Organisations operate in a dynamic environment. It is not easy for organisations to change. This is especially true of large organisations, which have to develop structures, standard procedures and systems to cope with the omplexity of their operations. Smaller organisations are generally quicker to respond, but the pressures on them are often greater. It is important for a manager to understand how to manage change. It is necessary to be alert to and monitor the factors in the external environment. Successful organisations develop organisational structures, procedures and systems which enable them to cope well with change. One approach is to build a flexible organisation which can respond quickly to any external developments. Another is to foster a culture of innovation and establish an organisation which initiates and leads new developments, anticipates future situations and helps to bring them to fruition.

An organisation exists to create value for its stakeholders. If it cannot do this effectively, then it will no longer serve a useful purpose. An organisation has to produce what its customers want. If one or more of its competitors can make its products more attractive to more of the market, then the organisation will lose customers and its revenue will decrease. With the higher wealth come greater expectations from customers. Customers no longer tolerate poor service and defective products. As well as increased competition for customers, there is increased competition for finance and organisations must work harder to provide high returns. There are market expectations about returns which mean that a company which does not meet these will have difficulty attracting investment. Management is under great pressure to maintain good returns—reasonable dividends and good stock-price growth.

How employees are treated affects how long they stay with an organisation. To retain employees, an organisation has to meet their needs. This includes not just the wages paid, but also providing interesting work, a pleasant working environment, flexible working conditions and continuing professional development. Maximising employee productivity is another area where there is ongoing change. In the
past, managers made the decisions and told employees what they had decided. This no longer works in highly competitive industries or with the new generation of employees who expect to be listened to and be given more autonomy. Even in more routine operations, there has been a trend towards multi-skilling. Recruiting new staff is a major issue for many organisations, since staff turnover rates are much higher than they used to be. Particularly in high growth industries there is fierce competition for available skilled staff.

Laws and regulations must be continually monitored to ensure the organisation complies. Regulators frequently issue new standards for products. Another recent development is the introduction of penalties for polluting water or air. Changes to trade laws and agreements can also significantly affect organisations. A new free trade deal or a reduction in protective tariffs can create a new market or destroy an existing one. Changes in taxes can make an operation more profitable or reduce the margins, depending on which way they are applied. New political developments can also offer new opportunities—such as a country opening up its trade to other countries, reducing bureaucracy or relaxing foreign exchange regulations.

In most industries, there is an over-supply of goods and services and suppliers must usually compete for custom. However, there are shortages in some areas, such as natural resources and available land, which create a sellers' market. Governments have supplier power when they are selling products or licences such as telecommunication bandwidth to broadcasters or exploration licences to companies looking for minerals or oil. A supplier may have an impact on a purchasing organisation that it supplies when it implements new technologies. The purchasing organisation which does not respond to supplier developments will fall behind in product capability and price.

Organisations may implement a successful strategy which provides good profits for a considerable time. The main advantage is that the organisation has available resources to research the market and new technologies. The drawbacks are that management often sees no need for change and becomes complacent. Then, when the run of good results comes to an end, there is no innovation and flexibility available to deal with the downturn. There is also reluctance by the staff to make painful changes when there is no immediate perceived need for such change.

There are many ways that an organisation can change. It can:

• develop new products
• implement more efficient processes
• develop the skills of its staff
• employ new channels for its products
• enter new markets
• change its structure

The main kinds of change are:

• planned change—where there is a formal process of identifying what the organisation wants to do, and setting up a project to achieve this
• emergent change—where the people throughout the organisation are monitoring and predicting developments and taking action at all levels to make appropriate change before it becomes necessary
• responsive change—where unexpected events require the organisation to adapt to new circumstances.

Organisational change is a complex and difficult issue. Unless it is done in a planned and professional way, the results are likely to be disappointing. The key requirements of a change program are:

• clear, appropriate and feasible goals
• careful analysis and planning
• establishment of conditions for success
• timely monitoring and measurement of progress

Kurt Lewin, a German-born psychologist, argued that organisational change involved three phases. The useful analogy he used to describe change programs consisting of three phases 'unfreezing-movement-refreezing'. The 'unfreezing' phase breaks down the resistance to change, and sets up a malleable organisation. The movement phase establishes the new systems or tasks; and the 'refreezing' stage embeds the changes in the organisational systems. Technology can either support or inhibit organisational change. If the technology is used in such a way that it 'locks in' aspects of the organisation (e.g. structure), then the organisation will be forced to make a choice between continuing to use the technology and the change that it would like to create. The size of the investments that organisations make in information systems often represents a significant barrier to change. Organisations often conclude that they simply cannot afford the extra cost of changes to an information system that a change would require.

According to Kurt Lewin, change is a function of the forces that promote change and opposing forces that slow and resist change (Lewin, 1951). Change forces lead to differences in the form, quality or conditions of an organisation over time. On the other hand, resistance forces support the status quo, that is, the existing state or conditions in organisations. In any planned change, which is an attempt to consciously and deliberately bring about change, managers as change agents must attempt to familiarise themselves with the supporting and resisting forces within their organisation.

