Modern organizations are faced with new challenges in their strategic management processes. Among these is the presence of rapid, volatile and discontinuous change. This challenge influences decision making in the organizations. If not addressed efficiently, this challenge may harm strategy management in organizations. CEOs need to identify and address such issues effectively.
In recent years, the world has experienced numerous changes in its economic, social, political and technological orders. This dynamism has impacted businesses in a variety of ways. However, what stands out is the need for managers to adapt. They cannot continue operating organizations under the old business practices. They need to adjust their management practices. These changes are needed for coping with the rapidly changing external environment, and therefore make profit and grow the business. In that respect, CEOS play a critical role in an organization’s management processes. They therefore need to provide adequate leadership in order to provide maximum value to shareholders. In this essay, it will be seen that they need to take adequate, apt and sensible measures to achieve this. CEOs need to embrace various business strategy models for assessment of the external environment and its effects.
Rapid, volatile, discontinuous change
The modern world is characterized by dynamism across the contexts of nation, region or globe. Current trends in globalization have only served to intensify this effect. Modern organizations are faced with multiple changes that take place abruptly. These changes can occur in any field. Changes may take place within the economy, technology, the natural environment or even politics (Sundarasaradula et al., 2005). For example, political upheaval in a key trading nation affects organizations through a lack of resources necessary for production. If inadequately prepared, organizations may find themselves in a difficult position hence closing down.
However, efficient strategic management under the leadership of CEOs can provide opportunity for organizations during such events. To achieve this, organizations need to develop analytical measures for mitigating and understanding the effects of these changes. However, it is important to note that such occurrences are spontaneous and very difficult to predict. The key role of leadership within the organization is to keep up to date with current trends. Organizations need to maintain the same rhythm as their respective external environments (Vasconcelos and Ramirez, 2011). This acts as a source of competitive advantage as the team is able to remain one step ahead. It also acts as a source of continuous growth for the organization and its shareholders. Similarly, the extent of globalization provides an opportunity for organizations, despite its contribution on discontinuous change.
Where RVD change fits within the Strategic Management process
Business strategy serves provides guidelines for the direction and objectives of the organization. It therefore plays a critical role in the operations processes of an organization. As a result, managers need to develop efficient strategies for responding to external change that is rapid, discontinuous and volatile. Strategy management is the primary means for dealing with outside change. In that respect, management is tasked with observing external trends through conducting analyses on a regular basis. They can utilize tools such as Porter’s Five Forces to that effect. Similarly, SWOT analysis can be utilized for analysis of the operating environment, in relation to external changes. Strategy management provides an updated strategy on how such issues can be dealt with (Teece, 2010). It enables managers to upgrade their business policies in order to remain competitive.
It is important to note that strategy management is usually focused on all stakeholders, during the development of new policies. It is not limited to the objective of increasing shareholder value and wealth. It involves consideration for investors, customers, employees and other stakeholders. Change can also take place within the business. An example is the development of new technology. Organizations need to adopt these measures in order to remain competitive. In that respect, an organization’s strategy management would need to adopt new information systems as part of its policies (Dong, Liu and Yin, 2008).
Models used for evaluation of RVD change and its impact.
Different industries are able to utilize various business models alongside their strategy management policies. These models are used for evaluation of the business implications caused by rapid, volatile and discontinuous change. Firstly, management may utilize Porter’s five forces to conduct external analysis of the organization’s business environment (Vasconcelos and Ramirez, 2011). For example, the analysis may be utilized to assess the threat posed by the entry of new competitive entities within the business environment. Similarly, this model may be used to assess the threat of competitors and substitute products within the business environment. Management may also utilize the PEST analysis model to the same effect.
Secondly, management may utilize the VRIO analysis model. This strategy is useful for analysis of change within the internal operating environment. For example, management may assess organizational systems such as IT. The Strategy Alignment model may be utilized to highlight whether internal business systems are efficient and compatible (Dong, Liu and Yin, 2008). It is useful in sectors such as Finance, where information systems need to be aligned to business strategy (Aversano, Grasso and Tortorella, 2013). Value change analysis may also be used for identification of internal change factors. Thirdly, organizations may adopt the Business Rules Group model. This tool enables management to assess efficiency in their business strategies. In essence, it provides them with a decision making tool as it highlights the suitability of strategic management policies. Other organizations have implemented the Vision, Mission, Objectives, Strategies and Tactics model. This framework enables managers in these organizations to identify the implications of volatile change on their business strategies (Rocha, 2013). However, this model enables management to achieve greater insights in their business strategy. This is seen through the breakdown of the model into five different categories. Organizations are therefore able to determine the extent of external changes on their business activities through implementation of these models.
How CEOS should respond to such change
CEOs have the most important role in an organization’s management processes. They therefore maintain the direct role of introducing and implementing efficient strategies. This is necessary for maintaining the competitiveness of the organization in a dynamic global market. CEOs need to assess the effects of discontinuous change as part of their decision making roles in the strategic management process. They need to actively prepare for change within the organization. For example, CEOs need to tackle discontinuous change immediately through selection of efficient and innovative solutions. These decisions need to be carried out on the basis of change (Teece, 2010). As a result, it is seen that CEOs and the management team may alter the organization’s mission and vision objectives. This is a necessary aspect of remodeling the organization alongside discontinuous change.
