Understanding the Nature, Importance, Forces, Types Of Technological Change

Technological Change

Technological change means the technical knowledge used in the production of capital and machinery. The various changes in technology leads to an increase in the productivity of labour, capital and other production factors. Technological progress comprises of creation of skill, new means of production, new uses of raw materials and the widespread use of machinery.

The technology is the most powerful means of wresting power from nature in all possible ways. It strengthens the facilities of man. Prof. Frankel assumes that the, “Technological change is not a mere improvement in the technical know-how. It means much more than this. It should be preceded by sociological change also, a willingness and desire on the part of community to modify their social, political and administrative institutions so as to make them fit with new techniques of production and faster tempo of economic activity.” Technology, according to J. P. Dewhurts, in fact, can be thought of as the change in the production process of material and human skills.

Process of Technological Change:

Technological changes devise new goods and techniques of production. The development of new technical knowledge can be defined as the growth of the new technique that can produce goods and services at lesser cost of production.

The process of growth of technical knowledge can be divided into following stages:

(a) Formulation of scientific principles

(b) Application of these principles to give technical problems

(c) Development of technical inventions to the point of commercial exploitation.

The first stage is the advancement in scientific knowledge, the second is that of the application of this knowledge to some useful purposes and third is the commercialization of invention which is called innovation. This has a great significance in the process of development. Schumpeter has distinguished between invention and innovation. Invention implies the discovery of new technique while innovation is practical application of invention in production for market.

It may be called commercialization that originates from scientific advancement. Invention is scientific fact while innovation is economic fact. Inventions are carried on by the inventor’s large capital investments at every stage as it needs not only a scientific attitude but an attitude of the community and an entrepreneurial skill of high order with the ability to understand the possibilities of employing scientific incentives for commercial purposes.

Importance of Technological Change

Shaping technology actively

But whether we notice it or not, technological change is happening – for us as private individuals, but even more so for companies. Those that want to remain viable must not only keep up with this change, but must also actively help shape it.

Let us consider one example: Even our grandparents traveled on trains that ran on tracks and turnouts. We are still traveling on them, but over the years turnouts have continuously been developed further. Apart from the fact that traveling over them is now more smooth and quiet and thus more comfortable, turnouts are now equipped with intelligent systems that enable them to monitor themselves, ensuring proper operation of their components under all conditions, including at high speeds.

Enhancing technologies

Technological change doesn’t always have to involve reinventing the wheel. Rather, existing technologies can be enhanced with new ones, or combined with each other, to make new solutions possible.

For example, turnouts have been made digital. For example, printing is possible not only with plastic but also with metals, and designs drafted on the computer go from the printer as a component directly to the assembly line. For example, high-strength body parts are made from press-hardened steel, to offer us even greater protection in a car. And, for example, new vapor-deposited coatings may soon recognize us through our hands alone, and open the front door for us without using any key at all.

Technology is the key

Change, as mentioned, has always occurred. It is part of doing business. Responding to change ensures a company’s survival. Today, however, technology is the key to maintaining and expanding a company’s role as a trendsetter. Whether the technology is new or a combination of existing ones – with them, together, we are shaping the future.

Forces of Technological Change

Organization as a system, depend on many interdependent factors which influence it’s day to day functioning, strategic decisions and future action plans for facing the competitive challenges successfully. These factors can be both internal and external in nature and determine an organization’s readiness for change as well as it’s preparedness.

External Forces of Organizational Change

The external forces of change stem up from the external environment. These forces have been described below:

Political Forces: With the rapidly changing global political scenario and the upheavals in the global politics, the worldwide economy is equally undergoing a quick change and presenting several challenges before the organization in the form of changes in regulations, policies and also the economic framework in the form of globalization and liberalization.

Economic Forces: The economic forces influence organization’s change management strategy by either presenting opportunities or challenges in the form of economic uncertainties or growing competitive pressures.

