The implementation of strategic change at Microsoft Canada

The Organization Development literature has directed appreciable attention at in being able to lead and manage change. The major portion of the material is highly normative, advising managers about how they should be planning and implements organizational changes. For example, one study suggested that successful managers in ceaselessly changing organizations should first; provide clear responsibility and priorities with extensive communication and freedom to improvise. Second, explore the future by experimenting with a wide variety of low cost probes; and thirdly, link current projects to the future with predictable intervals and choreographed transition procedures. Traditionally the main focus of change management is on identifying sources that resist change and offers ways to overcome them. Most of the recent contributions have been challenging the focus on resistance and have shifted the aimed at creating vision along with gaining political support for them, and managing the transition of the organization toward them. The various ways in which managing change can be classified are in figure below.

MOTIVATING CHANGE

Creating Readiness for Change

Overcoming Resistance to Change

CREATING A VISION

Describing the Core Ideology

Constructing the Envisioned Future

EFFECTIVE

CHANGE

MANAGEMENT

DEVELOPING POLITICAL SUPPORT

Assessing Change Agent Power

Identifying Key Stakeholders

Influencing Stakeholders

MANAGING THE TRANSITION

Activity Planning

Commitment Planning

Management Structures

SUSTAINING MOMENTUM

Providing resources for Change

Building a Support System for Change Agents

Developing New Competencies and Skills

Reinforcing New Behaviors

Staying the Course

The above mentioned activities contribute a lot to effective change management and have been listed in the order in which they usually are performed. The first amongst the activities involves motivating change and also includes creating a readiness for change amongst the members of the organization and which indeed helps them to address resistance to change. Initially motivation is a critical issue for change process because a lot of evidence indicates that people as well as the organizations want to preserve the status quo and are willing to change only when there are strong powerful reasons to do so. The next activity is considered with creating a vision and is closely alignment with leadership activities. The vision has the sole purpose of providing a purpose and lay out for change and it describes the desired future state of the organization. The next activity involves the task of developing political support for the change. Organizations of all kinds are composed of powerful individuals as well as groups that can either block or promote change, and it is the task of the leaders and the change agents to gain the support and permission of the higher authorities in order to implement changes. The fourth activity is concerned with managing movement from the current state to the desired level in the organization. It involves designing a plan for managing the change activities as well as planning particular management structures for working of the organization during this transition. The next and the final activity involve sustaining the flow or momentum for change so that it is being able to be carried to completion. The final activity includes task such as providing resources for implementing the changes, building a support system for change agents, developing new competencies and skills needed to implement the changes. Unless man-to-man are motivated and bound up to change, unfreezing the status quo will be very difficult. Without vision, chances are there that change will be disorganized and diffused.

Along with the fast moving pace of global, economic, and technological development change becomes an inevitable feature of the life of the organizational. But change that happens to an organization externally by the environment is quite different from the change that is planned and incorporated by the members of the organization. The main motive of Organizational development is to bring in changes in the organization in a planned manner so as to be able to increase its effectiveness and this organizational change is usually initiated and implemented by managers, with the help of professional OD practitioners. Conceptions of planned change have tended to focus on how change can be implemented in organizations. In order to implement change in any organization, certain frameworks are used as models that describe the activities that must take place to initiate and carry out successful organizational change.

Let us now discuss change that Microsoft Canada tried to implement in its organization by implementing Strategic Change.

MANAGING STRATEGIC CHANGE AT MICROSOFT CANADA

Microsoft Canada is a subsidiary of Microsoft Corporation responsible for the service, marketing and the sales of the full range of software products, including the Windows operating system, the office productivity suite, a variety of Net products, and the Xbox game console. The organization marketed to a variety of segments, such as software application developers, small and medium business and large enterprises, through a broad range of partners that worked directly with the client organizations to install and optimize the software used. A small service organization provided consulting support to clients with the partner.

Before 2001, Microsoft Canada had been part of North American subsidiary. Under this structure, large US market was clearly the focus of attention from Microsoft server, desktop, other software products. However, Frank Clegg, President of Microsoft Canada, argued that the Canadian market was different and under developed. It had a different mix of customers that did a United States, different competitors and different growth opportunities. Moreover, software sales and personnel computers shipments as a percentage of markets size and growth were below worldwide averages. These differences, Clegg argued warranted a specialized strategy.

As the fiscal year ended Clegg and his newly appointed Director of Strategic Planning, Sandra Palmero, wanted to cease the opportunity to define a uniquely Canadian strategy. Before becoming Director of Strategic Planning, Palmero had been Director of Marketing and Corporate Communications in Microsoft Canada. There with Richard Reynolds, her Senior Marketing Manager, they had planned and implemented a participative process of strategic planning. Sandra conducted the OD practitioner who had worked with them and contracted to design and implement a Strategic planning process for the Canadian organization. Over a 2 month period, Sandra conceived of a series of workshops involving the Canadian leadership team. This team represented a broad cross section of the organization including representatives from legal staffs, human resources, service business and Microsoft consultant, marketing managers, customer support and managers responsible for different segments of Microsoft business including enterprise customer, small and medium business, the Microsoft Network and the Xbox.

