Applications of Management of Change
The Lufthansa transformation story has some very good implications for the management of change. It is reflected form Pettigrewˇ¦s framework for analysing change (1987). The basic argument is that there has to be a fit between context (why), content (what) and process (how) of the change management process. The following have been learnt that has general applicability to problems of managing change.
We have learnt from the case that managers are subject to strong environmental pressures and constraints. Often, any firm lack of such responsiveness would face similar crisis as Lufthansa. Firms must understand that they are not the only one company in the environments. Rather they should appreciate the idea of the firm-in-the-sector that anyone could influence the others with their activities in the same sector. Yet, firms could do little to the changes in their sector as the sector is also changed with the wider environments. It implies that in order to survive, firms should understand what the selection mechanism of their environment is, and how to adapt with a co-evolutionary approach to deal with such environmental pressures and constraints.
However, understanding environmental context is not sufficient to manage the change. We have learnt from the case that national differences can also reduce the responsiveness of firms due to cultural boundary. In the case, Lufthansa was less responsive to the external environments. It is not because they do not want to change. It is often the culture that limits the motivation to react fast. German firms are with high technical skills so they are more adapted to incremental change (predict and plan for change) instead of drastic change. There is also strong pressure to bind firms to the institutional rules of game and internal inertia, sense of urgency is therefore reduced and firms are less likely to respond fast.
We have also learnt that understanding internal context is crucial to managing change more effectively. It is more about the power and politics as change might affect the interests of individuals. Usually change from top management is about exercising legitimate power that brings collective goods for all. However, people like to live in routine and norms, so any change would stimulate resistance. Barnard (1938) argues that this is the constitutional order, which in effect is the system of rules to which both managers and other employees consent previously. Managers must understand how to abide by this constitutional order to show good will and get consensus from all the groups. As long as consent is in place, the legitimate power will be positive to coordinate the activities of individuals. Hence, in the management of change, it is important for managers to be clear about the sort of power which they are seeking to exercise, the inherent limits to that power and the power of other groups in the organisation to oppose and resist.
We have learnt that the content to change is greatly influenced by the context, or saying differently, firms must change the content to fit the context in order to survive. The Lufthansa story displays that how a functional structure (global firm) is not fit well to the dynamic environments. Therefore, choosing a correct structure is crucial to the requirements of the environments. Moreover, changing structure would also change the culture and processes. Managers must deal with care and understand the inter-relationships. Finally, different content have different implications for the change management. For example, to effect change in a multinational is more difficult than a global firm because of considerations about national differences.
We have learnt that effective change management requires skills and interventions in dealing with the process to achieve commitment. From the discussion of context above, change process is strongly related to issues of power so that management should anticipate how much resistance is expected. Proactive management should manage well with uncertainty and ambiguity associated with the change in order to reduce resistance. This needs certain crafting skills from the management in the change process, such as communications and negotiations. As we can see from the case, there are pressures from the internal inertia (like the routines and norms) and the different power from different groups (departments, employees, unions, etc). Lufthansa has used different intervention strategies to make the change process effective, and fit into the context and content the management has set. Hence, process is often the greatest challenge to the top management to balance individual interests and lead them to the goals of the change.
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