For companies to survive the fierce market competition, they must reform their management systems in line with the times. Therefore, in this article, we will explain “change management” that leads management reform to success. Please refer to it if you are a company aiming to build a management system that is in line with the new era.
Table of contents
- What is management reform?
- Common points of companies that succeed in management reform
- What is change management that leads to successful management reform?
- The basics of change management “8-step process of change”
What is management reform?
Management reform refers to decision-making and actions to change the management system and business model to improve the corporate value of the entire organization. Management reforms include “group management reforms” aimed at optimizing the entire group company, “corporate management reforms” aimed at corporate reforms, and “business management reforms” aimed at strengthening the competitiveness of businesses. It is classified into four areas called “Functional Management Reform.”
Since the IT revolution, digital technology has progressed at an accelerated pace, benefiting from which various industries have achieved significant development. However, the development of the market is based on the principle of fierce competition, and for companies to survive in the ever-intensifying market competition, they must break away from their old management systems. Coupled with Japan’s social problems, such as the declining population, rising aging rate, and declining working-age population, the promotion of management reforms has become an urgent issue for many companies.
Common points of companies that succeed in management reform
Bringing changes to an organization’s management structure and business model is never easy. Although many companies are working to launch new businesses or improve and expand existing businesses for management reform, the reality is that there are not many cases of success. So, what kind of measures did companies that succeeded in management reform take?
First of all, one of the characteristics of companies that have succeeded in management reform is that they have established a dedicated team to promote the reform. And leadership from before the reform effort also has a great impact. A company that succeeds in management reform is characterized by a leader who presents a clear vision and philosophy and promotes reform while involving employees. In other words, to succeed in management reform, it can be said that “a project system that promotes reform” and “strong leadership that involves employees” are required.
What is change management that leads to successful management reform?
Change management is a management method that aims for management reform by aligning not only management but also all employees. In modern times, market changes are accelerating along with the development of technology, and for companies to continue to exist, it is necessary to flexibly change according to the times. However, humans are creatures that instinctively dislike change, and have a psychological effect called “status quo bias” that seeks to maintain the status quo by avoiding the unknown.
To achieve a drastic reform of the management system, not only the management but also every employee must work together to reform the management policy and work system. Therefore, in change management, we create an environment in which individuals can accept management reform initiatives while promoting strategic reforms by systematized steps.
Change management taxonomy
Change management has three areas for innovation. Below, we will explain each of the three areas: “individual unit”, “project unit”, and “organizational unit”.
1. Personal unit
Individual change management is an approach that promotes reform while encouraging change for each employee. Since the attitude and resistance to change vary greatly among employees, it is necessary to determine how to approach it and whether it will be accepted.
2. Project unit
In project-based change management, change is promoted at the specific project or team level, which is a collection of employees. Clarify the elements necessary for reform on a project-by-project basis, share with all members what kind of initiatives will lead to management reform, and encourage change.
3. Organizational unit
Organizational unit change management is a management method that promotes reform of the management system itself from a macro perspective such as market analysis, demand trends, and economic conditions. We will comprehensively analyze all business activities, including financial accounting, production management, human resources, purchasing, and logistics, and promote reforms at the organizational level.
The basics of change management “8-step process of change”
For change management to be successful, it needs to follow the right framework. A representative framework is the “eight-step process of transformation” advocated by John Cotter, professor emeritus at Harvard Business School. In the 8-step transformation process, change management will proceed according to the following process.
1. Increase awareness of danger
For the entire company to work together to advance management reforms, it is necessary to understand why it is necessary to reform the conventional management system. Without understanding the risks of maintaining the status quo, it is difficult to understand the need to change management. It is necessary for all employees to understand the necessity of change by showing diversified and sophisticated consumer needs, changes in social conditions, and the gap between the company’s management vision and the current situation.
2. Build a solidarity team
As the saying goes, “the whole is better than the sum of its parts”, by gathering excellent people and forming a team, you can achieve results that exceed the capabilities of each individual. Therefore, human resources with leadership and project promotion skills are indispensable for the success of a large project called management reform. It is necessary to select personnel who have both the authority and aptitude to lead management reforms, taking into consideration past performance and prospects.
3. Formulation of vision and strategy
This is the phase in which the company clarifies its vision for the realization of management reforms and incorporates it into concrete business strategies. By imagining the ideal state of your company and indicating the direction in which it should proceed, you can smoothly proceed with management reforms without hesitation. A vision that is too ambitious is unrealistic and may lead to a decrease in employee motivation, so it is important to formulate an achievable vision.
4. Shared vision
Once the vision for management reform is decided, the next step is to share it with all employees. By sharing the vision for management reform and the ideal state of the company, and thoroughly disseminating the strategy to realize it, the direction in which the organization should go is determined.
5. Encourage spontaneous action
No matter how lofty a vision you envision and formulate a sophisticated business strategy, it is impossible to realize management reform if it does not lead to realistic actions. Measures such as listing actions that will lead to the realization of the vision and introducing a system to evaluate voluntary actions are required.
6. Achieve short-term results
To realize management reform, it is important to set not only long-term goals but also short-term goals and to repeatedly experience small successes by achieving those goals. Since it takes a certain amount of time to realize the grand vision of management reform, accumulating short-term goals will help keep employees motivated.
7. Establishment of results and realization of further reforms
Management reform through change management is not something that can be completed in one go. Based on the short-term results achieved, hypotheses are formulated and verified, and the PDCA cycle of “Plan”→”Do”→”Check”→”Improvement” continues to improve. is required.
8. Embed change in company culture
To realize management reform, it is necessary to establish the process up to this point as a corporate culture rather than a temporary one. We will systematize change management and implement measures such as promoting the development of the next leader and successors and establishing change as a corporate culture.
Management reform refers to decision-making and actions to reform the organizational structure itself to improve corporate value. By following the 8-step transformation process advocated by John Cotter, you will be able to strategically reform your management. By all means, please use this article as a reference and work on promoting management reform based on your vision of what a company should be.