Tools for Organizational Change:
Select one of the following tools: the nine steps in Ackerman and Anderson’s roadmap for
change, Cummings and Worley’s five dimensions of leading and managing change, or the three
components of organizational change. Explain how a leader could use this tool in guiding an
organizational change.
Your initial post should be at least 250 words in length. Support your claims with examples from
required material and properly cite any references.
3
Implementing Change
hxdbzxy/iStock/Thinkstock
Learning Objectives
After reading this chapter, you should be able to do the following:
1. Summarize the nine steps in Ackerman and Anderson’s road map for change.
2. Analyze Cummings and Worley’s five dimensions of leading and managing change.
3. Describe how to align an organization with its new vision and future state.
4. Explain how roles/relationships and interventions are used to implement change.
5. Examine ways to interact with and influence stakeholders.
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Introduction
Change is the law of life and those who look only to
the past or present are certain to miss the future.
—John F. Kennedy
Pretest Questions
1. True/False: Celebrating the implementation of change is not something a serious
leader should encourage; changes should be carried out in a professional manner.
2. True/False: Motivating change involves creating readiness for and overcoming resistance to change.
3. True/False: In order to align an organization with its new vision, organizational
culture should remain steady and predictable.
4. True/False: Organizational change is most often led by the highest line of authority,
which is the leadership change team.
5. True/False: Change can be successfully implemented without collaboration if the
plan is a strong one.
6. True/False: Interventions to implement change can consist of reinventing specific
company structures such as its strategies, culture, and supply chain.
Alan Mulally was selected to lead Ford in 2006 after he was bypassed as CEO at Boeing, where
he had worked and was expected to become CEO. Insiders and top-level managers at Ford, some
of whom had expected to become CEO, were initially suspicious and then outraged when Mulally
was hired. They questioned what someone from the airplane industry would know about the car
business (Kiley, 2009).
Chair William (Bill) Clay Ford, Jr.—who selected Mulally as CEO—told Ford’s officers that the
company needed a fresh perspective and a shake-up, especially since it had lost $14.8 billion in
2008—the most in its 105-year history—and had burned through $21.2 billion, or 61%, of its
cash (Kiley, 2009). Because Ford knew that the company’s upper echelon culture was closed,
bureaucratic, and rejected outsiders and new ways of thinking, he was not surprised by his
officers’ reactions. However, Ford’s managers had no idea that the company was fighting for its
life. To succeed, Mulally would need Chair Ford’s full endorsement and support, and he got it.
The company’s biggest cultural challenge was to break down the silos that various executives
had built. As we will discuss more in Chapter 4, silos are specific processes or departments in an
organization that work independently of each other without strong communication between or
among them. A lack of communication can often stifle productivity and innovation, and this was
exactly what was happening at Ford.
Mulally devised a turnaround strategy and developed it into the Way Forward Plan. The plan
centralized and modernized plants to handle several models at once, to be sold in several
markets. The plan was designed to break up the fiefdoms of isolated cultures, in which leaders
independently developed and decided where to sell cars. Mulally’s plan also kept managers
in positions for longer periods of time to deepen their expertise and improve consistency of
operations. The manager who ran the Mazda Motor affiliate commented, “I’m going into my
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Introduction
fourth year in the same job. I’ve never had such consistency of purpose before” (as cited in Kiley,
2009, “Meetings About Meetings,” para. 2).
Mulally’s leadership style involved evaluating and analyzing a situation using data and facts and
then earning individuals’ support with his determination (Taylor, 2009). Mulally put a stop to managers’ meetings in which maneuvering for power occurred more than performance-based decision
making. He led by his mantra, “One Team, One Plan, One Goal.” The era of politicking and power
plays among officers was over. Mulally’s style and method was also effective with the unions; negotiations were tough but realistic.
Mulally also created a constant stream of data where all managers saw weekly reports of
Ford’s global operations that compared executives’ performance against profit targets.
Located in the Taurus and Continental rooms near Mulally’s office, the walls showed colorcoded bar charts, graphs, and tables that reflected information on Ford’s businesses in South
America, Russia, China, and other parts of the world. Red indicated divisions that weren’t
hitting profit projections; green indicated those that were on target; and yellow indicated that
performance could go up or down. Updated numbers were validated by pre-earning quarterly
audits. These openly visible charts and graphs created a culture of transparency where no
executive could avoid the truth. Mulally said numbers helped executives anticipate issues and
adjust strategy (Kiley, 2009).
AP Photo/Roberto Pfeil/dapd
Alan Mulally’s leadership was integral to enacting
positive change at Ford.
From the start of his tenure at Ford,
Mulally declared, “I am here to save an
American and global icon” (as cited in
Taylor, 2009, “A New Corporate Culture,”
para. 6). He was performance-driven, just
as he was at Boeing. He once stated, “I live
for Thursday morning at 8 a.m.” (Synder,
2010, para. 3), which was when he met
with direct reports and led by using
his Business Plan Review. Ford’s four
profit centers—the Americas, Europe,
Asia–Pacific, and Ford Credit—reported
out first, followed by 12 functional
areas, including product development,
manufacturing, human resources, and
government relations.
These meetings did not include premeetings or briefing books (Taylor, 2009), and Mulally stated
that the difficult questions he asked were never intended to embarrass anyone. He wanted people
to share information that could produce results in the marketplace. Neither BlackBerrys nor
distracting side conversations were allowed at these meetings. Mutual respect was demanded.
Mulally removed vice presidents from the meetings when they wouldn’t stop talking (Taylor, 2009).
Joe Hinrichs, a manufacturing supervisor, said, “Alan brings infectious energy. This is a person
people want to follow” (as cited in Taylor, 2009, “A New Corporate Culture,” para. 3). Mulally’s
practice and insistence on transparency through open and continuous communication with and
among all professionals at Ford was based on his assertion that “everyone has to know the plan,
its status, and areas that need special attention” (as cited in Taylor, 2009, “A New Corporate
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Introduction
Culture,” para. 2). For example, Mulally was resolute that Ford reduce its dependence on light
trucks, since gas is costly. Mulally’s openness gained him support across the company, even with
his candor and straightforwardness.
“Team Mulally,” as the CEO and his followers have been called, has succeeded in turning around
“a very sick company” (Kiley, 2009). The firm never accepted a government bailout like the other
U.S. auto companies. Ford generated $144 billion in revenue in 2014, down from $147 billion in
2013. The company sold 2.842 million vehicles in 2014 (Statista, n.d.).
The company positioned Mark Fields as the new CEO in 2014 following Mulally’s 8-year, highly
successful run. Although Ford’s competitive position is reportedly stronger than it has been since
the late Taurus/Explorer years of the 1990s (Taylor, 2014), there are still concerns ahead for the
company. First, Fields is not Mulally, who stands as one of the most popular CEOs the company
has known (Taylor, 2014). Despite this and the fact that Fields may be more direct and not as
charismatic as Mulally, he knows the company and industry well.
Whether Fields can meet the vehicle-related challenges of the digital and globalization age while
keeping the company from sliding back into a politically charged environment remains to be
seen. Fields has said that he faces the challenge of transitioning Ford’s vehicles from the “ultimate
industrial product” into the “ultimate technology product” (as cited in Nusca, 2015, para. 3).
Mulally’s “One Team, One Plan, One Goal” helped unify the company’s international operations, but
Ford’s sales show that it still is a “North American–centric automaker” (Ford Online, 2008) whose
profits stem mainly from the truck business (it earned $8.781 billion in 2013 pretax profit on North
American auto operations and lost $1.228 billion in the rest of the world [Taylor, 2014]).
The company must also be vigilant with regard to its corporate social responsibilities and legal
advertising. It was twice found guilty of falsely increasing the window-sticker fuel economy
ratings by 7 miles per gallon on several of its models (Taylor, 2014.). Fields must also ensure
that the company’s strategies, culture, and mind-set stay competitive and do not revert to preMulally practices. Fields has stated, “We want people to challenge custom and question tradition.
We want them to not take anything for granted” (as cited in Nusca, 2015, para. 6).
Critical-Thinking Questions
1. What went wrong at Ford that led to the competitive and organizational problems
that existed before Mulally came aboard?
2. What specific change (leadership) practices did Mulally employ to help turn Ford
around?
3. From your own reading, experience, and online research, what do you think
Mulally’s successor should do to make Ford vehicles more competitive?
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Section 3.1
Road Map for Change
Introduction: Getting From Here to There
Implementing major organizational changes is neither automatic nor mechanical. Transitioning to a new vision and future state is a process, not an event. During any change phase,
organizational leaders and change teams guide and shape people’s mind-sets and behaviors
to adopt new ways of thinking, apply different strategies, reinvigorate the culture, and align
internal systems. Leadership skills, intelligence, courage, and a high capacity for collaboration are required. The bottom line is that the success of any organizational change depends in
large degree on implementation.
Assessment allows change leaders to better assess the reality of the situation and a possible
future, whereas action planning allows changes to have a higher rate of success (Warrick,
2011). Although both factors are important in the change process, many OD practitioners
consider implementation to be most important. Without successful implementation, the
change process doesn’t matter.
The implementation process begins once the urgency for change is communicated, the organization is assessed for the type of change needed, and a plan is communicated throughout
the organization. In the following section, we present a road map that highlights the implementation phases of large-scale changes.
