Internal and External Forces of Change

Internal and External Forces of Change
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For all organizational change efforts, there is a reason, force, cause, or source of the organizational change. Whether it is pressure from the environment or internal pressure, each organizational change has its causes, and these causes are forces of change.

What makes small businesses and entrepreneurs really successful? It is flexibility. Flexibility means that they quickly change themselves and their businesses. All entrepreneurs must have a system to follow possible forces of change and make all necessary adjustments in their work without any delay.

đź“– Key takeaways

  • You must follow forces of change to adjust your company according to external and internal pressures.
  • There are two general sources of forces of change: external forces (political, economic conditions, social, technological, environmental, and legal factors) or pressure from your business environment and internal forces (human resources, structure, processes, and strategies) that result from inside your company.
  • As a manager or entrepreneur, you must ensure that your company adapts to these internal and external forces and supports your team members in implementing all necessary changes.

Why You Must Follow Possible Forces of Change

First, you probably know that continuous change is the only constant in the business world.

Several months ago, I got the following question from one of my clients:

changes request from client

As you can see from the request, this client was satisfied with the changes we have implemented through the years but also mentioned some analyses I have made to locate forces of change and develop a plan to implement the changes effectively.

So, you can see that the fundamental thing here is to know what forced or pressured the organizations to start with the change process.

Organizational changes don’t occur by chance or by accident. There are clear reasons for any process of performing something, and the process results from those reasons.

If the reasons don’t exist for a specific process or action, then logically, there will not be a need for that process or action.

Because organizational changes are continuous throughout the business life cycle, there will always be reasons for them. These causes are called the forces of change, sources, or drivers of organizational change.

Related: 28 Causes of Resistance to Change

External Forces of Change

External Forces of Change

External forces of change will be more challenging to manage and implement effectively because the organization’s management can not influence them. When the force appears, the company must shift course and adapt accordingly.

We can determine the areas representing external forces of organizational change based on how we classify the organizations’ environments.

The business environment can be seen through PESTEL analysis, which focuses on the following areas that can be seen as external forces of organizational change:

PESTEL analysis

Political environment as a force of change

As an external source of organizational change, this force of change deals with the laws and bylaws retrieved by the parliament and government regulations.

The political area contains elements such as government stability, strikes, the political situation in neighboring countries, taxation… These external forces of change must be respected by entrepreneurs and incorporated into their companies’ work.

Economic conditions.

When we talk about economic conditions, we talk that around your company are competitors, suppliers, different interest rates, unemployment rates, income settlement, credit policy, gross domestic product, inflation, and the level of international trade…

All these economic conditions will highly influence companies and the need for organizational changes. You need to track them to make the right decisions about change.

Socio-cultural environment.

The socio-cultural environment is the external environment or source of organizational changes. It contains people’s values, habits, norms, attitudes, and demographics. Every society has different sociocultural characteristics based on the region, ethnicity, settlement, etc. All of these factors will greatly impact how your business operates or will operate in the future.

Technology

Technology uses knowledge, methods, and techniques to transform inputs into outputs. The rate at which technologies, as external sources of organizational change, can influence an organization varies from industry to industry.

As an entrepreneur, you will need to follow the development of new technologies in your industry and use the latest technological achievements in your own business. Because of that, technology will present a challenge and require organizational changes and innovations in how the company operates.

Environmental Factors

Given the global focus on sustainability, these factors are increasingly being considered. Environmental considerations include climate change, recycling procedures, carbon footprint reduction, and waste management. Organizations are now integrating green practices into their operations to comply with regulations and appeal to a more environmentally conscious consumer base.

So, this already greatly impacts organizations that must incorporate these new practices and initiate changes inside the company.

Legal factors involve the regulatory framework within which organizations operate, including consumer laws, safety standards, labor laws, and antitrust laws.

Compliance with these legal requirements is not optional but necessary if you want to avoid penalties and protect your reputation. So, any changes in these regulations will strongly affect how your company works.

An international environment.

Even though this is not part of the PESTEL classification of the external environment, some research includes the international environment as it can impact the company’s operations.

A country where a company operates is a narrower environment for that company, but the wider environment is international. This environment recently had an increased impact on business because of the increasing globalization of markets.

For example, what happens in the global market affects every business. The global crisis or pandemic of the past several years also presents an example that affected the whole world.

Internal Forces of Organizational Change

Internal

Internal pressures of change are forces that appear inside the organization. However, in many cases, these forces will result from external forces and how the company reacts to them.

Entrepreneurs and managers find it easier to control these organizational changes because they are from inside the organization, something that management can control according to its managerial functions.

RelatedReal-life Organizational Decision-Making Examples

We can also use like in external forces to define internal forces of change based on the organization’s internal environment. What is the organization’s internal environment? Simply put, the organization’s internal environment is everything within the organization. The organization, as a system, consists of the following:

  • People
  • Structure
  • Process
  • Business strategies

People or human resources

People or human resources in an organization are employees who perform all activities in a specific company. We can have the best structure and processes in place, but without the people who transform input into output, we will not be able to perform anything.

People in the organization can be managers or employees, but they represent a source of organizational change. Employees are persons who must take the initiative to change their workplace or changes in work tasks for more efficient and effective performance.

Organizational Structure

organizational structure

The organization’s structure prevents chaos in the work and creates mutual relations among all company components.

Organizational structure defines the place of employees in the company according to the hierarchy and their role through the rules, norms, and procedures.

Over time, the organizational structure can not support the need for efficient and effective work and can become an internal source of organizational change.

Internal Processes

Internal Procedures

Each company bases its operations on systems that cover many different approaches and procedures to ensure that organizational members do their work properly.

Processes in a company are a collection of activities that need to be done to transform input into output, which then becomes a value for consumers. They can be different, and now I will show some of them that are most relevant to business:

  • The technological process is a process that transforms raw materials into products or services.
  • The decision-making process is a choice that people make about a specific direction in the company.
  • The communication process is the dissemination of information between people in the company.
  • Management process – is how organizational members are managed to achieve the organizational goals.

These processes are internal forces of organizational change because they create problems that require solutions, which are new ways of doing things in the company.

Business Strategies as a Forces of Change

Also, internal forces of change can be changes in the business strategies.

Your business strategy is a dynamic document that will change over time, requiring organizational changes inside the company.

For example, if a new competitor with more innovative products or services enters your market, your strategy must be adjusted if you want to stay competitive.

Similarly, changes in customer preferences or market trends can also lead to adjustments in your business strategies, which will then require your company to respond by implementing organizational changes.