The strategic analysis phase consisted of preliminary work by several members of the Canadian leadership team as well as initial exercises during the first workshop. Member of Canadian Leadership team each prepared an analysis of their respected areas of responsibilities. For example, the enterprise sales manager provided historical growth rates in the revenue, developed forecast for market growths and Microsoft’s share, described current levels of Customer satisfaction and technology road map of products being developed by the Redmond headquarters organization. In addition to this specific analysis, Sandra contracted with a market research firm to provide overall description of Canadian information technology market. Finally a competitor analysis was performed to develop and understanding of likely strategies, goals, and initiatives from key competitors such as IBM, Sun Micro System, and Oracle as well as competitive threat posed by the Linux Operating System Software.

During first workshop the Canadian Leadership team used the pre work data to perform an environmental scan. They discussed, debated, and ultimately came to some agreements about the trends affecting the organization. Based on that scan, the group engaged in a vision and value formation exercise and set out an initial list of short and long term goals. These activities let to several important decisions for new marketing organizations. For example, the vision and values exercised produced important insight about what the Canadian organization stood for, its uniqueness compared to the marketing subsidiaries within the Microsoft Organization, and its strengths in competing as a Canadian organization. The values also informed discussion about future goals and strategy to achieve them. Importantly, the Canadian leadership realized that customer loyalty would and should become a driving force for the organization. This realization led to passionate discussions about the relative emphasis in the organization on revenues versus customer satisfaction and loyalty. It also led to development of Big Hairy Audacious Goal (BHAG) that the members of the Canadian Leadership Team believed would be challenging but achievable.

The first workshop ended with a number of assignments, unresolved issues, and excitement about the future. In between the first and second workshops, members of the Canadian Leadership Team worked with their own organizations. Issues, decisions and questions that were addressed within the Canadian Leadership Team were discussed throughout the organization. The most important discussion concerned the Big Hairy Audacious Goal and the relative emphasis of revenues and customer loyalty over the short and long term. A consensus began to emerge that the right and proper strategy for Microsoft was to argue for a slower growth rate in revenues the short term, invest in customer satisfaction and then leverage that loyalty for a more secure stream of revenues in the future.

Frank Clegg took this idea to the executives in Redmond and discussed the implications of this strategy, including revenue projections, risk involved, the budget implications, and how the strategy aligned with corporate and other marketing organizations initiatives. The result of these conversations became the subject of opening discussions at second workshop.

The cautions but positive support from the corporate organization allowed the Canadian leadership team to move forward on its strategic intent. In second workshop, the organization’s mission and values were finalized; year by year revenue goals were agreed upon to achieve the Big Hairy Audacious Goal, and these goals were broken down and assigned to specific groups and managers. Finally, key customer and partner loyalty programs were established and outlined. Ownership for different initiatives was assigned and a strategic change plan originated. Frank Clegg pressed the group on its decision to emphasize customer loyalty and challenged the group with several scenarios that tempted them to trade off satisfaction for revenue. These scenarios helped fix the Canadian leadership team’s commitment to their strategy.

The important part of the strategic change plan that came out was a discussion and decision to tie the individual performance appraisals of Canadian leadership team as a whole also staked their end of fiscal year bonuses to the achievement of customer satisfaction, instead of revenue goals.

The strategic change efforts at Microsoft Canada are important for few reasons. First, the Canadian organization’s realization of the benefits of customer satisfaction and loyalty was influential in moving the larger Microsoft Corporation to examine its values in this area. Business Week reported on the changes Steve Ballmer was making in the organization; they reflected the increased importance of customer loyalty in Microsoft’s strategy and structure changes. Second, the organization learned how to organize a strategic planning effort. In the second year since this effort began, Sandra Palmero did built a stronger strategic planning organization and taken more and more responsibility for driving the strategic planning process. Even as the corporate Microsoft organization was making important changes in its reporting structure, business process, financial systems, the Canadian organization was able to adapt using its own resources and knowledge. Finally, the Big Hairy Audacious Goal has become an institutionalized part of the organization that drives thinking and decision making in the organization.

