Consulting in company transformation

and eliminating waste, building and sharing new capabilities, and rejuvenating its strategies – thus embodying aspects of both restructuring and revitalization at the same time.

Experience with organizational transformation during the past 15 years has taught us some important lessons. First of all, transformation is not just about reducing costs, improving profitability, or re-engineering. It is also about people and their concerns; it is reinventing strategies and management processes and must involve the whole organization as a social organism. It must be driven by new ideas, new concepts and a shared perception of opportunities.

22.2 Preparing for transformation

One of the first tasks of a consultant in assisting with organizational transformation is to identify just a few important reasons why the company needs to restructure and which justify an effort that is not going to be small, and in which managers and employees alike will face many difficult decisions. The general principles and methods of change management, as discussed in Chapter 4, apply; what is particular to overall company transformation is the combined impact and requirements reflecting the importance, speed, depth, complexity, risks and future consequences of the change process.

In these situations, management consultants normally help clients to deal simultaneously with two major issues: (1) preparing the organization for transformation; and (2) identifying and overcoming the resistance to change.

Preparatory steps

The consultant should start by assessing if the organization is generally resistant or sensitive to change. Change-resistant organizations constantly deny the need for change despite the influence of fast-moving external factors. While inertia takes the company in the direction that has served it well in the past, its environment moves in a different direction (figure 22.1). Over time the gap between outside reality and company position widens, and increasing amounts of energy are required to resist change. At some point, the pressure for change becomes too big and a catastrophic event occurs – perhaps sales fall off dramatically or markets suddenly dry up. Whatever the event, there are two possible outcomes: the organization either dies or some radical upheavals occur as the organization takes drastic steps to realign itself with reality. Changesensitive companies make continuous and incremental changes in response to the changing environment. They are keenly aware of their customers’ needs and competitors’ strengths and extremely receptive to new ideas. Change-sensitive organizations are also able to influence and monitor the environment rather than being controlled by it. As a result, they are poised to take new opportunities.

To cope with the transformation, it may be necessary to create certain capabilities. For example, management may be advised:2

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Management consulting

Figure 22.1 The change-resistant organization

Source: M. Hennecke: “Toward the change-sensitive organization”, in Training, May 1991, pp. 54–59.

●to create new organizational structures in which new processes can be developed;

●to establish an independent organization to develop the new processes and values required to solve the new problem;

●to acquire a different organization whose processes and values closely match the requirements of the new tasks.

In assessing organizational readiness for transformation some key questions should be answered: is this change a burden or a challenge? Is the change clear, worth while and real? Will the benefit of the change begin to appear quickly? Is the change limited to one function or a few closely related functions? What will be the impact on power and status relationships? Will the change fit the existing organizational culture? Is the change certain to happen?

To answer these questions and identify transformational needs it is necessary to do an industry analysis (characteristics, trends, key factors for success, opportunities and threats); a competitor analysis (actual and potential competitors, their strengths and weaknesses, capabilities and limitations, strategies and future moves); a societal analysis (important changes in government policy, consumer attitudes, employee expectations); and a company analysis (strengths and weaknesses; share performance; cost, quality, delivery time, reliability and service in present and potential markets; trends in market share and in profitability by product, by country, by distribution channel and by customer category).

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