Prior to, and especially over the last one hundred and fifty years, human beings have been in ongoing industrial and market flux. The changes, caused by different events of varying magnitudes, will continue to affect us individually, as communities and how we can, obviously, run our businesses. Thus, understanding change and how to manage it is critical to entrepreneurial success, and it shall be our topic for discussion today.
The case for change management: From legal and operational perspectives, businesses have both a life and an identity of their own. To survive, thrive and grow, they need to be consciously and persistently nurtured. There are business opportunities that can open up and challenges that will be thrown up from changes in demographics, economic trends, technologies, new products (goods and services), new competitors, changes in laws and regulations, etc. Inability and/or unwillingness by a business to evolve positively could lead to stagnation and failure. A brief history of the transformations in the world, from an entrepreneurial perspective, will help bring out the imperative for understanding change and planning appropriately to manage it if we are to succeed as entrepreneurs.
An entrepreneurs’ view of a brief history of the world: We were said to have started out living in caves as nomadic hunters and gathers. With time, we began to form sedentary farming communities. City states and later empires gradually grew out before the modern nation states that we know today.
Parallel to our demographic and social transformations, our economic life is also constantly changing. We learnt to trade by barter as we began specialisation beyond our agrarian lives to handicraft economy. This also changed to industry and machine manufacturing. The industrial revolution, starting out in Britain in the nineteenth century, saw the beginning of mass production with spinoff needs for developments in formal business management. After that, the computer age built, also on the massive volume of scientific knowledge that we now have, has in the last fifty years, made the changes to our lives and businesses as a result of the industrial revolution look like child’s play. No gainsaying we have gone through unbelievable transformations over the last twenty thousand years and will continue to do so!
Ø 17,000 BCE – First known trading between humans in New Guinea where obsidian (a vulcanized glass) prized for its use in hunting was traded for other goods such as skins and food. This was said to last for a millennium.
Ø 14,000 BCE – Instead of having to roam different regions through the year to hunt, humans began to domesticate plants and animals allowing for villages and towns to grow close to fertile lands. The ‘agricultural revolution’ led to specialisation as people began to become artisans of various sorts to build houses, fabricate tools, etc.
Ø From the agricultural revolution to 2000 BCE and beyond – With the discovery of iron, trading in weapons became very important, leading to conquests and growth of kingdoms and empires. Cities started to grow around the world but mostly near rivers such as the Nile, Tigris and Euphrates, Yangtze, Indus, etc. As cities grew, specialist entrepreneurs began to realise profits by trading items between different cities, regions and cultures. The earliest form of money began to replace the barter exchange system and generally served as a medium of exchange. Trade routes expanded greatly allowing for inter-regional trade. For instance, salt was traded from Africa into the vast Roman Empire.
Ø 500 to 1500: Markets began to become quite popular with large cities requiring large marketplaces. Banking grew to new heights and entrepreneurs bought goods from out of their regions to process and sell finished products.
Ø 1500 to 1800: This period gave rise to the philosophy of mercantilism, with its followers believing that there was only a finite amount of wealth in the world and a country’s wealth was based on its treasure of gold and the net of its exports over its imports.
Ø 1800 to date: Entrepreneurship fuelled by science and technology in the age of machines, markets, and information. Capitalism and democracy got entrenched or introduced in most parts of the world. The ‘mother of all machines’, the metal lath, was invented by various people depending on which source you take.
Without most of what had happened in the past, we will not be where we are today. The great philosophers, scientists, engineers, the Queens and Emperors, the explorers, warriors, merchants, etc. all helped shape where we are. The rates of change in our lives were sometimes low but can and do accelerate exponentially due to certain triggers as well. Thus, it behoves on the entrepreneur to understand where from these changes come; how they occur and be able to be part of initiating and benefitting from them.
What is change management? Change management refers to a deliberately conceptualised and developed holistic approach to achieving desired transitions and transformations of a business. It involves creating new systems, processes, technologies, and goals. The transitions and transformations can be as a result of internally initiated or externally prompted stimulus.
Change management involves establishing manners and methods that a business will implement to achieve required alterations and modifications to its internal and external processes, outputs and to achieve desired goals. This will require and include staff training, identifying the desired targets and objectives, establishing the required steps for the change(s), documentation and communication, execution, and monitoring.
Change management results in what I call ‘procedural’, ‘intermediate’, and ‘net’ benefits. The procedural benefits are those benefits derived from the simple act of carrying out the desired changes. Such benefits include the enhancement of business systems and methods, development of a better working environment and the introduction of new technologies. The intermediate benefits are those benefits that emanate from change management procedures such as those just mentioned, and which will lead to the net benefits. Intermediate benefits include increased employee satisfaction, higher productivity, etc. The net, or ultimate benefits are those benefits as may have been defined in the goal-setting stage of the change management exercise. These can include reduced production costs, attainment of some strategic competitive advantage, increased market share and profitability, etc.
Today, we have seen how changes in the world have affected the entrepreneurship landscape over the last thousands of years, as well as the case for change management and what change management and its benefits are. Next week we will take up types of change, challenges to change, change models, and methods of managing change.