The Landscape of Change
We change, society experiences change, and businesses are forced to change. From night to day and spring to fall the world keeps changing around us. Those who fail to change soon learn to follow the leader. After the subprime mortgage crash starting in 2007 and picking up steam in 2008 the United State’s mastering of electronic money without solid business principles, the business environment of using other people’s money, and highly paid CEOs who do not have obligations to the people will need to change toward a more socialistic approach. The change is at our door step and the way in which we have perceived the world will be wiped away for something new and more conservative in origin.
“The World had changed” says Morgan Stanley’s spokesman as the Company contemplates restructuring into a single holding company 75 years after it was forced to split into the separate holding company JP Morgan and the investment group Morgan Stanley by the Glass-Steagull Act (The End of, 2008). Years of capitalism and the “free market” approach of the government has been reversed in only a few short days. The new realities may force both government and business to think in terms of long-term strength rather then daily profitability.
Long-term strength is about consolidating new markets and building a base before moving onto other growth areas. Companies may miss the opportunity to move into profitable sectors quickly but will be more likely to sustain any downturns in the market without fearing total collapse. This conservative approach is about risk versus reward and the protection of investor capital. Since investors, not managers, are likely to lose considerable resources they will be the one’s advocating for change. Management control and power will likely be reduced in order to protect investors.
In addition to the loss of unchecked freedoms CEOs and Vice Presidents have been afforded in the past, they will also be expected to be more innovative than before. Management innovation is defined as the “invention and implementation of a management practice, process, structure and technique that is intended to further organizational goals (Birkinshaw, Hamel & Mol, 2008, 825-824).This definition has at its root the fostering and improving of organizational goals and objectives. Thus the inner workings of a business and the way in which the organization approaches the business environment must change to work within new realities. That reality may be based in further government oversight and scrutiny of accounting practices.
If the objectives of the organization are well defined then management will follow those objectives. Even management won’t blindly follow the defined path unless they believe in it and want to promote it. Those who are forced to comply might follow the general principles but will curb, undermine, and twist the objectives in favor of other preferred paths. Therefore, the new reality will require more clearly written goals and objectives that have wide appeal to the management team.
To change the processes and objectives of the organization is one thing but to change the worker population is another issue entirely. It is like changing the heads direction and hoping the body will follow. Preparing the worker population for change is often difficult. It requires education, participation, involvement, facilitation of problems, support from management and honesty. Many companies haven’t been open to including their worker populations in the decisions of the organization.
Change in any organization appears to have two major components based upon the conversation thus far. Change management requires first a change in the formal objectives of the organization and then a change in the actual behaviors of the workers. Imagine a ship that plots a new course but the men continue rowing in the previous destination. This ship would likely get lost, confused, or capsize during turbulent waters. Both the rudder and the rowers must be working together. Change requires a new direction and the effort of workers to get it there.
As retirement accounts dwindle and businesses close for lack of liquidity people wait for hope. This hope can come in the form of new and viable business approaches that protect investor assets and have employee confidence. No longer can people afford the concepts of “use other people’s money”, “borrow until your credit is gone”, and “make money at any cost” when these concepts are not grounded in solid economic principle.
The new business world will require additional responsibility towards employees who are lining up at the unemployment lines, clearer direction from investors, and a more conservative approach to business models. The new approaches will ensure that growth continues at a pace that will both be sustained over the long run as well as consolidated for security. Wasteful and risky investments will no longer be the norm in the new global economy.
Birkinshaw, J., Hamel, G. & Mol, M. (2008). Management Innovation. Academy of Management Review, 33 (4), 825
The End of Wall Street (2008, Sept 23). Wall Street Journal, 2011 (71), A28.
