A careful review of the strategy content literature reveals that the essential quality of a strategy is its originality since originality allows a firm to outperform its rivals. Originality can take the form of a first-mover advantage, a unique position in the market, a unique bundle of resources, or a unique dynamic capability (Gibbert, 2010). Strategic changes, are directed at creating a new type of alignment – a new fit between the basic set-up of the firm and the characteristics of the environment. While operational changes are necessary to maintain the business and organizational systems, strategic changes are directed at renewing them. Some parts of the firm’s business system and organizational system can be preserved, while others need to be transformed for the firm to stay up-to-date and competitive. This process of constantly enacting strategic changes to remain in harmony with external conditions is called ‘strategic renewal’. We speak of strategic change when fundamental alterations are made to the business system or the organizational system (bob de Wit, 2010). Siemens is a German-based multinational in the electronics and electrical engineering industry. While the German market barometer rose slightly over 25% from October 1 to September 30, 1999, Siemens’ stock surged over 90%. This is true for the capital market bubble, which burst spectacularly as expected and nor can Siemens escape these effects and their resulting pressures”. During the second quarter of 2001, however, ”dark clouds gathered over the global economy”. The most important reasons were. the world economy declined in the aftermath of September 11.
The project studied at the Siemens company called the ‘Top Plus Program,’ sought to improve business excellence by focusing on the three so-called ‘Top Plus Fields: productivity, innovation, and growth. Siemens made considerable progress in the three top fields. In terms of the first Top Plus field, productivity, the company had generally achieved productivity gains of between 3 and 4% a year before the program was conceived. Since the implementation of the Top Plus Program, however, the company accumulated productivity gains totalling nearly 40%. In terms of the second Top Plus field, innovation, the company also made considerable progress. In the early 1990s, Siemens registered an average of 3000 inventions per year and in 2002 the number had grown to more than 8000 per year. In terms of the third Top Plus field, growth, the company saw new orders climbing by 20bn Euro to nearly 60bn Euro (Gibbert, 2004).
The Top Plus Program started by delineating industry boundaries, particularly the boundaries of the electrical engineering and electronics industry, and for Siemens to operate within these boundaries. Siemens focused on two key dimensions when defining industry boundaries: customers, and competitors. The most important of these dimensions was the customer. Siemens had established a sophisticated approach, called ‘Pictures of the Future,’ to define industry boundaries using the customer dimension Pictures of the future were detailed studies presenting Siemens’ visions of the five key corporate areas (Information and Communications, Automation and Control, Power, Transportation Systems, and Medical Solutions) (Gibbert, 2004).
The Top Plus Program featured a special pointer dedicated to concentrating on core competencies. A key task in concentrating on core competencies was that of harmonizing multiple technologies.
The company’s focus on transcending, rather than beating competitors. As the following quote by Siemens’ founder, Werner von Siemens shows: ”A key reason for the blossoming of our factories lies in using our own innovations as their basis (Gibbert, 2004).
Perspectives on Strategic Change
there are two approaches that leaders might pursue in the implementation of strategic change. These are perspectives of discontinuous alignment or continuous alignment. Periods of relative stability are interrupted by short and dramatic periods of instability, during which revolutionary changes take place in the company. According to advocates of the discontinuous renewal perspective, strategic change is arduous and encounters significant resistance. In general, the more significant a change is, the more intense the shock will be. Proponents of this perspective argue that people and organizations exhibit a natural reluctance to change. The stability of an organization will be especially high if these elements form a consistent and cohesive configuration. For strategic changes to really happen, measures must be radical and comprehensive. However, proponents of the discontinuous renewal perspective emphasize that the period of turmoil must not take too long. Therefore, the long-term pattern of strategic renewal is not gradual, but episodic. However, often a misalignment between the firm and its environment grows over a longer period, causing a mounting sense of impending crisis. If the pressure persists, revolutionary change is possible, but as soon as the pressure lets up the firm will solidify in a new form, inhibiting any further major changes. Revolutionary change can also be proactively pursued to gain a competitive advantage, or even to change the rules of the game in the industry in which the firm is competing. In contrast to discontinuous alignment, the perspective of continuous alignment is more long-term in orientation. Three organizational characteristics are important for keeping up a steady pace of change. First, all employees within the firm should be committed to continuously improve. Everyone within the firm should be driven by constructive dissatisfaction with the status quo. Secondly, everyone in the firm must be motivated to continuously learn. People within the organization must constantly update their knowledge base. Thirdly, everyone in the firm must be motivated to continuously adapt. Constant adjustment to external change and fluid internal realignment should be pursued. These three characteristics of an evolutionary firm – continuous improvement, learning and adaptation – have in common that basically everyone in the organization is involved.
Resolution of Paradox
Revolution is a change that requires rapid and major strategic but also the culture change. This could be in circumstances where the strategy has been so bounded by the existing culture that, even when environmental or competitive pressures might require fundamental change. Managing such change is likely to involve: Clear strategic direction, combining economic and symbolic levers, an outside perspective, Multiple styles of change management, Working with the existing culture and Monitoring change.
Evolution is a change in strategy that requires the culture change but over time. It may be that managers anticipate the need for transformational change. They may then be in a position of planned evolutionary change, with time in which to achieve it. Managing such change is likely to involve: Empowering the organisation, A clear strategic vision, Continual change and a commitment to experimentation about organisational processes throughout the organisation, Stages of transition, Irreversible changes, Sustained top management commitment and Winning hearts and minds.