In context with the case in hand we are suppose to work on a few task related to the case in hand. Firstly, let us discuss the history of the organization in hand, which is Microsoft Canada. Microsoft Canada Inc. was established in 1985. It is the Canadian subsidiary of Microsoft Corp. the worldwide leader in services, software and solutions that help inhabit and small business realize their full potential. Microsoft Canada provides nationwide sales, marketing, consulting and local support services in both French and English. It has its headquarters in Mississauga and has nine regional offices across the country dedicated to empowering people through great software- anytime, anywhere and on any devise. Secondly, let us now discuss the circumstances that led the organization to undergo strategic change. Frank Clegg, President of Microsoft Canada, argued that the Canadian market was different and under developed and it had a different mix of customers. Thus it demanded for different competitors and different growth opportunities. Another circumstance was that the percentage of markets size and growth of software sales and personnel computers shipments were below worldwide averages. These circumstances demanded a specialized strategy. Thirdly, the type of change that was implemented in the Microsoft Canada was basically strategically. The change has been incorporated in such a way that every aspect of the organization starting from legal staffs, human resources, service business and Microsoft consultant, marketing managers, customer support and managers responsible for different segments of Microsoft business including enterprise customer, small and medium business, the Microsoft Network and the Xbox were taken into consideration. The senior members of the organization have tried its best to formulate and design the strategically change in such a manner that it helps Microsoft Canada to increase its percentage market share and gain better growth. Fourthly, in order to incorporate the strategically change into the organization the involvement of every member of the organization is very necessary. The strategically change was initiated by Frank Clegg, President of Microsoft Canada and Sandra Palmero, Director of Strategic Planning. Sandra Palmero along with Richard Reynolds, her Senior Marketing Manager, had crafted and implemented a participative process of strategic planning. Sandra conducted the OD practitioner who had worked with them and contracted to design and implement a Strategic planning process for the Canadian organization. Fifthly, the methods used in implementing the strategically change were basically workshops, assignments and discussions of issues related to work. Canadian Leadership Team was formed by members of various departments of the organization that were focused on developing and implementing strategically change in the Microsoft Canada Organization. During the first workshop the Canadian Leadership team used the pre work data to perform an environmental scan. They discussed, debated, and ultimately came to some agreements about the trends affecting the organization. Based on that scan, the group engaged in a vision and value formation exercise and set out an initial list of short and long term goals. These activities let to several important decisions for new marketing organizations. The Canadian leadership realized that customer loyalty would and should become a driving force for the organization. A consensus began to emerge that the right and proper strategy for Microsoft was to argue for a slower growth rate in revenues the short term, invest in customer satisfaction and then leverage that loyalty for a more secure stream of revenues in the future. In second workshop, the organization’s mission and values were finalized; year by year revenue goals were agreed upon and these goals were broken down and assigned to specific groups and managers. The important part of the strategic change plan that emerged was a discussion and decision to tie the individual performance appraisals of Canadian leadership team as a whole also staked their end of fiscal year bonuses to the achievement of customer satisfaction, rather than revenue goals. Steve Ballmer increased the importance of customer loyalty in Microsoft’s strategy and structural changes and also the organization learned how to organize a strategic planning effort. Microsoft organization has made important changes in its reporting structure, business process, financial systems; the Canadian organization was able to adapt using its own resources and knowledge. Big Hairy Audacious Goal has become an institutionalized part of the organization that drives thinking and decision making in the organization. Finally, the main changes that have been seen in the performance level of the employees getting better along with rise in the percentage of market share which led to its growth both internal as well as external. Also, the Canadian Leadership Team and the Big Hairy Audacious Goal was permanently incorporated in the structure of the organization.

(b)

Strengths of Bureaucratic organizations are as follows:

Higher level of consistency is maintained in decisions and implementation of projects. The control exerted by the head quarters or top level management ensures that the systems and delivery of services to the beneficiaries are in line with the laid down procedures. The major and important final decisions made by top management, considering various perspectives of organization. In this aspect the powers and interests of various stakeholders also taken care in delivering the final outcome. Another benefit is better cost control and management.

Weaknesses of Bureaucratic organizations are as follows,

The higher level of bureaucracy leads to lack of innovation and development in the organization, which leads to loss of competitive advantage in certain circumstances. Another disadvantage is that higher the structure and communication ladder impedes the speed of communication and decision making, and speed of response in emergency situations. The motivation of employees drops because of the lower level of delegation of duties and responsibilities and lower empowerment.. What must be realized is only that the strait jacket of bureaucratic organization paralyzes the individual’s initiative, while within the capitalist market society an innovator still has a chance to succeed.

(c)

Managing change is an inevitable part of Organizational Development. Organization Development is about how people and organizations function and how to get them to function better. The field is based on knowledge from behavioral science disciplines such as psychology, social psychology, sociology, organizational behavior, organization theory and management. OD programs are long-term, planned, sustained efforts.

