Forces for change

As recently as the late 1990s, music retailers Wherehouse Entertainments and Tower Records were rapidly growing as profitable companies. Young people were flocking their super stores because they offered a wide selection and competitive prices. But the market changed and these chains suffered the consequences. Downloading legal and otherwise cut hard into their CD sales; and growing competition from and discounters such as Wal-Mart and Target stole a sizeable part of their market share. In January 2003 Wherehouse filed for bankruptcy. Tower followed suit in February 2004.

More and more organizations today face a dynamic and changing environment. This in turn, is requiring these organizations to adapt. ‘Change or die’ is the rallying cry among today’s managers worldwide.

In a number of places in our articles, we have discussed the changing nature of the workforce. For instance, almost every organization has to adjust to a multi-cultural environment. Human resources policies and practices have to change to reflect the needs of an aging labor force. And many companies have to spend large amounts of money on training to upgrade reading, math, computer and other skills of employees.

Technology is changing jobs and organizations. For instance, computers are now commonplace in almost every organization; and cell phones and handheld PDAs are seen as indispensable by a large segment of the population. Computer networks are also reshaping entire industries. The music business, as a case in point, is now struggling to cope with the economic consequences of widespread online music sharing. For the longer term, recent breakthroughs in deciphering the human genetic code offer the potential for pharmaceutical companies to produce drugs designed for specific individuals and create serious ethical dilemmas for insurance companies as to who is insurable and who isn’t.

We live an age of discontinuity. In the 1950s and 1960s, the past was a pretty good prologue to the future. Tomorrow was essentially an extended trend line from yesterday. That’s no longer true. Beginning in the early 1970s, with the overnight quadrupling of world oil prices, economic shocks have continued to impose changes on organizations. In recent years, for instance, new dot-com businesses have been created, turned tens of thousands of investors into overnight millionaires, and then crashed. The stock market decline from 2000 to 2002 eroded approximately 40 percent of the average employee’s retirement account, which may force many employees to postpone their anticipated retirement date. And record low interest rates have stimulated a rapid rise in home values, helped sustain consumers spending, and proven a spur to home builders and remodelers, furniture retailers, mortgage bankers and other home related businesses.

Below summarizes six specific forces that are acting as stimulants for a change

Nature of the workforce:
* More cultural diversity
* Aging population
* Many entrants with inadequate skills
* Technology
* Faster, cheaper and, more mobile computers
* Online music sharing
* Deciphering of the human genetic code

Economic Shocks:
* Rise and fall of dot-com stocks
* 2000-02 stock market collapse
* Record low interest rates

* Global competitors
* Mergers and consolidations
* Growth of e-commerce

Social trends:
* Internet chat rooms
* Retirement of baby boomers
* Rise in discount and big box retailers

World politics:
* Iraq-US war
* Opening of markets in China
* War on terrorism following 9/11/01.

Competition is changing. The global economy means that competitors are as likely to come from across the ocean as from across town. Heightened competition also makes it necessary for established organizations to defend themselves against both traditional competitors who develop new products and services and small entrepreneurial firms with innovative offerings. Successful organizations will be the ones that can change in response to the competition. They’ll be fast on their feet, capable of developing new products rapidly and getting them to market quickly. They’ll rely on short production runs, short product cycles, and an ongoing stream of new products. In other words, they’ll be flexible. They will require an equally flexible and responsive workforce that can adapt to rapidly and even radically changing conditions.

Social trends don’t remain static. For instance, in contrast to just 15 years ago, people are meeting and sharing information in Internet hat rooms; baby boomers have begun to retire; and consumers are increasingly doing their shopping at discount warehouse and big box retailers warehouse and big box retailers like Home Depot and circuit city.

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