Management teams may also utilize other interventions in the efforts of fostering change within the organization. For example, they may use training and development interventions. These efforts may be utilized for fostering creativity in the organization. This is necessary for responding efficiently to discontinuous change affecting the organization. Top management teams need to develop experience based systems that encourage creativity and innovation within the organization. Analysis of the rational model highlights that CEOs and top management teams may not be able to keep organizational processes on track (Teece, 2010). In the efforts of challenging this, management teams need to maintain consistency and dedication to their rational strategies as they tackle organizational change.
CEOs may also tackle discontinuous change through the adoption of new technologies within their organizations. They need to demonstrate the significance of new technology to lower level staffs (Schwery and Raurich, 2004). In that respect, new information systems need to be updated regularly in accordance to internal and external organizational needs (Aversano, Grasso and Tortorella, 2013). Similarly, managers are tasked with developing an appropriate corporate culture within their organizations. The culture should be dynamic and flexible to discontinuous change. Similarly, it should provide support to strategic change in the organization. CEOs also need to carry out analyses of their internal and external working environments. This is necessary for ensuring that management strategy is efficient to business process. They need to adopt models such as PEST analysis, Porter’s Five Forces and the SWOT analysis as they assess their internal and external environments.
Alternatively, they can focus on specific threats. An example is the emergence of new entrants within their business environment. Similarly, it is necessary for CEOs to adopt a regional/global perspective in their policies (Vasconcelos and Ramirez, 2011). This is necessary for ensuring that business strategies are applicable across different markets. Growth is a core aspect of business policy (Sundarasaradula et al., 2005). In that respect, it is necessary for managers to carry out sufficient research on potential threats. Similarly, they should carry out research on the probability of loss. As part of their change strategies, management also needs to ensure the competency of their staffs. Managers may carry out assessment of their employees based on their knowledge as well as other roles within the organization. All these efforts are necessary for ensuring the success of the organization, as it embraces change. Efficient policies enable CEOs to maintain competitive advantage in their organizations.
Evidence of CEO responses
Numerous organizations have been able to implement efficient policies thanks to good leadership from CEOs and top management. This has enabled them to cope with rapid, volatile and discontinuous change within their respective external business environments. A good example of this is Lego, which is a Danish toy manufacturer. It is one of the top toy manufacturers in the world. The organization has been able to adapt to discontinuous change in its global operations. Change in the toy industry is dramatic, similar to the fashion industry. Toys are usually popular for a few years, and need to be discontinued alongside market trends. However, the organization has been able to remain competitive for over 50 years. This has been possible thanks to efficient policies from CEOs and their respective management teams. Their strategy has been focused on maintaining the appeal of Lego products to their target market.
However, other managers have failed to respond efficiently to external trends. It is important to understand that not all executives able to understand the need to changing their business strategy when faced with discontinuous change (Sundarasaradula et al., 2005). For instance, the smartphone technology industry is characterized by volatile change. There is a constant threat of new competitors and products. An example of an organization that has failed to develop efficient management policies is Blackberry, A Canadian firm. The organization had long maintained control over the smartphone market. However, it was unable to respond to products such as Apple’s iPhone. This is attributable to the management’s inability to create a proper product development strategy. They ignored the touch screen market while focusing on handsets equipped with physical keyboards. Similarly, they lacked strategies for mitigating the effects of new entrants in the smartphone markets.
CEOs are able to analyze discontinuous change through the SWOT framework (Schwery and Raurich, 2004). It contains both internal and external factors affecting the organization. The objective of strategic management policies is to develop strong competitiveness within organizational activity. Similarly, this should be reflected through higher than average returns. A good example for observing successful CEO responses is therefore its profits, when compared to other competitors. This is also seen in the case of Lego, as it has achieved above average returns for shareholders. Conversely, poor competitiveness and declining profits indicate failure of CEOs to respond effectively to discontinuous change (Schwery and Raurich, 2004). One of the reasons for these is the view that discontinuous change presents threats and has no opportunities. This perspective limits the management’s appetite for risk in the organization. Similarly, inconsistency in strategy results in ability to respond to such change. These explanations are well illustrated by Blackberry in the smartphone market.
Recent decades have been characterized by rapid, volatile and discontinuous change. These effects have exerted pressure on business organizations. They have increased complexity in the markets while creating new threats and opportunities in the process (Vasconcelos and Ramirez, 2011). It is therefore necessary for managers to align their business strategy with the emerging organizational needs. They will need to update their strategies such that their organizations remain or improve their competitiveness.
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Schwery, A. and Raurich, V. (2004). Supporting the technology-push of a discontinuous innovation in practice. R\&D Management, 34(5), pp.539–552.
Sundarasaradula, D., Hasan, H., Walker, D. and Tobias, A. (2005). Self-organization, evolutionary and revolutionary change in organizations. Strategic Change, 14(7), pp.367–380.
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Vasconcelos, F. and Ramirez, R. (2011). Complexity in business environments. Journal of Business Research, 64(3), pp.236–241.
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