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Managing structural change.

All of us have been reading, writing and hearing for more than a decade now about the fundamental structural changes that have occurred in the global economy, the North American metalcasting industry, and in every major market and competitive situation. But the practical implications of those new realities for CEOs remain largely unexplored, so they are taken up in part here.

First is that the tried and true tools CEOs have used to define and carry out the task of managing--like strategic planning--no longer apply as they once did. Even the value of this most important management tool has been called into question lately, as the best plans seem rarely to elicit an adequate organizational response to the dramatic changes that have occurred over the past 15 years.

This is so in large part because the planning discipline grew out of a 30-year period characterized by steady growth and both economic and competitive stability. But that steady-state business environment is history, and so is the job CEOs once clearly understood and enjoyed.

Thus, a second implication is that CEOs can no longer be merely transactional managers who put out fires in the plant, exhort the sales force, consider capacity expansion and otherwise manage the day-to-day transaction of business. Today, CEOs need to be transformational managers, where their number-one priority is transforming their businesses from one that succeeded in the steady-state environment of the past to one that can succeed in the new realities of doing business in the 21st century.

A third implication of structural change is that a new branch of strategic planning--change management--has emerged to help CEOs transform themselves, their jobs and their companies. Simply put, change management is a process whereby businesses can be transformed--from the inside out--to one which can adapt to, align itself with and succeed in its changed business environment.

Change Management

The best way to think about change management is as the flip side of the strategic planning coin. Whereas strategic planning's traditional focus has been outside the business and primarily on customers, change management's focus is inside the business--on the attitudes, assumptions, policies, procedures and culture that cause organizations to operate as they do and, in spite of even the best strategic plans, as they always have.

In the context of structural change, it is these largely unspoken assumptions and unacknowledged conclusions about the past which dictate what is possible for the future.

Therefore, change management and the CEO as transformational manager arise out of the next implication of structural change: that companies cannot muster an organizational response proportional to the changes that have occurred over the past 15 years until everyone understands that significant change is required not just in the strategies and tactics to ensure improved financial results but also and as importantly in people's attitudes, skills and behavior. Simply put, the corporate "context" that assured survival and success for so long has outlasted its useful life, and must be updated.

Another implication is that to make this cultural change happen, CEOs need, first and foremost, to lead their management teams on a formal look back and look inward. Only after a management team clearly sees how and why its company has become what it is today will a "better way" for the future become possible. And only if an organization fully appreciates where and how it has been can people begin to see their obsolete behavior as inappropriate in the context of a changed business environment.

Changing a corporation's culture can be very difficult and time consuming, which points to yet another implication of the new realities of doing business in the 21st century. And that brings us around once again to change management and strategic planning as the CEO's top priorities.

Companywide Direction

A key tenet of change management for the CEO is to remember that the organization needs to fully understand and buy into the company's new strategic direction--that competent employees must see and come to own the facts and rationale behind any major change, as well as the methods used to gather and shape the supporting data, so that they can make the calculations and form the conclusions for themselves.

This is where a heavy dose of solid market research and the discipline, teamwork and shared enlightenment inherent in the most advanced forms of strategic planning are also indispensable. Market research will provide the external data and information essential to developing understandings of what "should be" and of the behaviors that are in line with that ideal and those which are not. Strategic planning provides the involvement, structured decision making and purposeful action that turns a plan into reality.

In our work with metalcasters and their suppliers over the past decade, we have seen time and time again that plans in and of themselves cannot accomplish anything, except of course occupy space on a bookshelf. Clearly, even the very best strategic plans are worthless without organizationwide internalization of all that has gone into them and sincere implementation of all that comes out of them.

That is precisely why Eisenhower said: Plans are nothing, planning is everything. And this is where the internal perspective of change management is vital to the CEO's job of successfully transforming his or her business from one that was successful in the past to one that can grow and thrive in the years to come.
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No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1994, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:change management for CEOs
Author:Gibson, Tom
Publication:Modern Casting
Date:May 1, 1994
Previous Article:Consider marketing as a contribution center.
Next Article:A look inside Robar Industries' recovery.

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