3.1 Road Map for Change
Corporations and organizations that embark on large complicated changes, as Ford did and
continues to do, depend on a road map from which other plans are generated. Chapters 1 and 2
discussed two such road maps: Kotter’s eight-step method and Cooperrider’s four dimensions
in appreciative inquiry. Here we discuss Ackerman and Anderson’s (2010) road map, which
overlaps with the other two. Figure 3.1 shows distinct implementation phases that combine
learning from all the steps to help leaders move to their desired destinations.
The change process model offers a road map without dictating the roads to take (Ackerman &
Anderson, 2010). It is up to leaders to decide the paths they will take based on their individual
circumstances. In this regard, the road map can be used as a “thinking discipline” rather than
a prescribed way of forcing an organization’s behavior into a plan and timeline. Used this way,
leaders can have flexibility as they navigate the organizational, technical, human, and cultural
dimensions of their end-to-end change process.
Even with this process model, transformational changes tend to have a life of their own
(Ackerman & Anderson, 2010). Since both the change process and outcome emerge and
evolve—that is, both process and outcome evolve unexpectedly and sometimes become a new
or even better development than predicted (Ackerman & Anderson, 2010)—leaders generally
launch a planned change without knowing exactly where they are going, even though they have
described a clear end or future state. This is the case because markets, the economy, people, and
many other factors are constantly changing. Still, leaders of transformational changes use road
maps and plans to guide their implementation.
Leaders must let go of old ways in order to move forward. Any implementation plan is only as
sound as the change strategy, and if all other plan variables are consciously and conscientiously
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Section 3.1
Road Map for Change
Figure 3.1: Road map for change
The change process shown in this model is continuous and can allow leaders to implement change and
organizational reach goals.
HEAR THE
WAKE-UP
CALL
I.
PREPARE TO LEAD
THE CHANGE
IX.
LEARN AND
COURSE CORRECT
VIII.
CELEBRATE AND INTEGRATE
THE NEW STATE
VII.
IMPLEMENT THE CHANGE
VI.
PLAN AND ORGANIZE FOR
IMPLEMENTATION
II.
CREATE ORGANIZATIONAL
VISION, COMMITMENT,
AND CAPABILITY
III.
ASSESS THE SITUATION
TO DETERMINE
DESIGN REQUIREMENTS
IV.
DESIGN THE DESIRED STATE
V.
ANALYZE THE IMPACT
Source: Ackerman, L. A., & Anderson, D. (2001). Awake at the wheel: Moving beyond change management to conscious change leadership. OD
Practitioner, 33(3), 46. Copyright© BeingFirst, Inc. Reprinted with permission from the authors.
enacted. Enhanced commitment and excitement, combined with the collective intelligence
of key decision makers, are essential requirements for a transformational change’s success
(Ackerman & Anderson, 2009).
Mulally’s example as a change leader reflects many of the stages presented in Figure 3.1.
While stages 1 through 4 were discussed in Chapters 1 and 2, it is helpful to briefly summarize some of them, paying particular attention to the implementation process. It is also
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Road Map for Change
Section 3.1
important to note that all stages in any change road map are in some way related to, and in
preparation for, the change’s implementation. In fact, the implementation’s success depends
on how effectively the previous stages were developed and carried out.
Planning and implementing a large organizational change is, in practice, not a linear or
mechanical process. As we said at the start: Change is not an event but a process. Some stages
loop back to previous ones as surprises and emergent changes occur.
Preparing to Lead the Change
Leaders generally embark on a change effort because of a wake-up call (Ackerman & Anderson,
2010). In the case of Ford’s turnaround, it was Bill Ford who watched the company’s stock,
cash, and competitiveness tumble. He called Mulally to lead the charge to change because the
officers in the company were not moved to take urgent action.
Mulally’s mission, then, was to turn Ford around. To prepare to lead the change, he learned
the reality of the situation by studying the facts, numbers, and details. He next began to create a case for the change while identifying the desired outcomes. During this time he was also
building his capability to lead the change, ensuring that he had the relevant skill sets, expertise, and experience (Ackerman & Anderson, 2010). Because he had learned how to deal with
enterprise-wide change at Boeing, Mulally seemed ready for the task. He also was charged
with clarifying an overall change strategy and creating an infrastructure that had the conditions to support the change effort. In this regard, he devised a turnaround strategy—the Way
Forward Plan—that centralized and modernized plants to handle several models at once and
that sold vehicles in several markets.
Creating Vision, Commitment, and Capability
Mulally’s overall vision was to return Ford to its preeminent status in the global auto industry.
His commitment and persistence were evident in his statement that he “expects the very best
of himself and others, [and] seeks to understand rather than to be understood” (as cited in
Taylor, 2009, “A New Corporate Culture,” para. 3). As Bill Ford once said about him, “Alan is
not a very complicated person. He is very driven” (as cited in Taylor, 2009, “A New Corporate
Culture,” para. 3).
Mulally built the necessary capability by reorienting the top-level global officers and 12 functional area managers to the company’s long-term goals and short-term operating objectives.
He ensured this alignment by regularly communicating to all managers via weekly operational reports that compared executives’ performance against profit targets.
Assessing the Situation
Mulally never stopped assessing Ford’s situation—its financial position, sales, marketing
status, and capabilities in relation to global competitors and in regard to his vision to get
Ford back to the top of the industry. In the turnaround described in the opening scenarios,
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Road Map for Change
Section 3.1
Mulally’s “One Team, One Plan, One Goal” was the road toward his desired state of seeing Ford
as the top global competitor in as many vehicle classes as possible. Although he depended
on his managers’ input to help determine vehicles’ design requirements based on customer
demand, as leader he ensured that the company’s culture did not return to the splintered
state of bickering and isolated control based on different officers’ preferences.
In turnarounds like Ford’s, Mulally’s method reflected a continuous examination of the ongoing impact of his changes. His use of continually changing data, information, and analysis,
interpreted at the Thursday morning meetings, was the basis for analyzing his vision’s impact,
the company’s goal, and its global operational systems.
Plan, Organize, and Implement the Change
Mulally’s plan centered on the implementation of his “One Team, One Plan, One Goal” mantra.
Put simply, that plan was:
Focus on the Ford brand (“nobody buys a house of brands”); compete in every
market segment with carefully defined products (small, medium, and large;
cars, utilities, and trucks); market fewer nameplates (40 worldwide by 2013,
down from 97 worldwide in 2006); and become best in class in quality, fuel
efficiency, safety, and value. (as cited in Taylor, 2009, “A New Corporate Culture,” para. 4)
This plan was easier to outline than achieve. When Mulally first arrived at Ford, he said it was
the toughest environment he had seen, but he believed that the company would succeed if it
adhered to its plan (Taylor, 2009).
Implementing the plan required preparing for all the stages discussed previously. In the road
map shown in Figure 3.1, implementation occurred after the preparation stages were completed, based on the development of the master implementation plan (Taylor, 2009). Because
Mulally had Chair Ford’s and the board of directors’ support, and because he painstakingly
prepared himself with the financial, organizational, cultural, and operational detail, he knew
he was ready to implement.
It is very important to state that Mulally met with and debriefed the officers, managers, and
many employees at Ford before and while planning the change. Mulally had also met with
Chair Ford several times and discussed the company’s situation before accepting the job. It
all seemed to pay off. Mulally’s insistence on transparency through open communication with
and among all professionals at Ford ensured that everyone knew the plan and where the
company was in the process. So, although the change was not easy, neither was it impossible
or unrealistic. Mulally had used a road map and a plan, as well as his intuition, discipline, and
confidence.
The change has proved successful to date, as shown in Ford’s financials and Mulally’s 2011
stock bonus. Mulally and Ford have “Celebrated and Integrated the New Change,” as stage 8 in
Figure 3.1 shows. At his retirement in 2014, Mulally received almost $300 million with stock
shares and options. While at Ford, he received a total base salary of $13.5 million with cash
bonuses of $30.8 million. He took in a total of $44.2 million in cash by the end of 2014 (Isidore,
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Road Map for Change
Section 3.1
2014). The road ahead has already proved challenging for Mulally’s successor Fields, as noted
earlier, as Ford continues the journey through stage 9, learn and course correct. The remainder of this chapter discusses how other planned changes are implemented.
Managing Change
Mapping the Road for Change
Suppose you are a member of the C-suite (that is, the top-level officers of a company, including
the chief executive officer, chief financial officer, and others) at a multinational corporation.
After a period of stable, albeit slow, growth, you begin to notice changes in output. The
40-year reputation of the company is at stake, as are the jobs of your employees. In order to
prevent a downward spiral that will result in layoffs and possibly plant closings, a change
must be made.
Developments of concern include customer complaints, faulty supplies that prompted a recall,
and plummeting revenue. In the interim, a short-term survival plan is in place to sustain
the company until the problems are reversed, but you and other members of the C-suite
are meeting to discuss an overall change in the way you do business. It is crucial to evolve
with the markets and be attuned to changes in the business environment, but this change
requires more than that. When warning signals like these are received, it is necessary to steer
the company in the right direction to avoid costly pitfalls that may threaten its long-term
prosperity.
The change process model in Figure 3.1 is called on to formulate the plan. The input of
C-suite members and unit managers is an integral part of the initial planning. Leadership
recognizes that careful mapping must be completed for the change to take hold and truly
transform the company.
Discussion Questions
1.
2.
3.