The adoption of automation can enable an organisation to transform itself from a labour- focused to a knowledge-focused organisation by transferring relatively manual tasks to technology and changing the break-up of the workforce to increase the proportion of 'technology managers'. Sophisticated computer-based design systems can enable organisations to conveniently call for tenders and outsource specific production processes or even the design itself.

Ghani and Jayabalan (2000) found that in developing countries, advanced technologies did not provide significant benefits unless planned change was used to create an organisational structure and culture that could accommodate desired technological changes. Without these factors in place, the potential process benefits offered by the technology were cancelled by increased inefficiencies in other parts of the organisation.

An alternative to planned change is emergent change. In organisations where this approach is used, change is not organised and controlled by senior management. The responsibility for change is delegated to staff at all levels. With such systems, there are many more eyes and minds observing the outside world and thinking through the ways of coping with new developments. This approach does not generate large change, but proceeds in a series of small steps—which often reach the same stage as a planned major change program, but with much less disruption. There is a continuous adaptation to external circumstances. It works well when there is an educated and committed workforce; but is ineffective in organisations where employees are disaffected or poorly trained and where there is any form of authoritarian management.

Another alternative to planned and emergent change is responsive change. In responsive change, there is little attempt to predict future developments, but the organisation establishes systems which can respond quickly to changes when they occur. The structure is flexible, so that different resources and skills can be brought on-line or dropped and processes are set up so they can be altered quickly to meet new demands.

Innovation is 'the process of taking a creative idea and turning it into a useful product, service or work method' (Robbins et al. 2006: 806). Innovation is, in a sense, the step beyond ordinary change, as the organisation is implementing change which has not been tried before. Companies can cope with change by predicting the future and adjusting their processes and products and systems to be in accord with future requirements. This is planned change. Or companies can respond quickly to change as it occurs, being flexible and able to adapt quickly. However, the most successful companies are often the innovative ones - those that actually create the future.

The challenge for managers is to create an environment that encourages and stimulates employee creativity and innovation. The overall process of innovation can be managed in the same way as any other organisational activity. The process of idea creation, however, cannot be managed, it can only be encouraged. Suggestion schemes, rewards for ideas and an appropriate corporate culture go a long way to creating an environment in which all employees generate useful ideas. Management support for innovation requires some degree of decentralised authority, empowered employees and job designs that create a sense of ownership for individuals and groups.

Managers need a variety of skills to implement change. The first is leadership. Managers must be able to inspire the staff to follow them and have a clear picture of where they are headed. The second skill is communication. Too many change programs fail because of poor communication. The third skill is analysis. Unless the change program is feasible, it will fail. The fourth skill is planning. The manager has to have a good practical grounding in how to get things done, how to specify and allocate tasks, how to explain them and monitor them and how to adapt the program when things vary from what is expected. Above all, the manager who is implementing change needs persistence and focus.

Change must be measured, otherwise it is not clear what has been achieved. The measurements will show what goals have been reached and what gaps still exist between what is desired and what has been accomplished. Progress towards these goals should be monitored by taking measurements at regular intervals. Process changes can usually be more easily measured, as the efficiency and throughput can be calculated. However, when new processes are introduced or the goal is improved customer service, there can still be difficulties in identifying suitable measures.

There are many systems and approaches which organisations have used to facilitate change. Any technique or structure which enables change is an advantage in the contemporary situation where change is a constant challenge. Some of the systems which have been successful in this regard include learning organisations, flexible organisations, the fostering of entrepreneurs, total quality management, and organisation development. The focus in learning organisations is on the acquisition, sharing and application of knowledge. Flexible organisations are structured so that they can change quickly and easily. They may be the basis for learning organisations, for entrepreneurial organisations or for organisations that respond quickly to developments occurring in competitor companies.

Total quality management is a process and change management technique which focuses on increasing competitiveness and the need to achieve best practice. It includes benchmarking organisational activities against the best performer of those activities (whether they be in the industry or outside). Benchmarking enables managers to compare their operations against the best organisations and implement steps to close the gap. The aim of a TQM change program is to achieve continuous improvement in efficiencies, reduce costs, improve the quality of products/services and improve customer satisfaction. Other factors which characterise TQM include a focus on measuring and understanding processes; and breaking down barriers between departments, so that processes can be optimised across the whole organisation. In TQM there are 'internal suppliers' which provide a person or group with the means to do their job (such as information and materials) and 'internal customers' who use the outcome of an internal process. The aim of a process is to satisfy its 'internal customers', so their needs must be discussed and analysed and met.

Organisation development is a comprehensive effort to enhance an organisation's ability to solve problems and improve performance. Planned change interventions are used to improve an organisation's competitiveness, performance and effectiveness. A vital ingredient of organisation development is employee participation in the change process. Organisation development takes a 'behavioural' approach to improving organisational effectiveness. Organisation development focuses on process and outcome goals. Process goals include achieving improvements in such things as communication, interaction and decision making among an organisation's members. These goals focus on how well people work together. Outcome goals include achieving improvements in task performance. Similar to Lewin's three-phase change framework (unfreezing–movement–refreezing), the organisation development process involves three stages of diagnosis, intervention and reinforcement.