Managing And Leading Change

Ashland Case Study Assignment

Company background

Ashland Inc is a Fortune 500 and Standard and Poors (S&P) Midcap 400 company, providing specialised chemical, technologies and insights through Ashland Aqualon Functional Ingredients, Ashland Hercules Waters Technologies, Ashland Performance Materials, Ashland Consumer Markets (Valvoline) and Ashland Distribution. The firm has operations in more than 100 countries worldwide.

In 2010 the company’s revenue equated to $9bn, but its beginnings in 1924 were far more humble and it has  been though many changes since it was founded in 1924 as part of the refining arm of the Swiss Oil company, and it was then known as the Ashland Refining Company. The company takes its name after the town of its inception, namely Ashland, Kentucky in the United States.

In 1936 both companies merged and Ashland General Manager, Paul G. Blazer, became the newly merged company’s president and the company achieved $4.8m in sales, and by the entry of the United States into the Second World War they had grown to $12m. During the period a new refinery is built at Catlettsburg to produce aviation fuel.

After the war the Ashland brand is developed, and products are sold under the company’s name. This enables sales to further rise to $20.4m, and the company makes further strides in 1950 by acquiring the Freedom-Valvoline Oil Company and the contributed to a further boost to sales by 900 per cent. By 1959 the Valvoline brand had begun to reach the top of the lubricants world, thanks to an increase in the firm’s growing workforce, advertising campaigns, investments in infrastructure and it is highly featured in motorsport to this day.

The growth in its petro-chemicals business led to further growth, leading to the acquisition of R.J Brown of St. Louis, Montana and sales grew to $280m. However, in 1966 the company diversified and it purchased Warren Brothers and Ashland Paving And Construction Inc. was born. The firm’s sales reached $699 million as a result of this acquisition. Furthermore the company continued to evolve during the 1960s with the acquisition of ADM Chemical Group and the formation of Ashland Chemical, making Ashland a leading chemical supplier.

In 1969 Ashland Petroleum was formed, a year after the company had reached the milestone of having achieved an annual revenue of $1bn. However, the company further diversified and it enters into the coal-extraction market with the launch of the Arch-Mineral joint venture.  The following year the company’s name is changed further to gaining shareholders’ support, and it became Ashland Oil. It also purchases a refinery, adding the SuperAmerica petrol station and convenience store chain to its holdings.

The next milestone appears in 1986 with the establishment of Valvoline Instant Oil Change, which provided a service for lubricating vehicles across 70 units. Since then it has become the second-largest franchised quick lubrication business in the US, and it can be found at 870 locations.

The table below, according to the company, shows its other important milestones:

Year

Event

1992

Ashland acquires most of Unocal’s chemical distribution business, becoming North America’s leading distributor of chemicals and solvents

1994

Zerex vehicle antifreeze and coolant, the No. 2 brand in the U.S., is added to the Valvoline product line-up. Sales reach $10.3 billion.

1995

Shareholders approve changing the company’s name to Ashland Inc. to better reflect our diverse operations. This same year, more than $368 million is invested in 14 acquisitions to strengthen related energy and chemical businesses.

1998

Ashland and Marathon Oil merge their petroleum refining and marketing assets into a joint venture. Eagle One auto appearance products join the Valvoline brand line-up.

1999

Ashland celebrates its 75th anniversary. The company relocates its headquarters from Ashland, Ky., USA, to Covington, Ky., USA, adjacent to Cincinnati, Ohio, USA.

2002

Ashland introduces Envirez resin, the first commercially available unsaturated polyester resin containing a significant quantity of renewable materials.

2004

Ashland reorganizes into two sectors, Chemical and Transportation Construction. This lays the foundation for the company’s transformation into a global specialty chemical company.

2005

Ashland divests its joint-venture oil and refining business to partner Marathon Oil, and also acquires Car Brite, a leading marketer of professional auto reconditioning products. Sales are $9.3 billion.

2006

The transformation into a specialty chemical company continues. Northwest Coatings, a technical leader in the development of innovative Waters-based and energy-curable adhesives and coatings, is acquired and Ashland Paving And Construction, Inc. is sold.

2008

Ashland acquires Hercules Incorporated in a $3.3-billion transaction. The deal moves us into the top tier of global specialty chemical companies.

2009

The Nanjing Technical Center opens in China. The applications lab supports customers in the coatings, construction, energy, food, personal care and industrial specialties markets. Sales reach $8.1 billion.

2010

Natrosol hydroxyethylcellulose rolls off the line at a new plant in Nanjing, China. Ashland launches a global joint venture in foundry chemicals with Süd-Chemie AG and announces plans to sell Ashland Distribution in 2011.