4.
When embarking on transformational change, what considerations do you need to
keep in mind as a leader to move the company to the desired state?
What is the impetus for change, and what tools are necessary to move forward?
What are the principles of implementing a change?
How important are the members of your workforce in a change implementation, and
how do you utilize their efforts?
(See the end of the chapter for possible answers.)
Check Your Understanding
1.
2.
Explain how Mulally’s change program at Ford exemplifies and differs from the stages in
Figure 3.1.
What are some important differences between change assessment and implementation? Which
of these two processes would you feel more interested and confident using to define, lead, and
manage change in an organization? Explain your reasoning.
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Section 3.2
Implementing Change Through Leading and Mobilizing
3.2 Implementing Change Through Leading
and Mobilizing
Implementing change is an art and a science. Not all leaders and CEOs succeed the way
Mulally did. In fact, there is a mixed track record when CEOs leave one industry to change a
company in another. As discussed in Chapter 2, John Sculley from PepsiCo, who was chosen
by Apple’s board of directors to take over as CEO from Steve Jobs, failed in that capacity, as did
his two successors. Robert Nardelli, a vice president at GE, became CEO of Home Depot and
was eventually pushed out by the board because his directive approach brought about mixed
results. CEO William Perez, formerly of SC Johnson (which makes household brands such as
Glade, Pledge, Windex, and so on) became CEO of Nike but resigned after 13 months due to
disagreements with Nike founder Philip Knight and the fact that he was running an unfamiliar
business. However, there are some success stories, such as that of Eric Schmidt, who was CEO
of Novell and became CEO of Google from 2001 to 2011 (Kiley, 2009). We begin this section
with the example of a change master, ex-CEO Larry Bossidy, who came from GE to successfully
turn around AlliedSignal, which later became Honeywell.
AlliedSignal/Honeywell and Larry Bossidy
Bossidy became the chair and CEO of AlliedSignal, Inc., in 1991. The so-called Bossidy era
spanned from 1992 to the early 2000s. The company began as Allied Chemical & Dye Corporation in 1920 before becoming AlliedSignal, Inc., following the acquisition of Signal
Companies, Inc., in 1985 (International Directory of Company Histories, 1998). As a large
industrial corporation, it was a player in many industries, including aerospace, chemicals,
fibers, automotive parts, plastics, and other advanced materials (International Directory
of Company Histories, 1998). In
1999 a merger caused AlliedSignal, Inc., to become Honeywell International, Inc. It ranked
number 74 on the Fortune 500
listing in 2015, with revenues of
more than $40 billion (Fortune,
2015b). Looking back, the vision
of AlliedSignal, Inc., was to “be
one of the world’s premier companies, distinctive and successful
in everything we do” (International Directory of Company Histories, 1998, para. 1). Its success
in achieving this was largely due
to Bossidy’s strategy and vision.
AP Photo/Marty Lederhandler
The Bossidy era was distinctive
for its quick and ruthless but effective change (International Directory of Company Histories, 1998).
Bossidy came from the electronics
Larry Bossidy (right) shakes hands with Michael R.
Bonsignore, chair and CEO of Honeywell, after the 1999
merger between the two companies. Bossidy would
become known for his ability to affect rapid, if ruthless,
change.
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Implementing Change Through Leading and Mobilizing
Section 3.2
and electrical equipment industry, spending the majority of his 34 distinguished years at GE.
His leadership positions included chief operating officer (COO) of the GE Capital Corporation
(also known as GE Capital), executive vice president and president of the company’s Services
and Materials Sector, and vice chair and executive officer of GE. After entering a new industry
and successfully mobilizing change, he is credited with transforming AlliedSignal, Inc., into
one of the world’s most admired companies. He achieved earnings per share growth of 13%
or more for 31 consecutive quarters and an eightfold increase in the company’s share price
(LeighBureau, n.d.).
Despite his tough methods and company drive, Bossidy was well respected. He was named
CEO of the Year by Financial World magazine in 1994 and Chief Executive of the Year by CEO
Magazine in 1998 (LeighBureau, n.d.). He knew where he wanted AlliedSignal to go and how
he wanted to get there. He knew that significant changes were necessary and wasn’t afraid to
make them.
Housecleaning
Bossidy’s first move at AlliedSignal was to “clean house,” which he did by reducing the number of employees from 98,300 in 1991 to 76,700 by 1996 (International Directory of Company
Histories, 1998). He saw that the company was internally focused and too crippled by ineffective organization—they had “centralized all the paper and decentralized all the people”
(Tichy & Charan, 1995, para. 29). Bossidy set out to fix this.
News headlines about this time announced, “Larry Bossidy won’t stop pushing,” and articles
described him as a “tough guy” (Lobel, 2000, p. 1). Bossidy was known for valuing hard work and
rewarding those who demonstrated it. He reportedly said that he expected involvement, ideas,
collaboration, leadership, development, drive, anticipation, growth, and adaptability from every
one of his direct reports (Bossidy, 2007). He used these expectations as guidelines when implementing change. He didn’t stop after he reduced the labor force. He cleaned up unprofitable
operations, sold off many small and some significant business units, and cut capital spending.
Corporate culture was the hardest to change, but Bossidy’s approach created a team-oriented,
less bureaucratic culture that was heavily focused on performance (Lobel, 2000).
A “Churn and Burn” Culture
Bossidy had high expectations, and he demanded from employees what he demanded of himself: results-oriented high yields, quality, and no-nonsense execution. This message was clearly
communicated and incorporated into the company culture. Bossidy’s strategic goals for 1999
were growth, employee development/learning, and quality improvement using Six Sigma—“a
management philosophy developed by Motorola that emphasizes setting extremely high objectives, collecting data, and analyzing results to a fine degree as a way to reduce defects in products
and services” (SearchCIO, n.d.). He worked toward these goals by stretching each employee to
his or her potential, which often translated into long days and stressing demands (Lobel, 2000).
Bossidy was once quoted as saying, “Meetings start at 7AM and run until 6PM. It’s hard to get
stuff done around other times. After weeks of meetings, you have a pile of stuff on your desk
and people think you’ve been on vacation” (as cited in Lobel, 2000, p. 4). The culture was
challenging but attracted employees who thrived in that type of performance-driven environment. As Sandra Beach Lin, then vice president and general manager of the Specialty Wax and
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Implementing Change Through Leading and Mobilizing
Section 3.2
Additive group, noted, employees knew that they would be in trouble if the company did not
make its numbers, and therefore did not need to be pushed by management. Instead, they
pushed themselves (Lobel, 2000).
A Dramatic New Structure
Bossidy’s new vision required a dramatic new structure, and he was willing to make bold
moves on the battlefield (Tichy & Charan, 1995). As he put it, “I don’t want to have to come
back a year from now and restructure all over again. If we’re going to take a charge, I want to
take a big one” (as cited in Tichy & Charan, 1995, para. 53).
In October 1997 AlliedSignal announced that it was restructuring from three sectors to
11 business units (International Directory of Company Histories, 1998). The Aerospace sector became Turbocharging Systems, Engines, Aerospace Equipment Systems, Electronics
and Avionics Systems, Aerospace Marketing Sales & Service, and Federal Manufacturing &
Technologies. The Automotive sector became Automotive Products Group and Truck Brake
Systems. Finally, the Engineered Materials sector became Specialty Chemicals, Polymers, and
Electronic Materials.
This was no small change. It eliminated an entire layer of management. Bossidy issued a press
release saying that each new unit
is a significant factor in its market and has global reach, world-class talent,
and the critical mass to operate autonomously. Removing the sector layer
will enable these businesses to make faster decisions and serve customers
with greater speed, flexibility, and cost effectiveness. (Reference for Business,
2015, “Bossidy Era,” para. 4)
The Key: Goal Deployment
As CEO, Bossidy began each year by rolling out strategic goals that became the foundation
for the goal deployment process (Lobel, 2001). All employee goals were linked to those of the
enterprise. Before Bossidy could implement any of these transformations, the company had
to be united in vision and values. He started at the top with an off-site meeting for the top
12 company managers. They agreed on seven values: customers, integrity, people, teamwork,
speed, innovation, and performance (Tichy & Charan, 1995).
Employees at all levels then set goals with these seven values guiding their planning. The goals
were deployed through what was referred to as Total Quality (TQ). AlliedSignal fully committed to use TQ as the driver for change; if anyone did not believe in this initiative, they were
asked to change or leave the company. Some employees changed, while others left (Tichy &
Charan, 1995).
Coach Bossidy
Bossidy’s results-driven culture was also people-oriented. As he said, “I think you don’t
change a culture. I think you coach people to win” (Tichy & Charan, 1995, para. 22). Bossidy’s
coaching allowed employees at all levels to set goals and understand they would be stretched
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Implementing Change Through Leading and Mobilizing
Section 3.2
to achieve maximum performance. This culture was a significant success factor in implementing the dramatic changes made during the Bossidy era.
Bossidy talked to employees and practiced what management writer Tom Peters called MBWA,
management by walking around. Coaches are not very effective without good two-way communication, so in his first 2 months as CEO, Bossidy talked to about 5,000 employees at all levels
across the country. Talking to people was Bossidy’s main form of coaching. He coached them at
what is known as skip-level, informal lunches of about 20 employees (Tichy & Charan, 1995).
