisions to bring in the right changes at the right time in most cases. The standard that we get to see most often is that a growing organization marches ahead on a few niches simultaneously; the company’s flagship business which operates on one of the niches, might not remain so after a couple of decades when another business in a sub-niche might take over. Far sighted leaders begin work on this kind of long term change years in advance as they are able to see the opportunities in the horizon better.