Change Rosabeth Moss Kanter

Change Management

Organisations Must Change and Change quickly

INTRODUCTION

Rosabeth Moss Kanter is the professor in business at Harvard Business School, where she holds the Ernest L. Arbuckle Professorship. She is known for her classic 1977 study of Tokenism. As a business leader and expert on strategy and leadership for change, she was nominated as the top ten on the list of the “50 most influential business thinkers in the world”, and she is on the list of the “100 most important women in America” and the “50 most powerful women in the world”. Her main concepts include changing organisations, bureaucracy and characteristics of resistance to change. (drfd.hbs.edu, 2007)

In 1989, she argues that: “today’s corporate elephants must learn how to dance as nimbly and speedily as mice“. (Burnes, 2004) In other words, she points out that big organisations should change and change quickly to meet the changing environment. This report is going to analyse the key drivers for this statement and find out the reason behind change. This report contains three sections. Section 1 will give definitions to change management and the importance of change. Section 2 is discussions, which is divided into two sub-categories, first part is concerned with the models of change management, and part 2 goes on to show examples of how big organisations keep up with change and the possibilities of failure. This section contains examples of big organisations successfully changed to meet their goals and objectives, while some other organisations stay the same and fail to maintain their strong market position. Section 3 is conclusions.

CHANGE MANAGEMENT

“Today’s corporate elephants must learn how to dance as nimbly and speedily as mice if they are to survive in our increasingly competitive and rapidly changing world”

(Burnes, 2004)

According to Paton & McCalman (2004), managing change is about evaluating, planning, implementing, operational, tactical and strategic changes. As Siegal et al (1996) points out that rapid change is a pervasive part of our lives as human beings; it is no surprise that change is also a fact of life within human systems. Recent developments in the global economy have catapulted this fact to the forefront of management concerns as well. Therefore, even though Professor Kanter’s statement was mentioned about 18 years ago, it is still valued today.

Additionally, Kanter (1989) mentioned that in order for organisations to change, it requires faster action, more flexibility and closer partnerships with employees and customers than typical in the traditional corporate bureaucracy. To quote from her, “Corporate giants, in short, must learn how to dance”. Therefore, the “corporate elephants” represents big companies while “mice“, on the other hand, represents small firms. To summarise her statement above, we could conclude that small firms are more flexible in changing compare with big organisations, because big organisations have more management levels and more bureaucracy; therefore, corporate giants should adapt this ability to change and change quickly. More over, the most important reason for organisations to change, is to keep pace with the ever changing business environment and give a good company image to the public that they are keep up dating themselves and stay competitive.

DISCUSSION

“To cope with a changing world, an entity must develop the capacity of shifting and changing. It is not the strongest species that survive, nor the most intelligent, but the ones who are most responsive to change”

(Beitler, 2006)

Corporate elephants with change

Marks and Spencer is a well known British retailer, which was founded in 1884. It is one of the most iconic and widely recognised chain stores in the UK and it is the largest clothing retailer in the country. (wikipedia, 2007) Marks & Spencer is one of the typical examples for change management, and as Rippin (2005) proposed in her research that “when, in Autumn 2003 I needed a case study on organisational change, without too much deliberation I chose Marks and Spencer“. This corporate giant has developed through its golden years, the crisis, its change in leadership and its recent change management attempts in its response to its changing environment. (Rippin, 2005)

Kurt Lewin’s model of change

In the early 20th Century, psychologist Kurt Lewin identified three stages of change that has come to be known as the unfreezing-change-refreeze model. (Nilakant & Ramnarayan, 2006) The graph below shows more detail about this model:

Unfreeze

This is the first stage of this model that to make system receptive to change. (Nilakant & Ramnarayan, 2006) People feel comfortable and safe about the current situation and it is hard for them to change. It takes long time to unfreeze the environment and the first thing to do at this stage is to make people aware of the change and let them know the reason and needs for change. Moreover, organisations should involve employees in the decision making process by asking them how would they feel about a certain matter and what do they thing is necessary to change.