He was intentional about creating interactive settings and using surveys. Getting employees on
board was key: Obtaining support from lower level employees can be powerful and convinces
middle management to support the change as well (Tichy & Charan, 1995).
Communication is not the end-all, be-all to coaching people to win. Successful change leaders
like Bossidy also provide support. As Bossidy astutely recognizes, leaders cannot get their
employees to perform well by yelling at them and abusing them. Instead, they must show
employees the big picture and demonstrate how change will benefit the company. They do
this by establishing credibility and giving employees incentives and help. With this support,
employees can and will do anything (Tichy & Charan, 1995).
By coaching his employees to win, Bossidy’s increased influence bolstered his authority in
both strategy and operations. Tichy and Charan (1995) posit that “managers add value by
brokering with people, not by presiding over empires” (para. 77). That is what Bossidy did at
AlliedSignal, Inc.—he brokered with those still at the company to transform it.
There are many factors necessary for effectively leading and managing large organizational
changes; having a plan and a model are certainly two. The following are other factors advocated by experts and studies in the field and illustrated by Bossidy at AlliedSignal.
Five Dimensions of Leading and Managing Change
Bossidy embodied elements of many implementation models of organizational change,
including Cummings and Worley’s (2001) five dimensions of leading and managing change
depicted in Figure 3.2. Those dimensions include motivating change, creating a vision, developing political support, managing the transition, and sustaining momentum. Because we discuss the dimensions of developing political support in Section 3.5 of this chapter and present
strategies for sustaining change in Chapter 5, we will focus here on motivating change, creating a vision, and managing the transition.
Warrick’s (2010) six-step change implementation process will also be discussed within the context of Cummings and Worley’s model. Warrick’s steps include the following:
1.
2.
3.
4.
Keep the big picture in mind.
Choose the right interventions.
Use a sound change model to plan and manage the change process.
Keep people engaged and make the incentive for change greater than the incentive to
stay the same.
5. Identify and manage resistance to change.
6. Follow through and learn from the process. (Warrick, 2011, pp. 259–260)
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Section 3.2
Implementing Change Through Leading and Mobilizing
Planned organizational change
does not happen by accident.
Although not all events in a
change can be controlled, there
are logics to leading and managing change initiatives in organizations. The following five
dimensions illustrate practical
steps for leading such planned
changes.
Motivating Change
Figure 3.2: Five dimensions of change leadership
and management
Navigating the five dimensions of change includes motivating
change and sustaining a change, and several steps in between.
Motivating Change
• Creating readiness for change
• Overcoming resistance to change
Creating a Vision
• Mission
• Valued outcomes
• Valued conditions
• Midpoint goals
Bossidy was a master at motivating change. He created
readiness and overcame resisDeveloping Political Support
tance. Most resistance occurs
Effective Change
• Assessing change agent power
Management
• Identifying key stakeholders
because people know and/
• Influencing stakeholders
or believe that many planned
changes do not succeed; the
Managing the Transition
reasons for change are not
•
Activity
planning
clear; or the organization’s
• Commitment planning
leaders are not fully invested
• Management structures
in making sure the change is
successful (Warrick, 2011).
Sustaining Momentum
Leaders need to identify the
• Providing resources for change
specific reasons why change is
• Building a support system for
change agents
resisted and respond accord• Reinforcing new behaviors
ingly. Bossidy’s approach to
motivating change involved Source: Adapted from Thomas G. Cummings and Christopher G. Worley. Organization
intense and widespread com- development & change. Fig. 7.1, p. 109. Copyright © 2001 by South-Western College
Publishing, a division of Thomson Learning.
munication with all employees to avoid as much resistance as possible. He succeeded in preventing some resistance by
keeping the big picture and his vision in mind while dealing with the reality of the situation.
Two-way actions and communications must also take place to set an organizational tone
regarding change and must be continually updated as progress is made. Stakeholders need to
know what the change is, why it is happening, what has been accomplished so far, how their
efforts contribute, and when the change will be completed. For example, Bossidy spoke with
5,000 leaders before implementing the change and then hosted small lunches with employees to evaluate the change process as it was taking place. He gained employees’ respect
through good communication. Leaders must gain the respect of the organization when leading change, and when resistance is persistent and/or unwarranted, they must take corrective
action before change efforts are negatively affected (Warrick, 2011).
Creating a Vision
As we saw with Mulally at Ford, leading change also requires vision—a big-picture view framed
by the organization’s goals and an assessment of past, current, and future conditions. The change
process is dynamic and must be informed by the organization’s larger vision and values.
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Implementing Change Through Leading and Mobilizing
Section 3.2
Bossidy’s vision was to make AlliedSignal a distinctive, successful, premier global company.
This vision informed every decision and communication he made. He saw where AlliedSignal
could go and took the time to understand how it would get there. He had not only a b
ig-picture
view, but a systems-level understanding. The organization as a whole is a system comprising
many parts that interact with one another. Effective change leaders must understand that
changing one part of an organization can also affect the other parts, and that a structural
change may alter the organization’s culture (Warrick, 2011).
Developing Political Support
Although we discuss the importance of developing political support in Section 3.5, we note
here that Bossidy took into account his company’s political environment in relation to change
and responded accordingly. He understood the importance of internal politics in implementing change. To Bossidy, AlliedSignal executives were important stakeholders, and he took
action to influence them through goals and performance measures.
For example, when two marketing and sales executives could not get along and were not acting in alignment with the vision, Bossidy fired both of them and had a guard escort them out.
He recognized that negative political dynamics were hindering change and company performance. The two were hired back at 3:00 p.m., after convincing Bossidy that they would be
able to work well together despite their differences. Bossidy gave them a second chance, and
the lesson was learned (Bossidy, 2007).
Managing the Transition
Interventions must be designed and implemented to motivate and manage the transition.
Bossidy began his change process at AlliedSignal with several big bang interventions. He
laid off 21,600 employees, sold off business units, reduced capital spending, and did major
restructuring. He was not afraid of large-scale change and knew it was needed to move AlliedSignal toward the vision. These interventions were not implemented prematurely or without
adequate planning. Planning is a key responsibility of leaders when motivating change and
managing the transition. In some instances activities can be combined with planning, and
leaders must be careful to avoid misdirected or unnecessary efforts at any level.
Additionally, using a sound model to plan and manage the change process increases the effectiveness of implementation. Whether Bossidy explicitly followed Warrick’s proposed steps or
not, it is clear that he employed all of them while leading change at AlliedSignal/Honeywell.
Bossidy believed in relying heavily on a practical road map that identifies possible obstacles
to overcome (Bossidy & Charan, 2002).
Bossidy also employed elements from the change road maps presented earlier in this text.
For example, he created a sense of urgency for change (NHS North West, 1996) through his
decisiveness and timeliness, stating that people should expect him to make well thoughtout, quick decisions once he obtained the information that he needed (Bossidy, 2007). The
moment he took over AlliedSignal in 1991, he did just that. Bossidy gathered all the information he needed and made quick decisions to eliminate jobs and restructure from three sectors
to 11 units. Urgency was created as employees experienced swift action and follow-through.
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Section 3.2
Bossidy was decisive; there was no honeymoon period while the company considered
change. As soon as he had the plan and information to support it, change began to occur. He
used a guiding dominant coalition to implement his change strategy (NHS North West, 1996).
Bossidy knew he needed a strong management team to implement the change he wanted. In
his first 2 years, 30% to 40% of his day was spent hiring and developing leaders (Bossidy,
2001). In engaging in hands-on hiring, Bossidy was handpicking a coalition to share his vision
and help him implement change.
Bossidy generated short-term wins (NHS North West, 1996) to bolster support for the implementation process by focusing only on what needed to be changed and leaving the rest of the
company alone (Bossidy & Charan, 2002). In just 5 years, Bossidy’s changes increased the
company’s return on sales to 7.3% and reduced long-term debt to only 22% of total capital
(International Directory of Company Histories, 1998). Communication and strongly enforced
goals allowed the AlliedSignal team to work quickly to implement change.
BananaStock/Thinkstock
Interviews are one way to gather continuous feedback
from both employees and management, something
that is crucial to smoothly managing change.
Feedback was another critical success factor in leading and managing
the transition at AlliedSignal. Some
organizations may neglect to collect
feedback, putting change initiators
at risk of not knowing when their
changes are not working as planned
(International Directory of Company
Histories, 1998). Change is handled
best by organizations that are oriented toward learning, and feedback
is the most direct and continuous
way to learn about change within the
organization. Feedback on the change
process provides leaders with useful
information about what is and isn’t
working and ideas for improvements
or efficiencies.
Feedback can be gathered using many unique methods. These include surveys, interviews,
observation by employees responsible solely for monitoring change, and using teams. Bossidy
used his continuous communication process not only to gather new information and obtain
a sense of how the change affected people, but also to give positive and negative feedback to
his team and employees, both about the change and their performance. Feedback ensures
that mobilization is a dynamic, living process and, when done well, orients the organization
toward learning.
Sustaining Momentum
While managing and mobilizing change, employees must also be engaged and involved, especially those who lack access to higher level leaders and managers. This is because leadership
may become engaged in other tasks, key players may be unable to fulfill all their responsibilities, and leadership changes may jeopardize the organizational changes (Warrick, 2010). It
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Strengthening Alignment With the New Vision and Future State
Section 3.3
takes a concerted effort to provide the resources necessary to sustain change and reinforce
new behaviors.