Various factors such as changes in the business cycle, prevalent inflation or deflation rate in the economy, fluctuation in the interest rates, economic recession, changes in the economic policies or tax structures, import/export duties, fluctuation in the oil prices globally, financial stability of the country and also loss/increase in the consumer confidence towards the economic conditions of the country are some of the crucial factors. For example change in the global market, economies create a ripple like effect and affect the Indian markets too in terms of fluctuations in the capital markets, employment opportunities and rise or fall in the consumer demand.

Technological Forces: Technological advancements and innovations in communication and computer technology, have revolutionized the organizational functioning by facilitating newer ways of working and added in newer range of products/services thus creating a need for developing a framework for managing change effectively and proactively responding to the challenges as a result of these changes due to the technological forces.

Advancements in the technological field greatly contribute to the overall economic development in the country and also the organization’s success or failure in the competitive environment. One of the glowing examples is Singapore, which has emerged as one of the powerful economies within recent times in spite of no natural resource availability. With the usage of Information Technology in the strategic decision making and overall planning, today Singapore holds the status of being the world’s first completely networked economy in which all homes, administrative offices, schools/colleges/professional institutions, businesses and government branches are connected electronically.

Governmental Forces: Governmental regulations and also the extent of intervention may influence the need for change. The following governmental forces have been described below which determine the need for organizational change:

Deregulation: Deregulation is associated with decentralization of power or economic interventions at the state level or lessening of the governmental intervention in the economy. For example, as an outcome of deregulation few sectors/industries like insurance, banking, petroleum and many others which were previously under the direct control of the government, are now being handed over to the private players or companies.

Foreign Exchange: Foreign exchange rates directly affect the international trade, as the variations in the exchange rates influence the currency payment structure. Issues or constraints with the foreign exchange rate may compel the government in moving ahead with the imposition of import restrictions on selected items or deregulating the economies for attracting the foreign exchange for investment purposes.

Anti-Trust Laws: Anti-Trust laws are enforced by most of the governments for restricting/curbing unfair trade practices. For example, these restrictions have been enforced in India by enacting an act called Monopolies and Restrictive Trade Practices (MRTP), 1971.

Suspension Agreements: Suspension agreements are the agreements which are finalized between the governments to waive off anti-dumping duties.

Protectionism: Due to the growing competitive pressures, most of the governments try to enforce certain regulations or intervene for safeguarding their threatened industries. For example, by enforcing certain trade barriers, the Indian government protects the local industries such as Handicrafts and Textiles. These trade barriers may take the form of either anti-dumping laws, levy of tariffs or import duties, quantity quotas, and various government subsidies.

Competitive Pressures: The increase in the global competition and the challenges enforced due to the competitive pressures, force the organizations in changing their strategies for ensuring their global presence. Japanese majors like Nissan, Toyota and Mitsubishi, have been continuously relocating their manufacturing as well as their assembling operations to South East Asian countries for achieving a competitive advantage in the form of reduced cost of labour and economies of scale.

Changes in the Needs and Preferences of Customers: Changes in the needs of the customers are compelling the organizations to adapt and innovate their product offerings constantly for meeting the changing demands of the customers.

Internal Forces of Organizational Change

Systemic Forces: An organization is made up of a system and several subsystems which are interconnected, just like the way in which a human system functions. The subsystems of an organization are in direct interaction and influence the organizational behaviour as well. A change in any subsystem, result in a change in the existing organizational processes and the complete alignment as well as the relationship.

Inadequate Existing Administrative Processes: Each organization function by following a particular set of procedures, rules, and regulations. With the changing times, an organization needs to change it’s rules and existing administrative processes, failing which the administrative inadequacy might result in organizational ineffectiveness.

Individual/Group Speculations: In anthropological terms, it is understood that man is a social animal whose desires and requirements keep changing with the changing times, which result in differences in individual as well as group expectations. Various factors on the positive front such as how ambitious an individual is, achievement drive, career growth, personal and professional competencies and negative factors such as one’s own fears, complexes and insecurities are some of the inter-individual as well as inter group factors which influence an organizational functioning on a day to day basis and also its overall performance.