2011

Ashland and our people continue to set the standard for good chemistry and all of the great things it creates around the world.

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Table data source: Ashland Inc.

Ashland vision, mission, values and operating principles

The firm aims to be a leading global specialised chemical company by inspiring and engaging with its employees and adding value to everything it does. The company describes its mission as follows: “We satisfy our customers by delivering results through quality chemical products and services. Our desire to grow drives our passion to win in the marketplace. With a unified, low-cost operating structure, we’ll remain competitive across every business and in every geographic region.”

The following are its values and operating principles:

Our Values: Who we are

  • We act with integrity and honesty.
  • We focus on customer and shareholder success and compete to win.
  • We recognize each person for the difference he or she makes.
  • We drive innovation and results by understanding the market and its opportunities.
  • We are committed to the values of responsibility, sustainability and transparency.
  • We create safe and health-conscious work environments, require compliance and embrace environmental stewardship.

Our Operating Principles: How it happens

  • We operate in compliance with the law and adhere to high ethical standards.
  • We assess the impact on customers and society when making decisions.
  • We are externally focused. Our businesses are defined by markets.
  • We are process-centred. Our processes are designed to optimize global performance.
  • Ashland leaders are first responsible to Ashland and second to a business, resource group or process.
  • We are led by an Executive Committee that enforces our principles, sets our strategy and manages our capital.
  • We are united by our common vision, mission, values and operating principles.

Case Study Background

Ashland Inc’s earnings were off track in 2002. The company was also troubled by high levels of redundancy and operating costs throughout its business groups. The annual net results were also lower than the company’s share value. Even though the company has evidently gone through a number of transformations and evolutions since 1924, the vice-president of HR at the time felt that the firm’s troubles because it had turned it into a change-averse organisation. There was apparently no desire for change, and this person felt that as a company they didn’t do it well. Doing something different was thought of as change.

Between 1998 and 2003 Ashland had gone through a resource group restructuring exercise, relocated its head office, sold its oil exploration business, and it engaged in marketing and refining joint ventures. Dwight King, Ashland Chemical’s President for HR, said that there was a lot of rubble left behind, which led to unwanted turnover and reductions in performance. “As our previous VP of HR would say, a lot of wreckage results from somehow not executing our plans correctly”, he said before explaining that the elements of a previous failure were impacting severely on the business. There was also a new and critical project on the table, and the leadership team recognised that they were not being very efficient due to a lacking of understanding of what it means to be change leaders.  Dwight therefore felt that he was about to watch another car accident occur. What was missing was not the what and why, but the how to change the organisation for the better.

So in 2003 the firm’s senior executives recognised that they hadn’t changed direction as well as they could have done. So the organisation was nearly broken when the company tried to implement its first Enterprise Resource Planning system in its distribution unit, and this led to a shut down of west coast operations. The implementation hadn’t gone as well as everyone had expected.

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Change was therefore vital, and so Dwight initiated a change management programme. The company needed to build change into the organisation as a competency. The objectives were to ‘retro-fit’ several of its major initiatives to a change management methodology, integrate project and change management, to create a training curriculum and to build competencies within the following groups: managers, supervisors, practitioners, intact project teams and employees.

He recognised that this had to start from the top of the organisation, and so he arranged an executive briefing with all of the firm’s business unit presidents. He succeeded in gaining sponsorship for his initiative at the meeting. The programmes focused on HR, project managers and the distribution leadership team. By 2005 this had created tremendous momentum, including the adoption of change management terminologies and a new change management approach.

However, the first investments in change occurred in 2004 when Dwight facilitated a conversation with the chemical sector leadership team. He asked them a number of questions to find out where the company should be in five years time, and what it should look like. The discussion also analysed, from that particular hypothetical perspective, how the company got there, and what they would have to do to arrive at their perceived ‘destination’. There was also some in-depth discussion about the obstacles they’d face and how they would overcome them.

The SAP implementation moved forward too. It was now fully implemented, and Ashland formed its GlobalOne project team for SAP to begin a worldwide roll-out. Dwight convinced the SAP project manager that he needed to include a change management element in its deployment. In fact he said that ‘change’ needed to go well beyond that which was defined by the SAP consultants. “There were plenty of people who gave lip-service to the word ‘change’, including the consultants, two of the largest consulting firms in the world”, said Dwight. He added that their idea of change involved “documenting the new physical competencies of change around what new buttons you had to push, what new levers you had to pull, what new screens you were seeing in order to enter or bill an order, or service an account.”