Communication is an important tool when building support systems and providing a unified
and complete understanding of the vision. Bossidy created a demanding environment, but
he also provided many outlets for communication and feedback (in terms of concerns, ideas,
plans, goals, and performance). His expectations with regard to employee performance and
responsibilities were made very clear. Bossidy later became known in management literature as a leader who excelled at execution, which involved engaging and involving employees
(Bossidy & Charan, 2002).
However, with regard to creating incentives for change, it is also important to note that these
changes typically only benefit the organization and signify more work and little benefit for
those employees who are actually implementing the change. To this point, Bossidy was not proficient at providing incentives for change as much as he emphasized the achievement of goals.
His “incentive” was that employees would likely be fired if they didn’t meet the performance
goal. This type of culture worked at AlliedSignal because employees attracted to the company
were those who were looking for this type of environment; however, this performance-driven
method does not often result in the best change. It also requires more oversight and time when
creating goals (Holstein, 2002).
Despite the harsh performance-driven culture, Bossidy succeeded in following through on
the process of the change initiative. He sustained momentum through the change, which is
not easy. It takes a great deal of discipline and determination to provide successful, lasting
changes and to convince leadership to continue with the process until all goals are achieved.
However, successful implementation is worth the hard work—it accomplishes necessary
changes, increases confidence in the change process, and empowers and excites employees
at all levels.
Check Your Understanding
1.
2.
If you were instructed to help a team plan a large change for an organization that recently
hired you, outline some steps you would take to share at your first meeting.
What are some concepts and actions that Bossidy used in the change effort at AlliedSignal? How
successful was he in his efforts?
3.3 Strengthening Alignment With the New Vision
and Future State
Organizational change expert Daryl Conner (2006) stated in his book Managing at the Speed
of Change that once effective change leaders determine what must be done, achieving these
goals involves three components of organizational change: intent, people, and delivery.
Intent involves creating and sharing the vision for the end result of the change and protecting
its integrity as the company moves through the change process. This step is especially important at the beginning of a change effort, since it helps garner commitment and motivation.
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Strengthening Alignment With the New Vision and Future State
Section 3.3
People refers to the human aspects of change. It involves developing employees’ commitment
to the change, reducing resistance, aligning the change with the company culture, and creating
synergy. Delivery includes setting up governance, overseeing interdependencies, providing
progress reports, and prioritizing and assigning resources. When all three components are
combined, there is a higher probability of adding full value to the process and its outcomes.
The issue in integrating these three components in organizational change is that each one deals
with a specialized area (Conner, 2006). Therefore, when a pressing project or goal is being
pursued, rarely are the three areas dealt with simultaneously. From this reasoning, Conner
(2006) discovered the importance of strategy execution—that is, combining the components
of intent, people, and delivery to increase the probability of the change initiative’s success.
Another way to view how planned organizational change combines intent, people, and
delivery—including implementation—is through the need to align the major dimensions of
vision, strategy, culture/people, and processes that were discussed in Chapters 1 and 2. At the
implementation stage of organizational change, aligning these dimensions involves redirecting the activities of leaders, managers, and professionals to the new vision and future state of
a transformational change.
Leadership: Aligning
People and Culture to the
New Vision and Strategy
Aligning the organization to a new
vision and strategy begins at the leadership level. Leaders like Bossidy of
AlliedSignal and Mulally of Ford transformed their companies through dramatic vision and cultural alignment to
it. Collins (2000) noted the distinction
among values, vision, and operations:
Core values are timeless and should
not be changed, but the operating
practices and culture of an organization should never stop changing.
GuidoVrola/iStock/Thinkstock
A leader must be able to guide a company toward a
new vision while keeping the people and the organizational culture in alignment with core values.
Before a leader can align the people and culture with the vision, she or he must distinguish what
should change and what should not. An organization’s vision is comprised of three elements:
(a) its mission or purpose—the reason why it exists; (b) its enduring core values; and (c) its ambitious, achievable goals for the future. The most important of these elements is the company’s core
values (Collins, 2000). Strong core values give leaders the platform for vision and change.
Strategy, Culture, and Processes
An essential part of effective change is selecting leaders who can align the right vision and
strategy to an organization’s industry environment, and then ensure that the culture and
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Strengthening Alignment With the New Vision and Future State
Section 3.3
other organizational dimensions are working together toward common goals. Because CEOs
and leaders are chosen to identify a new vision and select an effective strategy for a failing or
faltering organization, the stakes are high for the leader. This is especially important when
implementing a sizable change because alignment helps to uphold the organization’s core values, reinforce its purpose, and move it toward its goals. When a company’s alignment is strong,
anyone can walk in and know what its vision is without explicitly being told (Collins, 2000).
While we have discussed leaders’ strategies, styles, and methods of organizational change, as
well as the effects of change on employees and teams, it is also important to raise awareness
of the importance of organizations’ and companies’ boards of directors. These are the bodies
whom leaders generally report to and must gain approval for their strategies and actions. It is
the role of boards of directors to keep the organization, and the leader, on course of the purpose
and mission of the enterprise. A case of a leader whose strategies were not accepted by the
board of directors is Hewlett-Packard’s former CEO Leo Apotheker. In August 2011 Apotheker
announced to the tech world that HP was spinning off its personal computer (PC) division and
business—in which HP is one of the world’s leading manufacturers (Taylor, 2011). Debate in the
industry and at HP ensued. Meg Whitman, former CEO of eBay, was hired to replace A
potheker
and his strategy. Shortly after she came aboard, Whitman announced that the PC division is
still right for the company and for its customers, partners, shareholders, and employees (Couts,
2011). An excerpt from HP’s formal statement on the strategy change stated:
The strategic review involved subject matter experts from across the businesses
and functions. The data-driven evaluation revealed the depth of the integration
that has occurred across key operations such as supply chain, IT and procurement.… Finally, it also showed that the cost to recreate these in a standalone
company outweighed any benefits of separation. (Couts, 2011, para. 8)
Aligning to Strategy
After the CEO or leader and top-level executives select a new strategy, implementing a
transformational strategy generally requires a shift in the organization’s culture, values,
structure, roles, skills, and processes. In the HP example, it appeared that the proposed
strategy change would not add to the company’s competitiveness and would be detrimental
to HP’s culture and stakeholders.
Note that Mulally at Ford achieved alignment through his “One Team, One Plan, One Goal” mantra, which was embodied in the strategy of the Way Forward Plan. He insisted on transparency
and communication, so that the vision was clear and supported by the entire organization.
A similar example comes from the 3M Company. Leaders at 3M were also able to create
alignment because of clear and enduring core values, a strong vision, and the fact that they
created opportunities to execute these (Collins, 2000). 3M’s corporate values state that the
company will:
act with uncompromising honesty and integrity in everything we do; satisfy
our customers with innovative technology and superior quality, value and service; provide our investors an attractive return through sustainable, global
growth; respect our social and physical environment around the world; value
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Strengthening Alignment With the New Vision and Future State
Section 3.3
and develop our employees’ diverse talents, initiative and leadership; and
earn the admiration of all those associated with 3M worldwide. (3M, 2015,
“Our Values,” paras. 1–6)
All aspects of the company and its operations align with these values. It has worked hard to
create a culture based on excellence and innovation that is firmly aligned with its core values.
At 3M, scientists have been permitted to spend 15% of their time on projects of personal interest (a similar practice exists at Google). As 3M leaders see it, creativity allows for innovation and
progress and is an important way to align employees and their efforts to the vision. 3M also
requires that 30% of division revenue come from new products. The company supports new
ideas (through an internal venture capital fund), provides a dual career track, and gives entrepreneurial and innovation awards (Collins, 2000). Through its actions, 3M leaders make the
company’s vision and strategies clear. Action is the primary means of alignment.
When aligning employees with the vision, leaders should consider nonfinancial incentives in
addition to financial ones. Nonfinancial incentives can sometimes be as or more effective
than monetary rewards in developing long-term
employee engagement (Dewhurst, Guthridge, &
Mohr, 2009). Part of aligning people to the
vision is motivating and keeping them engaged.
Employee morale can be improved with accolades from managers and one-on-one attention
from leaders, as well as the opportunity to participate in task forces or lead projects (Dewhurst
et al., 2009).
Blend Images/Superstock
Nonfinancial incentives, such as
employee-of-the-month programs, can
be just as effective as money when it
comes to keeping employees engaged.
Businesses are in need of leaders and employees
who are involved and eager to exceed expectations, particularly in an environment of continuous change (Dewhurst et al., 2009). Engagement
and alignment stem from good communication
and motivation. In the case of Ford, Mulally had a
well-communicated plan that he consistently followed. This created a sense of stability, making the
change seem more manageable.
Transitioning Cultures
A challenge pertaining to alignment arises when
achieving the new vision requires a fundamental shift in culture. Employee distraction and
demoralization can impede cultural changes and result in negative, counterproductive energy
within an organization (Ghislanzoni, Heidari-Robinson, & Jermiin, 2010). Canada’s Bombardier faced such a cultural transition in the early 2000s. Pierre Beaudoin, CEO and president
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Strengthening Alignment With the New Vision and Future State
Section 3.3
since 2008, had a formidable task. To change the culture, Beaudoin had to shift the company
from hard goals to soft goals and find a way to champion change. Once driven solely by its
manufacturing and engineering goals, Bombardier was on its way to becoming a company
dedicated to its customers, its workforce, and continuous improvement (Simpson, 2011).
