In my last article, I discussed the innovative change management strategy used by Gala Bingo in the UK to completely turn its business round. Today I’m going to look at how the strategies used by Gala – while they would certainly be considered as innovate by many in business – could have been copied from a number of successful organisational change initiatives. To illustrate this, I’ll briefly examine two examples of change management strategies and the four rules of organisational change that they follow.
Waking up and smelling the coffee of organisational change
Starbucks CEO Howard Schultz was facing a serious dilemma in 2007. Plagued by stiffening competition, a worsening economy, falling footfall and revenues, and a declining share price, Schultz looked hard at the company. He soon came to the conclusion that it had lost its identity. Starbucks had forgotten how to make coffee, and how to serve it.
By 2012, Schultz had stuck and extra ounce or two in employees’ get-up-and-go. He had re-engineered its policies, training, and positioning. Some of his methods had been somewhat off-the-wall (such as closing all stores on one afternoon for all baristas to undergo training in making the perfect coffee). The result is a thriving company, with shares reaching record levels, and a completely re-energised workforce.
Turning the wheel of change at Ford
Half-way through 2008, Ford was losing upwards of $80 million per day. The car market around the world had crashed into a brick wall on the back of the Global Financial Crisis. By the end of 2008, Ford shares were changing hands at little more than $1. Despite its problems, Ford was never bailed out (unlike America’s other major car manufacturers). By the end of 2012, Ford’s shares were trading at more than $14, employees received $6,200 in bonuses, and ballooning sales had translated into $20 billion of earnings.
Looking at Ford, Starbucks, and Gala Bingo, it’s easy to see how different each company is. But they have several things in common:
- First, all three companies had lost their way. They were losing market share, suffering falls in revenue and profits.
- Second, their employees were disenfranchised.
- Third, they needed to change and employed change management strategies to support the change.
It is in this third area that the most dramatic similarities are seen.
Four must-haves to execute effective organisational change
All three companies executed their change management plans with the following elements:
- Committed leaderships sponsored the change initiative. These leaders examined their companies closely, taking on board their growing knowledge and using it to shape their vision of the future.
They communicated top down, keeping executives in the loop at all stages. They encouraged this communication trail to flow further, empowering their leaders to do likewise with their teams. Schultz held ‘town hall’ meetings, using them to shape goals and objectives. Mulally (Ford) went out into the field (in a similar way to how Jack Welch had preached change at General Electric).
When sponsors and top brass are seen to be so involved in change and the need for change, it encourages the workforce to act likewise.
- A recognition that culture had to change. At Ford, the ego-driven mentality had to be broken, and replaced with greater transparency and collaborative working methods. At Starbucks and Gala, focus had to move from profit to customer service in order for profit to grow.
- A basis for sustained change had to be found. It is not enough to simply fight the fire and help the business survive; ways for the business to thrive have to be discovered, and discovered as a team effort with all stakeholders in success represented and involved.
Mulally cut back Ford’s bloated production line. He reduced the number of brands, and streamlined the organisational structure. While some costs were cut, others rose as the company invested in new initiatives.
Schultz used the power of the customer, investing millions in new products, customer loyalty programs, and staff training. Gala invested in customer service initiatives, too.
Such initiatives require vision, foresight, a will to succeed, and a flexibility to alter methods on the path to achieving goals.
- Finally, change management must be true to the organisation’s core identity and values. The need for change is undeniable, but the change must be in line with mission. Ford’s mission was “to build innovative, best-of-class vehicles.” Starbucks was “one person, one cup, and one neighbourhood at a time.” Gala’s mission was to create millions of fans all served with “Gala Greatness.”
In summary, to make effective organisational change, remember these four things:
Leadership; culture; basis for change; organisational identity and values.