There was no understanding about the resistance that would be created by any change programme implementation; their views didn’t even consider the creation of a body of knowledge about expectations and then reinforcing them through training. This meant that there would need to be some systems training in place, and so a change management consultant was hired for the GlobalOne team.

Previously they had implemented SAP Global One in Canada, and even though there was a good change management plan in place, some issues arose. The trouble was that the assets were only there for just two weeks, and then the team left to implement it in the US. Out of this situation came the realisation that you need a dedicated change management structure within the project to make sure that it succeeds. It was also recognised that certain people were needed in order to be responsible for the change effort.

Around the same period the company implemented an organisation-wide rewards scheme, called Total Rewards, which redesigned the firm’s salary and incentive schemes. This migrated the company to a single incentive scheme. Previously each group had had their own.

Ashland’s CEO and Board Chairman, Jim O’Brien, was introduced to the change leadership tools, and he used them to identify the champions within the company. Working collaboratively with HR and Communications he developed a strategy to target the change sponsors. “It went incredibly well”, said Dwight before adding that it was “fraught with potential landmines and we missed most of them, so Jim, our CEO, became an advocate for change competency.”

They also adopted a change management methodology and 150 people attended a workshop. The company’s distribution managers and projects leaders, upon participating in the workshops, thought that they had at last struck on what change was all about. Subsequently this marked a change in Ashland’s deployment strategy. There was no longer a requirement to apply change management to one project at a time. An enterprise-wide approach was sanctioned by O’Brien instead, and he selected Hank Waters to be the Ashland Enterprise Change Management Executive sponsor. Dwight King and Hank Waters then set about creating an organisational structure and identified key players within the ECM Deployment Team.

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The ECM Deployment Team was created in May 2006, and it began to implement the change management programme across the company from this point. While Hank Waters was at its leader, the team also included Pam Yost, Carol Chistobek, Jerry Prochko, Lisa Ireland, Mark Lambeth, Stacy Dunbar and Vondar Melton. An ECM Steering Committee was also formed to provide oversight for the ECM Deployment team, and it became an important catalyst for driving change further into the organisation. Two members of the team also undertook a course to become change management trainers in a change management methodology. The Steering Committee included heads of HR, Corporate Communications, IT, EHS and two business unit leaders. Its purpose was to provide direction to the change management programme.

Together they achieved substantial change between 2003 and 2008, and the company made significantly more inroads than it had done previously to achieve their vision to construct a platform for growth. This exercise was repeated across the globe, and it was helped when a former business unit head and a member of the ECM steering committee, Peter Rijneveldshoek, became president of Ashland Europe. He requested that all members of the 200 plus European management team attend change management training in preparation for the SAP implementation.

Dwight says that the company lost momentum at one point due to moving a key executive from change management deployment over to Ashland’s Waters division, but the aim was to make change part of the organisation’s DNA. Therefore European project leaders were also required to undergo change management training. However, this was more embedded in the US more than in Europe. The training also occurred with project managers in China.

In April 2007 a series of assessments were conducted, and there were also a number of professional development sessions held with the 12 members of the Operating Committee and the CEO. The aim of the assessments was to help the senior executives to understand the true meaning behind sponsorship of change, and it gave them an insight into how they were fulfilling their roles. Coaching sessions followed these ones, and sponsorship development roadmaps were created to enable the leadership team to develop their skills as sponsors of the change management programme.

The project was deemed to be successful with 95% of the participants in a survey about the change management programme reporting that the training and tools helped them to provide support for their employees during the SAP EMEA implementation. An online training course was also provided, and 331 employees took part in it. Again 96% agreed strongly or just agreed that the course had been worth the time it took to take it. However, at one point it was felt that the ECM team required another 6-12 months to ensure that 90% of the organisation would be more change-ready. Problems arose due to members of the team being moved to more permanent roles within other parts of the organisation. Nevertheless, change became more part of Ashland’s dictionary than it was previously, and more awareness of what change means was created.

TASK:

You are a change management consultant whose been asked to come into Ashland to assess the company’s change programmes. Critically analyse and evaluate the success of the programme mentioned in the case study, consider other approaches that the firm could have taken, and think about what recommendations for change you’d make for 2011 onwards based on the your knowledge of the company’s history and previous change management efforts.

Use the information contained in the case study, plus further primary and secondary research to form your assessment of Ashland’s future strategic direction and explain how it will need to adopt new change management programmes.

Consider all of the aspects of Managing and Leading Change that were discussed in your lectures, including the theoretical models and approaches to managing, leading and implementing change within an organisation. Compare your approach to the one taken by Ashland between 2003 and 2008, and explain how you would measure the success of your change management programme. For example, which metrics should Ashland be using to assess the success of its change programmes?


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