Bombardier was affected by the aviation and aerospace industry recession that followed the
September 11, 2001, terrorist attacks, but the company also acquired the railway transportation company Adtranz from DaimlerChrysler in the same year. The company’s function-based
structure had allowed it to make such acquisitions and grow. This growth was positive but
kept the focus away from the customer. The Bombardier culture was in silos (per function)
and needed to be integrated and aligned toward a new, customer-focused vision. Employees
didn’t understand the company’s vision or values, making it nearly impossible for them to
support it. The culture was one in which value was placed on any individual who was able to
get the job done in a crisis but with very little focus on teamwork (Simpson, 2011).
The company then made a shift from hard to soft goals. Hard goals, or goals that have clear,
quantifiable criteria like performance figures, are often easier to measure. They are necessary
but cannot be the main focus if a cultural transition is to take place. Instead, soft goals, or
goals without clear, measureable criteria—such as employee initiative and communication—
had to be the focus. Bombardier leaders translated soft goals into hard measurements wherever possible to help the company evaluate progress. The goal was to encourage frontline
employees to become more proactive and take initiative. This process took time, as culture
cannot be changed quickly (Simpson, 2011). The leaders at Bombardier understood a critical
success factor in alignment—goals must be connected to the daily work of each employee. If
employees cannot see or understand the alignment, it will not be sustainable.
Effective alignment is achieved when there are champions of change. Champions are visible,
daily examples of alignment. As Bombardier recognized, it is critical to have employees who
will reach out to others and spread new ideas throughout the company (Simpson, 2011). By
engaging employees across all levels to become champions of change, the vision and strategy
spread more quickly, consistently, and thoroughly throughout the organization.
Changing Systems and Processes
Aligning culture to new strategies lays the groundwork to successfully implement new systems and processes. Looking back at stage 6 in Figure 3.1, planning and organizing must occur
before the change can be successfully implemented.
A process is a series of actions or steps designed to achieve a particular goal, objective, or
milestone. The strategy dictates the necessary processes. The leader must evaluate whether
those processes exist yet in the organization and, if so, whether (and how) they are contributing to implementation. Many companies must move from a narrow, project-based perspective to a broad, program-based, end-to-end perspective (Browning, 1993). This can happen
on either a micro or macro level; but either way, changing systems and processes requires a
big-picture view. The leader must see and understand how all the pieces should and do work
together to accomplish the strategy.
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Strengthening Alignment With the New Vision and Future State
Section 3.3
Accountability is important when working with new or improved systems and processes.
With this in mind, Browning (1993) suggests that the organization create the role of process
owner. The process owner is the employee who is given both responsibility and accountability regarding how the new or improved process functions (Browning, 1993). This relates back
to alignment; for new systems and processes to work, there must be spaces for them, created when the organization was aligned to the new vision. Changes in processes and systems
must be made carefully and correctly to prevent employee and cultural morale from dropping
(Ghislanzoni et al., 2010).
Ghislanzoni and colleagues (2010) note the top five strategies used by successful organizations when changing their systems and processes. The first is that successful organizations
use reorganization to change employees’ mind-sets and behaviors. Processes and systems
are often completely integrated, meaning that employees at all levels of the organization are
involved. If done well, a change in processes and systems can help align the culture to the new
vision, and reinforce that alignment.
The second strategy focuses on what the new organizational model is and how it would work
within the company (Ghislanzoni et al., 2010). Leaders must look at both the conceptual and
the reality when implementing change—one without the other is incomplete and ineffective.
The third strategy involves implementing the model quickly to begin immediately providing value. Implementation often happens more slowly than leaders would like, but changes
that have been competently and thoroughly planned and organized are more likely to be less
wasteful and more successful.
The fourth strategy is to attend to any risks or roadblocks as early as possible in the process,
which enforces the need for the leader to monitor the process and plan before it is implemented. Finally, successful companies launch new business initiatives just prior to or at the
same time implementation is completed (Ghislanzoni et al., 2010). Small and early victories
are key, and sustaining the momentum is important for implementing change. This is also
true at the system and process level.
Fine, Hansen, and Roggenhofer (2008) note six habits lean leaders—that is, leaders who
streamline and bring effective practices—adopt when changing systems and processes:
1.
2.
3.
4.
5.
6.
A focus on operating processes
Root-cause problem solving
Clear performance expectations
Aligned leadership
A sense of purpose
Support for people
Processes should be a focus, and successful leaders must ensure that processes are standardized (Fine et al., 2008). The goal is to solve the root problem, rather than generate temporary
solutions to surface problems. This involves providing learning opportunities as processes and
systems are changed. With change comes the need for performance measurements that must
be communicated and evaluated at all levels. Functional boundaries shouldn’t stop changes
in process. Looking at the big picture often requires that processes change across silos or
departments, which requires that leadership in all functions be aligned with the vision.
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Section 3.3
Finally, changes must be related to employees’ day-to-day work. Leaders must show others
how all the pieces fit together and set both short- and long-term goals. Companies should
change with purpose and support. Mulally, for example, provided purpose and support
through good communication. He first aligned himself to the vision and then led by example.
Processes and systems were changed—not arbitrarily, but strategically—and the change process was approached as a learning process.
These six habits encompass the importance of aligning culture and people to the vision both
before and during the implementation of new processes and systems. Leaders must see the
real problems and develop a well-communicated and well-followed plan that adhere to the
vision, and set clear expectations at all levels.
Managing Change
The Specifics of Alignment
Suppose you are implementing change at a major pharmaceutical company. You want to
veer the company away from having the stereotypical reputation of a medicine factory
concerned mainly with profit margins and cost-cutting measures. Instead, you want to steer
the corporation onto a path that concentrates on the customers. Your vision: improving
customers’ health is paramount—set out to do good for society and make it good business.
Getting leadership on board is one of the first steps. You set out to integrate the three
main components of proposed change: intent, people, and delivery. You recruit leadership
by communicating a clear vision and announcing your commitment to protecting the
organization’s integrity and in an effort to foster buy-in from managers and employees,
thereby aligning the culture to your vision. You work on redesigning the infrastructure to
manage delivery, including resource allocation, governance revisions, and metrics. Along
with your team, you begin to refocus activities of unit managers to support the new vision.
It is important to integrate the three main components of the proposed change (intent,
people, and delivery). However, as they are different dimensions of organizational change,
you must try to spin several plates at once and keep your attention focused on all corners
of the organization. You are determined to lead by example. You see how the pieces of your
organization fit together to achieve your vision, you have a big-picture view that you are
communicating to others, and you are approaching this change as a learning process.
Discussion Questions
1.
2.
3.
4.
What role do values play and how do they affect the vision and culture in a
transformational change?
What are the stages, in order, to take as you implement change?
What are some specific ways to align the culture of the organization with the change
initiative?
What are some of the pitfalls to be avoided?
(See the end of the chapter for possible answers.)
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Plan-to-Action: Roles, Relationships, and Interventions
Section 3.4
Check Your Understanding
1.
2.
What techniques did Bossidy use at AlliedSignal to align the new vision, strategy, culture/
people, and processes? Explain.
If a manager asked you for tips on how to implement an organizational change, what lessons
and knowledge from this section would you share?
3.4 Plan-to-Action: Roles, Relationships,
and Interventions
Whereas Mulally, Bossidy, and other top-level leaders generally serve as the champions of
change in their organizations, assigned managers and teams work with consultants to drive
the daily planning and implementation processes. Although there is no one best way to organize change, most models refer to some form of top-down structure to launch the process,
which cascades across all other organizational units. This section discusses how the roles,
relationships, and planned activities are designed and implemented.
Assigned Roles and Relationships
Having a comprehensive change road map and plan in hand—like the one discussed in the
first section of this chapter—enables the CEO or top leader to proceed with the help of human
resources professionals to recruit and assign others to transition the organization. The following framework represents different roles and responsibilities of different change leaders
and professionals in an organization described in Table 3.1.
Leading and managing the change transformation involves the normal operating business
side of an organization to coordinate with the planned change side. Human resources professionals are involved throughout the change process. Depending on the size of the organization and the scale of the change, assigned roles and relationships can involve a number of
people and teams, as Table 3.1 shows.
Some of the roles in Table 3.1 involve integrating individuals’ and teams’ responsibilities into
the organization’s daily business functions and specific change activities. For example, the
sponsor (who works for the organization) must interact with representatives from all the
groups. Similarly, the change consultant and his or her team (who are dedicated to the change
program and do not work as part of the business functions) must interact with the leadership
change team and the executive team (members from teams who do work for the organization).
Power, Authority, and Responsibilities of Change Leaders and Teams
Notice in Table 3.1 that power and authority are based on a number of sources, including
position, technical expertise and knowledge, strategic and operational experience and knowhow, ability to motivate and serve as a positive role model, interpersonal and organizational
communication skills, and the capability to execute the change requirements.
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Section 3.4
Plan-to-Action: Roles, Relationships, and Interventions
Table 3.1: Assigned leadership roles and relationships
Roles
Responsibilities
Deliverables
Sponsor (highest line
authority)
“I give the ‘go-ahead’ to implement,
provide resources, clarify outcomes,
make course corrections, and sponsor the change.”
