Enhancing strategic change management practices to stay ahead of external events
Sean Miles, Head of Operational Risk, Shawbrook Bank
Below is an insight into what can be expected from Sean’s session at New Generation Operational Risk Europe 2023.
The views and opinions expressed in this article are those of the thought leader as an individual, and are not attributed to CeFPro or any particular organization.
What is the importance of strategic change management practices within institutions?
For institutions to survive, they need to implement new plans, structures, and processes. As most organizations are now quite complex; strategic change management can help prevent complexity turning into chaos (see Cynefin framework).
By managing change strategically, institutions are better able to address challenges, minimise disruptions and ensure that changes are implemented effectively and efficiently. Strategic change management helps organizations stay competitive and adapt to changing market conditions, customer needs and technological advancements. It also helps to foster a culture of continuous improvement and innovation.
What are some of the challenges with managing operational risks alongside change?
Nobody wants to be the fun police; however, change is one of the main drivers and sources of risk. Consequently, managing operational risks alongside change allows businesses to achieve their core objectives by identifying preventable or mitigatable hazards. This can be a challenging task for organizations as they need to balance innovation and growth against maintaining resilience, stability and continuity of operations. Challenges that organizations may face include:
- Identifying and assessing risks: Identifying and assessing risks can be difficult, especially when dealing with complex and rapidly changing operational environments.
- Prioritizing risks: With limited resources, it can be challenging to prioritize which risks need addressing first and which to accept or transfer.
- Communication and coordination: Change management initiatives often involve multiple departments and stakeholders. Coordinating and communicating effectively across teams can be difficult.
- Resistance to change: Employees and other stakeholders may resist change, especially when it could be disruptive or threatening to their roles or interests.
- Lack of resources: Organizations may not have the necessary resources, such as budget, personnel, or technology, to implement changes effectively and manage risks.
- Maintaining compliance: Organizations may face regulatory and compliance challenges when implementing changes and managing risks, especially when dealing with sensitive information or critical infrastructure.
- Measuring and monitoring effectiveness: Organizations may find it difficult to measure and monitor the effectiveness of risk management and change management initiatives, which can make it hard to know if they are achieving their intended outcomes.
To overcome these challenges, organizations need to have a robust operational risk management framework in place, which includes identifying and assessing risks, developing and implementing risk mitigation strategies, and monitoring and reporting on risk management activities.
Additionally, clear communication, stakeholder engagement, and employee training can help to ensure that changes are implemented effectively and that risks are managed effectively.
What business change can we expect to see with the volatility of the current economic environment?
We have always lived in a Volatile, Uncertain, Complex and Ambiguous (VUCA) world, currently these phenomena appear more visible. However, these drivers are ever present and business change needs to constantly try and stay ahead of these to stay relevant. To do, this, we should expect and plan for:
- Pressure on margins, driven by competition and economic uncertainty affecting revenue and costs. To address this pressure businesses must innovate their products, services, or business models to stay relevant and to stand out from the competition. Specifically, the constant digital transformation accelerates changes, especially now open-source AI is becoming more available.
- Constant shifts in consumer behaviour: currently there is a shift in spending towards essential items and away from non-essential items.
- Changes in supply chain: due to economic instability, trade policies, and other factors.
- Adjustment in workforce, to respond to changes in demand and the evolution of the remote work model.
Change management practices can help businesses navigate the above challenges and minimize disruptions by providing a structured approach to identifying, assessing and mitigating risks and opportunities. This includes regular monitoring of economic indicators, developing contingency plans, building flexible and resilient supply chains, communicating clearly with employees and stakeholders, and regularly reviewing and updating policies, procedures, and plans.
How are geopolitical impacts changing business, and how can change management practices help stay ahead of this?
Geopolitical impacts can change business in the following ways:
- International trade: Geopolitical tensions and trade policies can disrupt global supply chains and impact the availability and cost of goods and services.
- Political instability or changes in government policies can lead to economic uncertainty, affecting business operations and investments.
- Market changes: Geopolitical events can cause shifts in consumer demand, as well as changes in the competitive landscape.
- Legal and regulatory changes: Changes in government policies can lead to new laws and regulations that businesses must comply with.
Change management practices can help organizations stay ahead of geopolitical impacts by providing a structured approach to identifying, assessing and mitigating risks and opportunities. This can include:
- Regularly monitoring global events and identifying potential risks and opportunities.
- Developing business resilience, through contingency plans and scenario planning to prepare for potential disruptions.
- Building flexible and resilient supply chains and diversifying the sources of goods and services.
- Communicating clearly with employees, customers and other stakeholders about the potential impacts of geopolitical events and the steps being taken to mitigate them.
- Regularly reviewing and updating policies, procedures and plans to ensure they remain aligned with changing geopolitical conditions.
By taking a proactive and strategic approach to change management, organizations can better anticipate and respond to geopolitical impacts, minimize disruptions, and maintain a competitive edge.
In what way can data be used to predict business change? What impacts will this have?
Organisations can use data to predict business change in the following ways:
- Predictive modelling: This involves analysing historical data to identify patterns and trends to forecast future events. For example, sales data can predict future demand for a product.
- Data mining: This process involves looking for hidden patterns and relationships in data sets. It can identify patterns that predict future changes in customer behaviour or market conditions.
- Machine learning: This is a type of artificial intelligence that uses algorithms to learn from data and make predictions. Machine learning can predict changes in customer behaviour, market trends, and other factors that can impact a business.
- Using data to predict business change can have a significant impact on an organization. By anticipating changes and taking proactive measures, organizations can stay competitive and adapt to changing market conditions. Additionally, data-driven predictions can help organizations make better decisions, optimize operations, and improve customer satisfaction.
- Furthermore, using data to predict changes allows organizations to anticipate future challenges and opportunities, and to make informed decisions about how to respond to them. This could be as simple as identifying a trend in sales data that indicates a change in demand, or as complex as identifying a trend in customer feedback that indicates a change in customer sentiment.
Overall, data-driven predictions can help organizations stay agile and responsive in a rapidly changing business environment.