In 1998, Marks and Spencer became the first British retailer to make a pre-tax profit of over £1 billion and this is the peak time in the company’s history. (marksandspencer, 2007) Few years later, it plunged into a crisis which lasted for around several years. The problems Marks and Spencer faced were:

• The rising cost of using British suppliers
• Losing customer loyalty
• Increasing rival companies with cheap production to lower down their cost, therefore to lower down the price
• Refuse to accept the credit card

As a large company with a long term history, Marks and Spencer has its weak side that the bureaucracy management system (Rippin, 2005) made it lose its touch with the real buyer and lost potential younger customers. In 1984, the company’s priority is to provide high quality clothing to working class women. As time goes on, people’s taste changed that we no longer chase quality products but disposable clothes with a cheaper price. At that time, Marks and Spencer didn’t realize this shortage until they found themselves struggling to compete in the changing environment as the fashion trend changes. As a result, the company’s share price went down by more than two thirds and profit fell from £1 billion in 1998 to £145 million in 2001, which was only 10 per cent compare with its golden age. (wikipedia, 2007) As Rippin (2005) described in her research that Marks and Spencer is a “sleeping beauty” as the organisation is in suspension waiting for the “right prince” to come and reanimate the body.

Change

The second stage of the model is change to achieve the desired results. At this stage the actual change happens which can be either to acquire desired behaviour or technological change. (Burnes, 2004) It is a hard journey that the organisation might go through several stages before it successes. This is the stage that the real changes take place and the organisation applies the plans to action in practise.

At this stage, Marks & Spencer conducted another model-Planned model of change (step change) that issues are dealt with stage-by-stage and built to transformation over time. (Cummings & Worley, 2004) Marks and Spencer’s change management was implemented step by step over time. To quote form the Stuart Rose – Chief Executive: “We continue to improve our core business…We are ahead of our space growth target…We are stepping up our investment in the business… In addition, the Board is announcing a step change in the investment this year. These decisions reflect our confidence in the strength and future prospects of the business.” (finfacts, 2007)

In order to successfully apply this Step change model, Marks and Spencer is constantly working on the progress. In 1999, the company launched online shopping and issued credit cards payments in store or online to make transactions simple and faster for customers. In order to lower down the costs and have more sales, the company decided to switch to overseas suppliers, open store on Sunday and added self-check outs to tills. (wikipedia, 2007)

Secondly, it changed its business focus from quality fabric for working classing to the new sales of fashion clothes, and the company launched the “Per Una” clothing range, which recovered some market share to the younger consumer group. Additionally, it changed the women’s bras to machine washable while there are many designer brands that still need to be hand washed. (Rippin, 2005) More over, the company realized its strength and weakness, therefore, it sold the financial service to HSBC Bank Plc and stopped the expanding of its “simply food line” of stores. As a result of those changes, by 2005, its share price went up and doubled from 319p to 766p as the highest in 2007. (Bloomberg, 2007)

Refreeze

The last step is to refreeze and make changes permanent that cement change into the organisational culture. To quote from Cameron & Green (2004), “for change to be effective, it needs to be implemented at all levels and embedded in the culture of the organisation“. Change management should be merged with the organisational culture that all the changes should be developed according to its culture with shared objectives and common goals.

At this stage, organisations meet their goals and objectives and waiting for new changes. (Paton & McCalman, 2000) Marks and Spencer today, has 760 stores in more than 30 countries around the world. In 2007, it is growing again and rapidly increasing profitability with revenue of £7.8 billion. In Nov, the company reported that the profit before tax rose 11.5 per cent, which is slightly ahead of analysts’ expectation. (finfacts, 2007)

Corporate elephants dance speedily

Flexible & Elearn (2005) explains the four key processes for success when implementing change within an organisation, they are:

• Pressure for change
• A clear and shared vision
• Capacity for change
• Action

To summary from Flexible & Elearn (2005), organisations need the driving forces for change and a clear/shared vision. In order to successfully implementing change, organisations need to identify the resources that will be required and make sure they are provided. The last stage is action and implementing the planned changes. At this stage, organisations should keep checking and monitoring the process, and ensure the progress is operated well.