“I set the direction and expectations,
coordinate communication, sign off on
major decisions, inspire confidence, and
resolve significant disputes.”
“We are cross-functional, representing the entire organization; we
have been delegated the authority
to help create and implement the
change strategy with the executive team. We create conditions to
realize breakthrough outcomes. We
own the change methodology and
support its implementation in the
organization.”
“We develop the change strategy and
supporting process plan producing
results. We oversee the realignment
and resources of the change strategy to
ensure effective integration of all change
objectives. We also model behavior and
roles required to implement quality
results.”
Executive team
(organizational
senior managers)
Leadership change
team
Change consultant
and project team
“We manage the outcomes and
results, coordinate the business
with the change strategy and
outcomes, and balance priorities between the change activities
and organizational business with
middle managers and frontline
supervisors.”
“We lead and manage both the
process and technical sides of
the change. We coordinate with
the Leadership Change Team to
integrate the design and implementation of project change activities
throughout the organization.”
“We authorize and fund the change
requirements. We manage expectations,
maintain operations, model new behaviors and attitudes of the change and new
culture, and sign off on daily decisions
from the change team.”
“We ensure the process and completion of
all the major stages/phases of the change
for each goal. We strategize, problem
solve, and coach the business side on all
steps and issues of change initiatives from
plan to implementation. We also model
change behaviors and mind-sets required
for success of the change.”
Source: Adapted from Ackerman, L. A., & Anderson, D. (2010). The change leader’s roadmap. San Francisco: Pfeifer, an Imprint of
Wiley, Chapter 1; and The Adkar model of change. Loveland, CO: Prosci. Retrieved from http://www.change-management.com
/tutorial-job-roles-mod2.htm
The sponsor is an executive from the organization’s line operation. This executive has position
authority and power in the chain of command to direct employees to perform tasks related to
their positions and to the organization’s goals. At the same time, the sponsor must be able to
oversee the entire change process while inspiring others to succeed.
The organization’s executive team members must be able to balance priorities, workloads,
and the expectations of middle managers and frontline supervisors who are meeting the
needs of the daily operations of the organization while implementing new requirements of
the change. They must ensure that the change effort’s strategic goals and objectives are being
implemented, and also model the behaviors and mind-set of the new organizational state that
is still in transition.
The leadership change team consists of members from different functional areas (for example,
marketing, finance, production, and research and development) who must lead the change
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Plan-to-Action: Roles, Relationships, and Interventions
Section 3.4
strategy’s implementation. They create the conditions and own the change methodology to
realize breakthrough outcomes. They are content experts in their areas of specialization who
are charged with ensuring that the details of the plan are integrated “on the ground.” Like
the other members responsible for the change, they too must be the change that they are
effecting.
The change consultant and project team lead and manage the technical sides of the change.
The change consultant coordinates with the leadership change team to integrate the design
and implementation of specific change activities throughout the organization. The power and
authority of change consultants and their team—all of whom are usually hired externally—is
based on their knowledge and expertise, not on their organizational status. Therefore, they
need the leaders and members who are organizational hires to cooperate by performing their
work. As OD specialists, part of their expertise resides in their human relations, communication, and execution skills.
Criteria of Change Leaders and Teams
Organizational members should be selected to help plan and implement the change according to certain criteria. These include being (a) highly competent in the organization and
(b) best positioned to effectively lead the effort (Ackerman & Anderson, 2010). In addition, we
would add the following criteria: (c) being well-respected and well-liked by professionals in
the organization, (d) being trusted by others in positions of authority and responsibility, and
(e) having a track record of accomplishments that are central to the organization’s mission.
These are also characteristics, competencies, and experience that CEOs like Mulally brought
to Ford and Bossidy to AlliedSignal/Honeywell. Although they were not always liked by everyone, they earned respect based on their competence, their knowledge and experience, and
their ability to demonstrate productive results. This is important for promoting collaboration,
which is a cornerstone of effectively implementing change initiatives.
Implementing Interventions
A major task of change leaders and teams is to design and implement change interventions. With regard to organizational change, interventions are specific planned activities
and events aimed at helping an organization increase its effectiveness (Cummings & Worley,
2009). Based on diagnoses of problems organizations face and/or opportunities that can be
taken advantage of, OD interventions are designed to put an organization or one of its units
into a more effective state. From this perspective, an intervention is effective if it meets three
criteria: (a) it fits the organization’s needs, (b) it has been thoroughly examined and will produce the intended outcomes, and (c) it transfers management competence to the organization’s members (Cummings & Worley, 2009).
The type of intervention used depends on the type of organizational change needed (transformational, transitional, or developmental), as shown in Figure 2.4. The type of planned
intervention also depends on what particular dimension of the organization (for example,
leadership, strategy, culture, structure, processes) is targeted to change. Because we are primarily discussing transformational or large-scale change, the types of interventions required
affect all of the major organizational dimensions in some way. Some changes within a
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Section 3.4
particular dimension may affect the other dimensions. For example, a newly selected CEO has
ripple effects that extend to everyone. A major employee evaluation system can affect different employees across an organization, whereas an IT reporting and control system that most
employees must use will affect different divisions, departments, and units.
Before elaborating on the different types of change interventions shown in Figure 2.4, we
summarize one of the most important transformational changes experienced by the Avon
Products company. Examples from Avon’s story will demonstrate the nature and types of
interventions that organizations use.
Avon and CEO Andrea Jung
Avon is one of the world’s leading direct sellers of beauty products, including skin care,
makeup, and fragrances, as well as jewelry, lingerie, and fashion accessories. The company
sells to customers in 145 countries (Cohen & Roussel, 2004). Avon’s 2015 annual ranking as
a Fortune 500 firm was 322, with $8.85 billion in revenues (Fortune, 2015a).
During the 1980s Avon Europe had branches in just six countries, and each country had an independently operated factory and warehouse with separate information and distribution systems
that handled the local market. During the 1990s Avon’s robust growth nearly overwhelmed its
supply chain organization (Cohen & Roussel, 2004). The firm had focused almost exclusively
on marketing and sales to the exclusion of its supply chain and operational logistics. When the
company planned on doubling sales revenue in Europe from $500 million in 1996 to $1 billion
in 2001, executives realized that it would not work to replicate its country-based supply chain
model in new and different markets. A decentralized supply chain across international geographies and cultures would be cost prohibitive (Cohen & Roussel, 2004). Something had to change.
Andrea Jung had been CEO of Avon for 11 years when this change loomed on the horizon. She
recalls how it felt to be faced with this situation:
As I was deciding back in 2005 to undertake the boldest-ever restructuring of
the company, I had a frank conversation with a friend to whom I turn for advice
from time to time. He reminded me that most people who successfully orchestrate significant corporate turnarounds come from outside, because they have
no vested interest in the company or its people. It was 8 P.M. on a Friday night,
and he challenged me. Could I, he asked, go home over the weekend and fire
myself as the CEO who had presided over five years of explosive growth, and
then rehire myself Monday morning as the turnaround specialist who would
lead the company into the next era? It meant totally reinventing myself from
the leader I had been to an entirely new type of leader who would be right for
the next chapter in the company’s history. It was a very humbling experience,
but ultimately very liberating. (as cited in Business Today, 2011, p. 34)
In 2005 Avon’s stock price—which increased more than 181% during Jung’s first 5½ years as
CEO—dropped 45% between April and October (Kowitt, 2012). That same year marked the
abrupt end of 6 consecutive years of more than 10% growth, with earnings having tripled under
Jung’s leadership. In Avon’s European markets, a new sales campaign began every 3 weeks, but it
took 12 weeks, on average, to cycle a product through the supply chain. Manufacturing was
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Plan-to-Action: Roles, Relationships, and Interventions
Section 3.4
dependent entirely on forecasts, but about 50% of products resulted in rush orders because the
company sold more than forecasted. Manufacturing incurred large changeover costs to stop production and meet rush orders. Preprinted containers were ordered in the language of respective
country markets before sales were known. The company had slow-selling inventory accumulating and significant, unpredictable costs dependent on sales (Cohen & Roussel, 2004).
Significant resources were needed
to transform the supply chain. Avon
moved 45 of its best employees from
Europe to work on the transformation full time for 18 months. The
company was challenged to create
a centralized planning function to
handle reactions to demand and
inventory levels (Cohen & Roussel,
2004).
Accumulating Information
and Creating Systems
Avon’s first step was to create a comAP Photo/Stephen Chernin
mon database for the organization to
One of the first steps Andrea Jung took toward dourecord information about inventory,
bling Avon’s sales revenue in Europe was to compose
manufacturing, and sales. Things
a solid team and transform the supply chain.
like product codes and descriptions
were developed for global visibility
and analysis. Management around the world had to evaluate sales and inventory trends—
both supply and demand. Without accompanying systems, the information in the database
could not be used effectively, so Avon also created a supply chain and scheduling system. A
regional planning group was put in place to evaluate the entire supply chain and make decisions using this information (Cohen & Roussel, 2004).
The Redesign
When Jung and her senior team stepped back and reviewed their supply chain as an end-toend process, rather than as isolated local systems, the real value and benefit of this transformation became evident. If the supply chain was transformed, the company could replace five
or six language-specific bottles for shampoo or lotion with one plain bottle. This way, production could run continuously without having to switch the bottle stock, and customer service
could respond more quickly to changes in demand. Therefore, when inventory was exhausted
in any market, the warehouse moved into action by labeling products in the relevant language
and shipping them out on trucks. The savings and economic gain was significant.
