All change in business, can be classified in four ways, depending on whether the change was in the past or will happen in the future, and on whether the change was planned by the company's managers or was outside their control.

Most kinds of change require reaction, anticipation and analysis; each has a set of 'thinking tools' that managers need to acquire in order to deal with it. Ultimately, the manager's task is about managing change; by acquiring thinking tools and knowing how and when to use them, they will be able to do so effectively.

Consider the following scenario. A company wants to build a new plant for the manufacture of cars. Certain assumptions are made:

By definition, the company's owners could open the door, turn on the lights, walk away and leave the plant to do its work perfectly. But that is not how the real world works. Here, we are constantly confronted with the phenomenon of change. Customers do vary their demands; machines break down, workers are fallible, and so on. Nothing ever seems to stay the same for long. And dealing with this ever-present change is the function of the manager.

There are two kinds of change that are, or should be, of concern to management: past change and future change.

There are a multitude of prefixes which can be applied to the word "change", such as climate change, culture change, environmental change, technological change, and so on. But all can be classified into these two categories. For example, technological change can be divided into past change (such as space flight, the development of the internet) and future change (the space station, the impact of third-generation mobile phones and so on). Other types of change can be categorised in the same way.

Past change and future change can be further divided into two sub-types: planned change and unplanned change. This gives us a fourfold typology of change for the purposes of managerial analysis. Let us now look at each in detail.

Planned past change

'The merger with ABC Company completely met our objectives.'

'The start-up of our new plant went according to plan.'

This type of change is not of concern to management as far as there may be any need to analyse it. It depicts a situation in which something that was expected or planned has happened exactly as intended; the company is on target.

Unplanned past change

'The reject rate on product 102 doubled yesterday.'

'Our sales in the Western Region rose by 50 per cent last month.'

This type of change should concern managers. The examples depict situations in which something unexpected has happened. As a result, the company faces a problem. Whether the change was undesirable or desirable, managers needs to find out why it occurred. They must find the cause so that an undesirable change can be corrected, or a desirable change perpetuated.

To gather information about unplanned past change, managers must use a thinking process called problem analysis. This is a process specifically structured to deal with factual information, and helps managers to understand how and why problems occurred.

Planned future change

'We need to select someone to manage our new plant.'

'We need to decide how we're going to finance expansion.'

Here the organisation should set out to make the best planned future change, that is, choose the best possible option for change from the range of options available. Planned future change is, in effect, making and implementing a decision. The thinking process specifically structured to deal with the inferential information that surrounds a decision situation is known as decision analysis.

Unplanned future change

'Competitor XYZ is going to merge with ABC Company.'

'We should be able to launch our new product in six months.'

These two statements appear at first glance to depict planned future change - although the first one is outside our control - but situations such as these can bring trouble along with them.

Unforeseen problems may delay the product launch or raise costs beyond budget. The merger of two competitors may have an unplanned impact on the market, throwing one's own calculations of market share and profitability into doubt. Managers need to anticipate such trouble and try to prevent it or, in the worst case, be prepared to react to it when it happens.

The specific thinking process structured to deal with the inferential information surrounding these situations is called potential problem analysis.

On the flip side, unplanned future change can also be a source of opportunity. It is therefore incumbent upon managers to do their best to anticipate such opportunities and to stimulate them or, at minimum, be prepared to take advantage of them as soon as they appear.

The specific thinking process structured to deal with such situations is called potential opportunity analysis.

The analysis of change

We see, then, that managers may be confronted with four generic types of change. One of these - planned past change - requires no special management skills. The other three, however, require management to anticipate, react and analyse change, using the four types of analysis mentioned above.

Each of these thinking processes is a tool that has a specific use. They are not interchangeable. A hammer works well with a nail, but it cannot be used to put in a screw or a bolt. In the same way, each of the processes described above will produce the results managers need only when it is used for the type of change for which it is designed.

All four should be part of the thinking manager's toolbox able to be deployed when the situation calls for it."


Based on article by William J. Altier who is a management consultant and president of Princeton Associates, and the author of The Thinking Manager's Toolbox.