Development Strategy for Business Resilience and Sustainability through an Incremental Strategy
– A Study of British Telecom
This report discusses the comparative analysis of three strategies namely incremental, renovate
and inventive within the context of the internal as well as the external environment of a company
such as BT (British Telecommunications Limited) which is a multinational telecommunications
services company headquartered in London. It also evaluates a change management programme
that can bring about strategic change within this organisation. BT has a global services as well as a
retail division. Its operations span 170 countries throughout the world.
Company’s Internal and External Environment and Its Strategy Type
In the current business scenario, intense competition, integration across global markets, changes
in technology and the advancement of the telecommunications sector are some of the external
factors that influence the change management program of BT. the Company’s managerial talent
and the level of the motivation of its workforce are some of the internal factors influencing
strategic management. In order to improve the effectiveness of the organisation, strategy is the
key because it leverages the capabilities of the individuals and the institution in a cohesive
manner. The ideal development strategy for a company like BT that seeks business resilience and
sustainability throughout its line of operations is an incremental approach.
Strategic Capabilities
Incremental strategies are effective within the current dynamic environment. Regulatory
convergence is a key factor in the selection of incremental strategy for handling change and
sustaining profits. The challenges of global competition have to be seen within the broader
regulatory framework for effective strategic management. The incremental approach to strategic
management is in response to the complex and ever changing corporate environment.
Consequently, the strategic process moved in an incremental manner adapting to changes in the
internal and external environment of the company. Decisions will then be driven by multiple
goals. BT has low levels of business resources with respect to its telecommunications services
though it is steadily expanding in the field of broadband communications. BT has reported a fall
in sales though it experienced a healthy profit in 2013. Moderate or high business resources
imply greater strategic capabilities which enable the company to excel using innovation or
denotative strategic management. Annual pre-tax profits of BT were up by more than 40% but
sales fell by 4%.
Business Strategy BT Competitive Analysis
The major feature of the incremental strategy is that it is decentralised and it responds to
dynamic environmental challenges. BT is facing a changing socioeconomic milieu wherein the
incremental approach accounts for this variable. An incremental strategy enables the
organisation to fulfil its mission by closing the divide between long as well as short term goals
within a changing environment. Organisational design followed a contingency approach since
landmark research was conducted by Emery and Trist (1965) as well as Lawrence and Lorsch
(1967). When a company faces a challenging environment, incremental strategy is far better than
inventive or renovate strategies on account of the challenging environment faced by the company.
As a British MNC which has to face global competition, BT should opt for an incremental strategy
to boost its prospects and sales. The degree to which the environment of a company is
globalised also influences its development strategy. Porter has proposed the five force model for
analyses of competition presented below:
Porters 5 Force Model
Figure 1: Porter’s 5 Force Model from Michael Porter, “Competitive Strategies”
Porter’s model elucidates how competition from different sources can create industry rivalry.
Competitive analyses in the context of an incremental strategy is suitable for organisations such
as BT which want to cope with competition from different sources, as discussed in Porter’s
model.
Business Strategy BT Competitive Advantage
BT needs to consider the complete gamut of competitors through an incremental approach to
change management. Porter (1980) has argued that organisations should consider the behaviour
of firms that are producing same/similar products as well as the action of suppliers, competitors
producing substitute products and the customers themselves. An incremental strategy enables
companies such as BT to develop a holistic view of the market to promote business resilience and
boost profits. Competitive advantage has been discussed through a model proposed by Porter
discussed below:
Porters Generic Strategies Model
Figure 2: Porter’s Generic Strategies Model (Porter, 1980)
Ansoff (1985) has discussed how companies should also develop the strategy keeping in mind the
flow of critical resources for production. They should also consider how they will impact
non-market actors. Nonmarket actors or strategic interest groups also have an important role to
play in influencing the development strategy of a firm. BT should follow a cost leadership strategy
for low cost rather than aiming for product uniqueness as there are many rivals offering advanced
services in this sector.
Culture
The culture of an organisation also plays a key role in influencing the strategy it adopts. The
company’s abilities revolve around the resource, skills and procedures as well as its competencies.
Attitudes and other cognitive factors reflect an organisation’s culture. The work culture at BT is
unique. It focuses on completion of projects and garnering of crucial contracts. The organisational
culture of a company influences its success in current times. BT needs to follow an incremental
strategy whereby it adapts to changing global and domestic environment so that it can keep up
with its competitors. The choice of a strategic management approach is based on several critical
considerations such as an organisation’s strategic capabilities, competitive analyses, competitive
advantage and culture.
An organisation must have a strategy that can meet the challenges of its internal or external
environment (Ashby, 1961). Therefore, an incremental strategy would be ideal for enhancing the
sustainability of business practices and the resilience of British Telecom. Consider the personnel,
structure, systems and financial resources to be important factors in any strategy for change
management. An incremental strategy follows a contingency approach which is ideal for British
Telecom.
The organisation’s culture as reflected by collective values, experiences and beliefs of its
members also has a critical role to play in its success. An incremental strategy for development
and change management incorporates this effectively, making it the viable and effective choice
for BT which has skilled employees. An incremental strategy is ideal for bringing about small but
important changes in the organisational functioning compared to inventive or renovate strategies
which focus on large scale change.