Organisations like the benefit of change but they are afraid of failure. In order to successfully launch the change within organisations, Flexible & Elearn (2005) suggest organisation to follow this stages, but on the other hand, changing could be difficult according to the change stages model as it is time consuming and costly. To quote from Saka (2003), “one of the main boundaries for big organizations to change is the one which separates the model-builders from recipe-givers, the theoreticians from the practitioners“. Organisations understood the need for change, but they don’t seem to be able to respond quickly, especially for those big firms as they have many layers of management level that all the decisions need to run through the top to the bottom. It takes time to inform everyone in the organisation about the change and keep them up-dated with the progress. As Saka pointed out that there is a lack of interaction between decision and action. Organisational members, who are not only potential change-makers, are likely to be more questioning about the value of change.

CONCLUSION

Change management plays an important role in any organisations regardless its size. It means to make change in a planned and systemic way. (Cummings & Worley, 2004) Moreover, it helps to lower risks associated with change, eliminate resources conflicts and redundancies.

For Marks and Spencer, its problems include: business too complicated, competition, downsizing, and management system. The Marks and Spencer story shows that changes are essential for all the organisations regardless its size and reputation. Staying in the same place without considering the changing environment will leads to losing profit or failure. Moreover, Marks and Spencer went through three stages of change, which are:

Unfreeze: feel the needs to change as the market share and profit was going down

Change: going through changes with the planned model of change that allows the company to change step by step with continuously changing progress.

Refreezing: met the goals and objectives that Marks and Spencer successfully changed itself from an old, transitional British retailer to a new look, fashionable icon.

To sum up, small organisations are more flexible when they facing changes, while big organisations have bureaucracy management system and more layers of management level, hence, it is harder for them to response to the changing environment. Therefore, big organisations should adapt the ability to change and change quickly.

REFERENCE

Beitler. M, 2006., Strategic Organisational Change: A Practitioner’s Guide for Managers and Consultants, Practitioner Pr Intl.

Burnes. B, 2004., Managing Change: A Strategic Approach to Organizational Dynamics (4^th Ed), Pearson Education.

Cameron. E & Green. M, 2004., Making Sense of Change Management: A Complete Guide to the Models, Tools & Techniques of Organizational Change, Kogan Page.

Cummings. T & Worley. C, 2004., Organizational Development and Change, Thomson South-Western.

Flexible. P & Elearn. L, 2005., Change Management: Management Extra, Elsevier.

Kanter. R, 1989., When Giants learn to Dance, Simon and Schuster.

Nilakant. V & Ramnarayan. V, 2006., Change Management: Altering Mindsets in a Global Content, Sage Publications.

Paton. R & McCalman. J, 2000., Change Management: An Guide to Effective Implementation,, Sage Publications Inc.

Rippin. A, 2005., Marks and Spencer-Waiting for the Warrior: A Case Examination of the Genddered Nature of Change Management, Journal of Organizational Change Management,, Volume 18, p578-593

http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/0230090605.html [Accessed 17/11/07]

Saka. A, 2003., Internal Change Agents’ View of the Management of Change Problem, Journal of Organizational Change Management,, Volume 16, p480-496

http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/0230160501.html [Accessed 22/11/07]

Siegal. W et al, 1996., Understanding The Management of Change: An Overview of Managers’ Perspectives and Assumptions in the 1990s, Journal of Organizational Change Management,, Volume 9, p54-80

http://www.emeraldinsight.com/Insight/ViewContentServlet?Filename=Published/EmeraldFullTextArticle/Articles/0230090605.html [Accessed 20/11/07]

http://drfd.hbs.edu/fit/public/facultyInfo.do?facInfo=bio&facEmId=rkanter

[Accessed 17/11/07]

http://en.wikipedia.org/wiki/Marks_&_Spencer [Accessed 20/11/07]

http://www.biomedcentral.com/1472-6963/6/62/figure/F1?highres=y [Accessed 20/11/07]

http://www.marksandspencer.com/gp/node/n/46010031?ie=UTF8&mnSBrand=core

[Accessed 21/11/07]

http://www.finfacts.com/irelandbusinessnews/publish/article_1011718.shtml

[Accessed 21/11/07]

http://www.bloomberg.com/apps/quote?ticker=MKS:LN [Accessed 19/11/07]