There might be difference in magnitude or duration, but like living things and products, organizations are changing through the life cycle of introduction, growth, maturity and declining stages. Have not there been such uncertain process, the planning and management role of managers could have been very easy and trivial. Therefore, the best quality of an effective management is the ability to predict these changes, identify the cause changes and make decisions that strengthen the growth and maturity stages and delay or prevent the declining stage.
Many factors are contributing to organizational changes but one area I am focusing in this blog is the external pressure.
As discussed in Robbins, Coulter and DeCenzo (2017), one external factor that triggers change is market competition. Inability to recognize the fierce competition coming from Apple and Google was the major contributing factor for the downfall of Blackberry. Until 2010, Blackberry was holding more than 40% of smartphone’s market share but today the share is 0% because its leaders were resisting and slowly accepting the growing trend of consumers’ preference for touch- screen than keyboard option (Dunn, 2016).
Technology is another powerful predictor of change. With his seminal work on disruptive technology, Professor Clayton Christensen, of Harvard Business School, has predicted that traditional colleges and universities will be out of business unless they restructured themselves with the growing trend of online education system (Lederman, 2017). As the cost of traditional colleges are getting expensive and cheaper online schools are mushrooming everywhere, all major universities including the Ivy Leagues are now embarking on the online learning bandwagon so that they were able to prevent or delay their failures.
Government laws and policies are additional push factors for change. The Trump administration’s policy on trade is one area to watch if it may affect cost of goods and consumers’ price both at domestic and international markets. Trump is planning to impose 20-40% tariff on major trading partners such as China, Mexico, Canada, EU and Japan where the US trade deficit is reaching at $621 Billion in 2018 (www.statista.com) and the target countries are also threatening to retaliate reciprocally.
Businesses must understand that an increase in import tax on both sides of the trading partners will make supply chain costs very expensive and hence it makes consumers’ price less competitive. Effective managers are those who forecast this risk and make decisions to prevent business declines. Some best practices managers need to implement are maintaining sufficient essential inventories necessary for core competence activities; diversifying customers’ bases and renegotiating with new suppliers; spending less and setting aside extra liquid capital and preparing for a smart pricing strategy.
Overall, external pressure is beyond the control of the organization and hence businesses have no power to avoid it. The only option they must prevent its impact is through predicting the risks associated with the external pressure. To that end, establishing a well-developed data analytics and prediction system is a crucial step every business should adopt.
Dunn, Jeff. “Here’s How Dramatic BlackBerry’s Fall Has Actually Been.” Business Insider. Accessed January 31, 2018. http://www.businessinsider.com/blackberry-phone-sales-decline-chart-2016-9.
Lederman, D. (2017), Clay Christensen: Doubling Down, retrieved from https://www.insidehighered.com/digital-learning/article/2017/04/28/clay-christensen-sticks-predictions-massive-college-closures
Robbins, Coulter and DeCenzo (2017), Fundamentals of Management, Pearson Education Inc. 10th edition, USA.