In order to possess business resilience and sustainability in its operations, BT needs to follow an
incremental strategy to bolster its current organisational culture. Companies need to be proactive
to cope with changes such as economic slowdowns, increased global competition and massive
amount of technological advancement. BT would do well to adopt an incremental, contingency
oriented approach to strategic management to cope with this.
Critical Evaluation of the Incremental Strategy
Incremental strategy is ideal for British Telecom. An incremental strategy enables the company
to have flexibility in coping with uncertainties in the field of policy regulation and governance.
People
There is a need to bargain with stakeholders and integrate human and organisational capabilities
to catapult the company to the path of success. Renovate and innovative strategies can only be
effective in environments where there are less regulation uncertainties (Lindblom, 1979). Each of
the different resources within a company plays a critical role in its success. Through an
incremental approach, British Telecom can impact its employees in a positive way. By instilling
coping skills and out of the box thinking to manage dynamic and changing situations, BT can
boost its profits.
Employees also differ in terms of their personal knowledge, perception, limitations, and it is due
to this inherent complexity that incremental strategy can be the perfect tool for change. Diversity
is one of the chief features of the workforce at BT. Therefore; development strategies followed
here should take advantage of this versatility. Incremental approaches to strategic management
can accomplish this. Top managers within the same company can approach the same problem
with different solutions (Bower & Doz, 1979).
Operations
Operations system provides guidance regarding how work procedures must be carried on and
provides the framework for performing the work People are the key resources of any company.
They are the prime assets which spur the growth and development of the organisation.
Operations are a key area where rapid changes have to be kept pace with. The internal as well as
external stakeholders also play a central role in the company’s success (Lindblom, 1959;
Mintzberg, 1919). Balancing the goals and interests of stakeholders is the key to organisational
success (Ansoff, 1985). BT should adopt an incremental strategy to improve operations.
Finance
Financial resources are necessary to accomplish goals and provide rewards. Money is one of the
primary motivators for obtaining optimal performance from employees in the work setting.
Annual pre-tax profits were up 42% to £2.4bn, last year for BT while sales were down 4%. An
incremental strategy is ideal for a company such as BT which has ample financial resources.
Technology
Technology sets the stage for the company to maximise its capabilities if it keeps pace with it.
Effective utilisation of resources is a must if a company has to progress and make healthy profits.
An organisation’s culture is maintained and transmitted by its workers. Leaders of internal
stakeholder groups are the key assets to instil positive change within an organisation. For
companies such as BT that are facing moderate to heavy environmental turbulence, an
incremental strategy for strategic management is needed (Mintzberg, 1973).
Several comprehensive reviews have been conducted by leading researchers in the field of
strategic management (Hofer, 1976; Vancil, 1976; Armstrong, 1982). Research has found that
degree of formality centralisation, hierarchical structure and comprehensiveness of any company
is influenced by its environment, and complexity (Armstong, 1982, Hofer, 1976). In current
scenario, an incremental strategy is optimal for BT.
Change Management Programme
A change management programme for British Telecom must incorporate an incremental
approach. This is because its external and internal environment is more suited to an approach
that makes allowances for sudden and rapid changes. Whether it is people, financial aspects,
technological advancements or organisational culture, all aspects of an organisation’s
functioning need to be taken into account for effective change management. A conventional
approach towards change management will not be successful. In 1995, John Kotter published his
landmark paper “Leading Change: Why Transformation Efforts Fail”. This paper cited how only
30% of change programs are successful.
The biggest advantages of a change management programme for British Telecom through an
incremental strategy is that it will make allowances for the rapid changes in technology and
competition that are taking place in the Indian telecommunications sector. Colin Price and Emily
Lawson (2003) suggested that the conditions which must be met for employees within an
organisation to embrace change include their agreement to the change, effective role modelling
for inculcation of change oriented behaviours, and reinforcement systems that encourage the
behaviour and the skills required for change. The structures, systems, processes and incentives
within a change management program should be conducive towards a positive transformation of
the company into a reliable and sustainable business.
An incremental approach to strategic management can bring about this transformation for British
Telecom. But change management processes should have an appeal for employees. Businesses
that want to do more than survive have to remodel themselves to match up to competitors.
Change management programmes have incorporated various methods such as total quality
management, rightsizing, restructuring, cultural change and turnarounds in a bid to improve their
profit margins. British Telecom needs to follow a change programme that pursues innovation in a
way that is flexible and keeps in line with the incremental strategy of adapting to changes. Too
many companies fail to progress beyond a certain point when it comes to garnering market share
because they do not anticipate change due to factors such as advances in technology and
industrial competition. Even a change management programme based on the incremental
approach can have a few pitfalls though. Anticipating change is not easy. Many times, market
analysts may be predicting a trend which is short-lived. Kotter’s 10 year study of more than 100
companies found unsuccessful change management programmes failed to generate the urgency
or formulate a vision that could be communicated well to bring about a complete transition.
Companies need to be practical and realistic in their aspirations. Only then can change
management programmes succeed in a complete sense. Obstacles to the change management
programme suggested in this paper include rapid changes in the regulatory framework,
unforeseen innovations and advancements in the field of technology and lack of market foresight.
Genuine transformations require game changing ideas which can bring about creative solutions
to problems. A change management programme based on an incremental strategy can only
succeed if company personnel have the objectivity to view successes and failures in accurate
ways.
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