Avon embarked on the redesign of its physical supply chain. Manufacturing operations were
consolidated around the company’s emerging market, allowing for time and labor cost efficiencies. A centralized inventory hub was created near two manufacturing plants in Poland,
allowing products to be directed as demand was determined. Containers were standardized
to reduce changeover costs. By purchasing inputs like containers from suppliers close to the
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Section 3.4
manufacturing plants, transportation time and cost were reduced. There were also fewer suppliers that were more flexible and responsive.
The redesign was possible because Avon widened its view of the company’s overall operations. The decentralized model—in which each country operated independently—kept Avon
from working as a single, streamlined operation. By looking at the supply chain as an end-toend process, Avon could make better strategic choices and adapt to changing market demands
more quickly (Cohen & Roussel, 2004).
Communication and Realignment
Avon next changed its structure to match the redesign of its supply chain processes. “Plan,
source, make, and deliver” became the new key process (Cohen & Roussel, 2004, p. 3). The
simpler, centralized model was easier to manage. It also changed the roles and responsibilities of many employees. For example, general managers became responsible primarily for
sales, rather than for inventory.
Jung made facts rather than intuition the main driver behind managers’ decisions. This shift
removed much of the autonomy of country managers but enabled them to perform their work
with more precision, increasing each operation’s overall performance. These changes were
reflected in new performance metrics—a data-centric approach (Bloomberg Businessweek,
2008). The company also infused collaboration in its changes. A collaborative design workshop was held that involved suppliers, a design firm, and Avon marketing and supply chain
personnel. Collaborating on ideas yielded designs that reduced costs and improved efficiency.
The new processes and structure were communicated through training; this helped upgrade
employee skills. Avon partnered with Cranfield University, a supply chain business school in
Britain, to develop a new training program in both full and accelerated durations (full for supply chain associates and accelerated for senior executives) (Cohen & Roussel, 2004).
Avon successfully implemented a new and vastly more efficient supply chain to respond to
its rapid growth of two or three new markets per year. This change allowed the company
to increase efficiency, reduce costs, and save about $50 million per year (Cohen & Roussel,
2004). The company went on to create a fully integrated IT system to incorporate the changes
and track the new information collected (Cohen & Roussel, 2004).
The Transformation of Jung and Avon
Jung’s expertise and experience were grounded in building brands, not in turning around
global logistics supply chains, structures, and systems. During the company’s steep decline
in the early 2000s, she said, “My first reaction was: ‘I get it. I see the numbers, but I just don’t
know if I, or we, have the stomach for it’” (as cited in Byrnes, 2007, “Painful Cuts,” para. 1).
She had to shift both her thinking and the thinking of her managers regarding problem solving from intuition to a data-driven approach. She also had to take much of the autonomy from
country managers, who were used to running plants their way. They had to create a way to
install and mobilize a globalized manufacturing and marketing system.
Jung also had to champion downsizing—a most painful task. Seven layers of management
were let go, from 15 down to 8 management levels. During the restructuring, she flew from
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Plan-to-Action: Roles, Relationships, and Interventions
Section 3.4
country to country talking with her top 1,000 global managers. Her basic message was that a
quarter of them would be let go by the end of the year. This was a difficult time for Jung, as she
had hired many of them (Bloomberg Businessweek, 2008).
She also led the charge on launching the numbers-heavy, return-on-investment analysis that
most of the larger, successful consumer products companies—Gillette, Procter & Gamble,
PepsiCo, and Kraft—had been using for many years. The analysis was run by an executive
team, most of whom were recruited from outside the company and were centralized from the
New York headquarters.
At the end of her tenure as CEO, Jung had more pressures with which to contend (Lublin &
Karp, 2011). In 2011 the U.S. Securities and Exchange Commission (SEC) inquiries and an SEC
subpoena investigated whether Avon was involved in bribes to Chinese government officials
and improperly disclosed market-sensitive information to financial analysts over the previous 2 years. In December 2014 Avon agreed to pay $135 million to settle the SEC charges
(Wohl, 2011). As CEO of Avon, Jung made some bad decisions. In April 2012 Avon replaced
Jung as CEO with Johnson & Johnson vice chair Sherilyn McCoy.
Types of Interventions
We usually do not read about or see how the different implementation roles explained earlier in this section are carried out in notable organizational transformations. What we do
read about is how visible CEOs and leaders either master or fail at organizational changes.
Mulally at Ford and Bossidy of AlliedSignal, for example, succeeded in their efforts. Jung succeeded but struggled in her attempt to learn and adopt the necessary implementation roles
and expertise needed to turn Avon around.
Reinventing the Leader as Change Champion
Jung led the restructuring and centralization of Avon’s supply chain, which required transforming new logistics systems and business processes that, in turn, changed employee roles
and the manufacturing and marketing processes. She succeeded at leading these strategies
and systems (shown in Figure 2.4) by reinventing her role as an implementation leader who
had to make and enact the tough decisions. This reorientation was not easy and did not
happen right away. Avon experienced a 45% stock price drop and the cessation of earnings
growth in 2005 before any changes were made. It was challenging for Jung to stomach these
downturns when the company had been doing so well under her former leadership style.
Jung had to change not only her leadership, but also the organization’s culture, people, strategy, structure, and systems. The team she put together developed the strategy at corporate
and functional levels. Jung started by looking at the big-picture problems to determine the
big-picture solutions, and then brought people together to work out the details.
Reinventing a Supply Chain and Culture
With the plan ready to be put into action, Jung used her role as integrator to attack the system
and structural issues. She started with a new common database system for recording inventory, manufacturing, and sales data, as well as a new supply chain and scheduling system. Both
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Section 3.4
systems integrated information and facilitated decision making. Jung had to use relationships
with employees, vendors, and customers to successfully implement the new system and sought
constructive feedback throughout the process. This major change at Avon was a collaboration
of efforts and insights. Jung relied on this collaboration, which was a balancing act for all parties.
Structural Interventions
With the new system in place and functioning, Jung turned to its structure. She looked at the
supply chain from all levels—enterprise, functional, business process, and global. Avon consolidated its facilities and created a centralized inventory hub.
Major physical changes like this require significant amounts of resources (particularly financial), making it critical that the leader maintain good relationships with employees, vendors,
and customers. Relationships allow for the beneficial exchange of information and feedback,
and they often contribute to a more efficient, accurate, and mutually beneficial change process. The leader must make sure all stakeholders see the value in the change and understand
their unique contributions to it. Jung topped off the structural changes by standardizing containers and localizing suppliers. These procedural and structural changes made Avon’s supply
chain (and its people) more agile.
Roles, Relationships, and People Interventions
The roles and relationships required dramatic changes for many managers, not only for Jung.
A simpler, centralized model was easier to manage and resulted in a shift in responsibility,
from inventory to sales. It freed managers to evaluate larger issues, rather than micromanaging and responding to inventory concerns. By understanding their roles and relationships,
the managers were free to develop more of their skills and talents.
These changes affected Avon’s culture and its people. The culture became more centralized as
communication was integrated and supply chain problems no longer caused tension. Employees changed as their roles were relocated, more local suppliers were used, and outside specialists were brought in to train employees and evaluate the supply chain.
During the implementation process, Jung succeeded at learning new leadership roles and
navigating new relationships. She learned to be an integrator, a liaison, and a cheerleader
throughout the process—not with creative marketing and merchandising employees, but with
first-line managers and supply chain systems professionals. The implementation succeeded
because she assumed roles that involved the nuts and bolts operational systems and strategy,
which were an integral part of the company’s culture, people, structure, systems, and enterprise strategy. These changes were not instantaneous. It took years of strain on the supply
chain, declining performance, and the advice of a good friend to direct Avon and Jung toward
change. In the end, changes were the result of careful observation, feedback, and collaboration.
Implementing New Strategies and Structures
Champions of change in any organization must ask, “What structure is best for the company?” From a contingency management theory perspective, the answer is, “It depends.” It
depends on the strategy, the changing marketplace, the competition, and the evolving needs
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Section 3.4
Plan-to-Action: Roles, Relationships, and Interventions
and requirements of products and services. Generally, as Figure 3.3 illustrates, organizational
structures have evolved from functional, vertical hierarchies to matrix and product-structural
arrangements to organic (flexible and decentralized) networks, outsourced alliances, and
teams (virtual and land-based).
Some degree of centralization and control are required to standardize products and/or services and to save and share costs, ensure quality and evenness, maintain control over errors,
and increase profit margin—as was the case at Avon. Still, flexibility, integration, speed, and
operational connectivity output are also required to streamline structures and meet changing
customer demand. For these reasons, many firms that wish to establish accountability with
flexibility move certain operations into strategic business units. These arrangements give
units control over their own profits and losses, while coordinating strategy, revenue, and
profit targets with the parent company.
In Jung’s situation, the company had become too localized in its decision making and operations. The supply chain had splintered, and costs were spiraling out of control. Her task was to
Figure 3.3: Organizational structures
The evolution of changing organizational structures generally moves from simple to complex, stable to
turbulent, and mechanistic to organic. There is no single organizational structure that is always right; the
“fit” between an organizational structure and its environment depends on many factors, including the
demands of the environment and an organization’s leadership, strategy, resources, and culture.
Industrial Era: 1890s−1950s
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