Structural Changes: These changes alter the existing organizational structure as well as its overall design. Structural changes can be regarded as a strategic move on the part of the organization’s to improve profitability and for achieving a cost advantage. These changes may take the form of downsizing, job redesign, decentralization, etc. For example, IBM for introducing reforms in its existing system and procedures and for achieving cost effectiveness has enforced downsizing strategy.

Changes in the Technology: Within an organization, the technological changes may take the shape of changes in the work processes, equipment, level/degree of automation, sequence of work, etc.

People Focused Change: In this context, the major focus is laid on people and their existing competencies, human resource planning strategies, structural changes and employee reorientation and replacement of an employee which mean shifting an employee to a different work arena where his/her skills are best suited. It may also be involving establishing new recruitment policies and procedures in line with the changes in the technology.

Issues with the Profitability: This can also be one of the primary causes which compel an organization to restructure (downsize or resize) or to reengineer themselves. The organization may have profitability issues either due to a loss in revenue, low productivity or a loss in the market share.

Resource Constraint: Inadequacy of the resources may result in a powerful change force for the organization.

Types of Technological Change

Organization-Wide Change

Organization-wide change is a large-scale transformation that affects the overall structure of the company. This typically tends to entail resizing of any form, restructuring or collaboration — basically, a step towards changing the nature of the company. For example, changing from a highly reactive entrepreneurial organization to one that more has a more stable, corporate development. It should be noted that irrespective of the type of change undertaken, these changes do affect the organizational culture and as an end result, affects the behavior patterns of employees and individuals. Changes in this category are long term and if not planned well can be highly disruptive.

Transformational Change

It is important for companies to constantly examine the organization’s underlying strategies. A company must be in touch with the environment around them. This includes knowing cultural trends, understanding the social climate and generally be clued up on technological advances. According to a recent MIT study, maturing digital businesses are focused on integrating digital technologies, such as social, mobile, analytics and cloud, in the service of transforming how their businesses work. Less-mature digital businesses are focused on solving discrete business problems with individual digital technologies. In an increasingly digitally motivated world, more tech based companies are taking risks to the point where it has become a cultural norm. Easily digitally transform your business with WalkMe’s immediate onscreen guidance.

Personnel Change

Personnel change is when a company undergoes mass hiring or layoffs. This necessitates a shift in company culture and processes. When a company rapidly expands by hiring en masse, the organization will have to absorb the initial shock of onboarding new employees as it also fits each employee into their new role, where each new role may yet to be defined. This transition, if not managed well, can cause chaos and inefficiency. Layoffs can stem from a number of reasons (government regulations, financial restraints) it still greatly affects the remaining employees of the organization. These changes tend to negatively affect employee morale. This is something that should be considered. It is important to efficiently and fairly manage how to disperse the workload. Employees who take on more tasks than originally given can be inefficient and even if it is a temporary solution to filling gaps, can also result in a shaky transitioning period.

Unplanned Change

Amidst the endless data analysis and planned strategies, an organization can undergo a number of unplanned changes, sometimes even more drastic than planned ones. Changes like these may be introduced in an unplanned manner in response to a change in the demographic composition of an organization- i.e.: Lack of diversity or social equality. These changes are typically internal unplanned changes. External factors that include economic uncertainties and changes in government regulations, play a crucial role in compelling organizations to change. Another surprise occurrence could be any kind natural disaster. With instances like these being completely wild and unforeseeable, a company’s response to such an event is a true testament to its resiliency. That being said, these changes are often chaotic and expensive and prompt companies to act within limited time. It is because of this that solutions tend to be short term fix to a current problem.

Remedial Change

Remedial changes are brought about when responding to a general sense of deficiency or poor company performance. Performance levels tend to drop when suffering from financial distress. These remedial changes or corrective actions are thus made with the intention of increasing functionality and reviewing certain strategies that may have previously been considered as profitable, but now, only seem to be detrimental to the organizational structure. An example — if the environment a business works in becomes polluted as the result of the activities of that business, this pollution must be cleaned for reasons of safety and welfare. A business would then invest in financing the remedial action or applying for the finances to do so. Another example — when a product is deemed redundant, either by the company itself or by public, a recall plan of action must be implemented.

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