What are the key elements of change?

             It is the goal of every top level executive to enhance the common awareness of change in their company in order to be better lead their organization when faced with change. As executives, we focus specifically about change in the business environment, but the resultant discussions will be applicable to all areas of life. In order to understand Change, we need to explore Change Management as it impacts our day-to-day work environment. We need to take a step back and analyze why we initiate change programs, the resistances we encounter to change, and the ways to better enable our change efforts to yield greater results. It’s important to recognize up front that Change Management in business is the movement of people, processes and technology from the current state to some future, but not always better, state.

             To start, let’s all agree that Change is a fact of nature. As Charles Darwin once stated, "It is not the strongest of the species that survive, nor the most intelligent, but the one most responsive to change." But in the 21st Century business world, have we accepted change too often? Are we willing to change just for change sake? And how does that impact the effectiveness of our organizations? With the swift changes in technology, the ever increasing demands of more savvy consumers and the globalization of nearly every industry, how we manage change, and ultimately the organizational implications resulting from these changes, make getting answers to these questions critical to the success of modern-day businesses.

             Just like Darwin’s general theory of evolution which says that complex life forms have evolved overtime from more simplistic life forms, so too do more complex businesses grow from more simple businesses. Darwin’s theory of natural selection includes the accumulation of several beneficial mutations; however, natural selection is a slow, gradual process. In business, change occurs with near break-neck speed. The end results are the same though, only beneficial changes will help a company to survive and grow into a more complex organization.

             As with the evolutionary model, changes occur to an organization through several external and internal factors. Companies are bombarded with Sociological, Political, Economic, Technological and Environmental forces that impact the necessity for change. Just as two storms can converge to form a ‘perfect storm’ and wreak havoc on an ecosystem, multiple external and internal forces can converge on/within a business to wreak havoc on efficiencies, profits, and personnel. In order to be prepared for these cataclysmic events, businesses need to understand each of the forces in more detail in order to react appropriately.

             A common tool used to identify and evaluate the external forces impacting on a particular market is to evaluate the Sociological, Technological, Economic, Environmental and Political factors (STEEP) that impinge on that market. STEEP helps to provide an added level of depth to a corporation’s risk analyses by:

              Identifying the relative strength of each factor and consider how it will shape the strategic change approach in the future

• Identifying likely fluctuations to the STEEP landscape
• Developing conclusions as they relate to the potential change management strategy 

Figure 1

      In understanding the drivers of change, it is wise to apply the STEEP Analysis as shown in Figure 1 above. With this tool we can generate a checklist to brainstorm all of the known or unknown forces that could impact the organization’s change effort. This will allow management to properly classify and quantify each force and identify their effects on the change management strategy. A few examples of disruptive forces are:

Sociological:

• Strikes / work disruptions
• Working condition changes (e.g.: Bangladesh garment industry)
• Pirating / terrorism attacks

Technological

• New technological innovations that threaten or enhance current business processes and/or products
• New technology adapted by suppliers and/or customers requiring shifts in company technologies (e.g.: Apps, web-portals)
• Social media highlighting positives and negatives of key organizational personnel or the company as a whole

Economic

• Economic growth or decline in existing markets
• Turnover, profit and growth shifts
• Investment levels in the infrastructure in the countries that the company currently and potentially source or manufacture goods
• Changes to export/import duties/quotas.  Are they likely to change over the next 3 to 5 years? (These can add dramatic cost increases to moving goods around.)
• Economic conditions of the market shifting (monopoly, competition etc.).
• Economic conditions of customers and/or suppliers market shifting (monopoly, competition etc.).
• Currency instability and fluctuations
• Shortages of key commodities or disruption to supply

Environmental

• Natural disasters severely or even partially impacting trade (e.g.: volcanic ash disrupting flights, earthquake / tsunami disrupting services and transportation)
• Changes to the supply market’s current environmental issues / concerns (e.g.: air quality in China)
• Man-made environmental disasters severely or even partially impacting trade (e.g.: BP Gulf Oil spill)

Political

• Government support or blockage of exports and imports
• Stability of existing government or the overthrow of existing government
• Changes to taxation laws
• Changes to laws governing compensation for stolen goods or damage to company property
• Trade barriers imposed or relaxed.  Changes in the current trading relationship between countries?  (i.e. China and GATT)

             It is important to note that some of these disruptive forces might span more than one STEEP classification. Additionally, some of these disruptive forces can spark a cascade reaction across other STEEP classes. It is necessary to not focus on only one classification but rather be aware of the interaction and balance of all 5 classes.

             Whatever the cause or whatever the impact, the old adage of “Better safe than sorry” still holds true today. Anticipating issues before they impact businesses allows leaders and managers the ability to prepare and design plans for change. Change will always be a part of life. Understanding “Why” change occurs is the first step towards creating a successful change program within your business.