Determining the Need for Change in an Organization
The world we live in is in a state of perpetual change and progress. As the lives of people gradually change, so do their expectations and demands as consumers. This means that all markets are constantly shifting and changing, and the most successful companies are the ones that can change and adapt alongside, or better yet, drive the change in the market. While this seems clear, undergoing significant change is not always an easy process, so itâ€™s important to be able to determine if and when large-scale change is actually needed.
Here are a few factors that can help you determine if you company needs to change:
Every organization has its objectives, and it also needs to measure how well itâ€™s performing in comparison to them. As you could say that the main reason for an organization to exist is to become a financially sound organization that can survive on its own, itâ€™s easy to see that if it cannot make money, itâ€™s probably underperforming. If a company is not performing as expected or desired, it obviously needs to change to rectify the situation, and to elevate its performance to a competitive level.
Encountering Unpleasant Surprises
If a company and its management are regularly surprised by industry news or unexpected obstacles, there must be a gap between the way the organization sees the market, and the way the market actually is. This is a very worrying symptom, and is one of the main reasons businesses that have been around for while fail. This requires decisive action right away. It means that the organization is not properly positioned strategically, and that it is in dire need of fundamental change to become aligned with the market once again.
Competitors Are Doing Better
Every company should strive to become the market leader, and if there are rivals that are outperforming it, it means itâ€™s not doing its best. While smaller companies in markets dominated by bigger players can thrive for extended periods of time, this can rarely stay permanent. Any business that wants to ensure its long-term survival needs to constantly strive to improve its market position. If your market share is not increasing reliably, it is bound to start dwindling at some point, so taking decisive action as early as possible is the only way to go.
One mistake companies make is that they are focused on their immediate competitors, and not scanning the wider business sector to see who could replace them.Â Taxi drivers were not looking at Uber, hotels were not looking at AirBNB, and digital cameras were not looking at cell phone manufacturers.
There Are Inefficiencies
Any inefficiency that exists within a business is something that is making the business less competitive and less profitable. This is why any inefficiency is a problem that needs to be remedied as quickly as possible for the company to be able to remain competitive. No organization can remain successful without being more efficient than its competitors, or stands to be at a disadvantage.
As the world is changing, there are constantly new markets and niches opening up, and new opportunities presenting themselves for the taking. When new potentially advantageous opportunities are discovered and identified, finding a way to take advantage of them should be a top priority. In these cases, triggering internal change so they can be seized upon is the only logical thing to do. On top of this, companies should constantly be looking for new opportunities to take advantage of new markets to enter. When conditions to do this are favorable, change should be welcomed. Often these opportunities show up during difficult times, so the company ready to strike during down times is in the best situation to succeed.
As new technologies emerge, they present opportunities for doing things in a better way. If there are new technologies that could reliably make a business more efficient in one way or another, it is usually a very good idea to invest the time, effort and resources in adopting them. Those technologies might vary from new production materials, to new more efficient ways to communicate and share data. Whatever the technology might be, if it can really benefit the organization in the long run, it should be pursued wholeheartedly. It is also a reason why employee turnover increases, when they realize that the company is not keeping up with reliable and proven technology changes.
While reading the list of factors above, you will notice that most organizations in the world probably qualify for at least some of these change scenarios. Most of the time, some level of change is always needed. The businesses that tend to do best are the ones that have openness to change ingrained in their company culture, which allows a business to stay competitive in an ever-changing market.
Now that you’ve decided you’re ready for change, learn about Kotter’s 8 step process for leading change >>>