Strategic Change

Strategic change is the means by which a significant and new organizational order is created over time so that the organization is better aligned with its current and/or future environment. When an organization is better aligned with its environment, organizational survival is preserved and organizational performance is enhanced. Because health care environments are changing quickly and often in unpredictable ways, the ability to prepare for or bring about strategic change is increasingly important to successful health care organizations.

In the preceding definition, strategic change is conceptualized as both an outcome (that is, significant new organizational order) and a process (that is, means by which a new order is created). When we speak of strategic change outcomes, experts often refer to “first-order” and “second-order” strategic change. First-order strategic change deals with such things as adding new service lines or entering new geographic markets. It is strategic in nature because the organization's alignment is altered, but it does not challenge the cultural values or identity of the organization. In contrast, second-order strategic change deals with first-order changes, but it also challenges the cultural values and identity of the organization. Clearly, second-order changes are more complicated, uncertain, and challenging than first-order strategic changes.

When we speak of strategic change as a process, experts usually refer to three types of processes. The oldest and most widely acknowledged form of strategic change is the formal planning process. However, it isn't always possible to know where an organization needs to go or to designate in advance how to get there in a predetermined fashion, because of the complexity and uncertainty of most health care environments.

Consequently, some organizations have focused on developing their capabilities in anticipation of upcoming strategic changes. Rather than a discrete annual planning ritual, some organizations focus on continuous improvement in areas such as improving the new product development process or developing leaders within the organization. Once again, however, it isn't always possible for strategic leaders to know what capabilities will be needed in the future. Therefore, a select few progressive organizations are investing in becoming learning organizations. This approach requires all of the organization's associates to experiment, learn, and adjust individually and collectively so that the organization's alignment with its environment can be enhanced.

Strategic change is complex and messy. There is no one technique for thinking about or bringing about strategic change as each organization's situation determines what will and will not work. Usually, strategic change efforts focus on one or more of the following aspects of an organization: (a) the way people do their jobs, (b) the way an organization structures or controls itself, (c) the way that strategy is developed and/or the strategic goals pursued, and (d) the way that cultural norms and values operate within the organization. Clearly, the scope and complexity of the strategic change expands with each successive level of focus.