How to be fluent in change: Understanding the principles of change management

In facing with fast changing environments, how to manage strategic change is an important but challenging topic. As the former GE CEO Jack Welch once said, When the rate of change outside [an organization] exceeds the rate of change insi de, the end is in sight, i n order to manage strategic change, firms need to design its internal structure to match its external change rate. However, as Andrew Grove , the former Intel CEO and Chairman , claimed in his famous book: “Only the paranoid survive very few if any, in particular large corporations can survive in a dynamic changing environment.

In her current research article which was published at European Journal of International Management , Emily Shu provided an insightful study to examine how strategic leadership can deliberately initiate a firm’s transformation process. Based on an in depth case study of Haier Group Company, the global leader in home appliances industry, the research findings reveal a process model that strategic l eaders influence a firm’s strategic change process by articulating, embedding and reinforcing the changes.

The Haier Group Company serves as an excellent example to exemplify the phenomenon of strategic change process. Starting as the Qingdao Refrigerator factory in the early 1980s by importing its production technologies from Germany, the company has been “fluent” in strategic changes since the current CEO Ruimin Zhang took office in 1984. Over the past two decades, Haier successfully transformed itself fr om a near bankrupt bankrupt local home applicant company in China to alocal home applicant company in China to a fast growing major multinational fast growing major multinational corporation around the world.corporation around the world.

The strategic change process of Haier never stops even after its grand success in the global stage. The company continues to radically transform itself from a manufacturing company to a customer centric service corporation. Upon currently, the company keeps surprising its competitors by dramatically transforming itself into a platform networking company emphasizing an ultimate zero relationship with customers. What are underlying principles of organization sustained innovation and upgrading in Haier? Based on an in depth case analysis, the findings reveal that top managers align the management process to strategic transformation through a process model by articulating, embedding and reinforcing the changes. In the article, Prof. Emily Shu further argues that innovation and leading change require a corporate and entrepreneurial mindset in learning and practicing the principles of change management.

Reference:
Shu, Emily. (2019 ) ‘Fluent in change: enabling strategic change in an established firm’,
European J. Int. Management, in press.