Various definitions of OD are:

“”Organization development refers to a long-range effort to improve an organization’s problem solving capabilities and its ability to cope with changes in its external environment with the help of external or internal behavioral-scientist consultants, or change agents, as they are sometimes called. “”(Wendell French)

“”Organization development is a system-wide process of data collection, diagnosis, action planning, intervention, and evaluation aimed at (1) enhancing congruence among organizational structure, process, strategy, people, and culture; (2) developing new and creative organizational solutions; and (3) develop the organization’s self renewing capacity. It occurs through the collaboration of organizational members working with a change agent using behavioral science theory, research, and technology.””(Michael Beer)

Thus, Organization development is a system based and wide application that transfers behavioral science knowledge to the planned improvement, and reinforcement of the process that lead to effectiveness and efficiency of the organization. All OD programs have three basic components: diagnosis, action and program management. The symptomatic component represents a uninterrupted collection of data about the total system, its subunits, its processes, and its culture. The action component consists of all the activities and interventions designed to improve the organization’s functioning. The program management component encompasses all activities designed to ensure success of the program.

The process of Organizational Development is quite complicated and the completion of the change process consumes a lot of time with a minimum of one year and sometimes keeps indefinitely. There are different approaches to the process but the usual process consists of seven steps, which are initial diagnosis, data collection, data feedback and confrontation, action planning and problem solving, team building, inter group development and evaluation and follow up.

organizational development process

The following steps are vital steps taken into consideration while implementing any alternative forms of organizational development:

Communications patterns, styles and flows.

Goal setting.

Decision making, problem solving, and action planning.

Conflict resolution and management.

Managing interface relations.

Superior- subordinate relations.

Technological and engineering systems.

Strategic management and long-range planning.

Vision/ Mission formulation.

Organizational learning.

Task 2

(a)

The key stakeholders in Microsoft Canada can be people from any of the departments and levels of the organizations. But in general, the following people are the stakeholders of Microsoft Canada:

Financial analysts

Business analysts

Forecasting or sales individual contributors

Controller

IT specialists and administrators.

Legal staffs

Human resources

Service business and Microsoft consultant

Marketing managers

Customer support

Managers responsible for different segments of Microsoft business including enterprise customer. Etc.

(b)

As discussed already it has been seen that the above cited stakeholders are the main members of the Canadian Leadership Team and plays a very significant role in the successful formation and implementation of Strategically Change in Microsoft Canada. The stakeholders, most of whom are also the members of the Canadian Leadership Team have played important role in the workshops, assignments, and discussions that was basically done to decide upon implementing new strategically changes required by Microsoft Canada to achieve its long term and short term goals.

Also in the beginning of this report we have discussed three different models that are usually used in any organization as models for implementing and managing change, which are, Lewin’s Planned Change Model, Action Research Model and Positive model. After going through the entire case in hand it is seen that the Action Research Model best suits the procedure in which implementation of strategical change was carried out in Microsoft Canada. As the Action Research Model of change suggests, Microsoft Canada firstly, identified the problem that the organization was facing and having done that it was discussed upon by the experts of the organization and data was gathered from various sources to analyze the problem in order to be able to provide with the best possible solution. Finally, The Canadian Leadership Team acted as the Action team that helped to implement the solutions and bring in the Change in Microsoft Canada. Thus, the above report is a good example of implementing and managing change in an organization.

Task 3

(a)

UnfreezingLewin’s Planned Change Model

Refreezing

Movement

Action Research Model

Data Gathering after Action

Action

Joint Action Planning

Joint Diagnosis of Problem

Feedback to Key Client or Group

Data Gathering and Preliminary Diagnosis

Consultation with Behavioral Science Expert

Problem Identification

Positive Model

Design and Deliver ways to create the Future

Envision a Preferred Future

Discover Themes

Inquire into Best Practices

Initiate the Inquiry

There are various types of change that an organization may implement.

(b)

It is often remarked that the only constant thing in the world is Change and having said that in today’s so fast moving world and economy, every organization needs to implement change in its working structure and structure to be able to cope up with the changing environment. Today, organizations basically go for a change in order to be up to date with the current world and also are able to cope up with the increasing competition. Change suiting to the organization helps the organization to attain better brand name and a increased market share. Also change in the structure and working environment usually helps the organization to provide its employees to be happy and satisfied working in the organization and give maximum effective result to the output of the organization. Thus there may be a number of reasons that might have led to any organization’s decision to implement change in the organization. In case of Microsoft Canada, Frank Clegg, President of Microsoft Canada, argued that the Canadian market was different and under-developed and it had a different mix of customers. Thus it demanded for different competitors and different growth opportunities. Another circumstance was that the percentage of markets size and growth of software sales and personnel computers shipments were below worldwide averages. These circumstances demanded a specialized strategy. Thus this was the major reason that led Microsoft Canada to decide to implement Strategic Change in the organization.