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Context Analysis

 

Disciplines > Change Management > Diagnosing change > Context Analysis

External context | Internal context | See also

 

When investigating change it is important to understand the context within which the current situation is operating. The context shapes and gives meaning to many things, and can explain, for example, why people may appear to behaving dysfunctionally.

External context

The external context that affects the organization provides the forces to which the business must react and are common root causes of the need for change.

PESTLE forces

The broader business climate includes the external sea in which the business and its competitors must swim and provides the ultimate playing ground. PESTLE (aka. PEST, STEP, SLEEP, etc.) stands for Political, Economic, Social, Technological, Legal and Environmental factors. Each of these may lead to the need for change, for example declining economic conditions or new legislation.

Market forces

Within the chosen markets, forces as price pressures, competitive shifts, customer demands and so on may be creating business tensions. These may act to push the business in different directions, such as when the middle market becomes unprofitable and there are choices such as to chase fat up-market profits or to eke out slim margins in volume business.

Internal context

As well as the external context, there are many contextual factors within organizations that can lead to the need for change.

Driving objectives

Out of the external forces and internal ambitions, business leaders identify the key purposes and objectives that they want to achieve and hence achieve success in the organization. When these change or when the organization is not on track to achieve them, then there is clear reason for change.

Driving objectives come in many forms, including visions, mission statements, values and more specific objectives that come out of these. Specific objectives typically include the need to produce and sell named products, within given quality parameters, on time and within budget.

Organizational alignment

An aligned organization has its processes, technology, reporting structures and individual objectives all aligned with one another. Any lack of alignment is effectively waste, as it contributes only to non-achievement of objectives.

Alignment may be identified through a comprehensive Structural Analysis, followed by assessment of how well those structures work in combination to achieve objectives.

Organizational capability

As well as alignment, an organization needs its people to be able to complete work given to them. This is often assumed to be largely about motivation and skill but, although these may be factors, they are often not as significant as initially assumed.

A common culprit is process design. Processes have capabilities just as people, and the saying that 'you can't make a silk purse out of sow's ear' is equally true. If you ask a process to do something outside of its capability, then it will fail. Similarly, technology has its limits, despite sometimes inflated promises.

See also

Structural Analysis, Leadership

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