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CHAPTER 1

"3Managing Change: Stories and ParadoxesLearning ObjectivesBy the end of this chapter you should be able to:LO 1.1Understand how stories of change can contribute to our knowledge of theory and practice.LO 1.2Explain why managing organizational change is both a creative process and a rational process.LO 1.3Identify the main tensions and paradoxes in managing organizational change.LO 1.4Evaluate the strengths and limitations of our current understanding of this field.1"

"4Chapter 1 Managing Change: Stories and ParadoxesLO 1.1LO 1.2Stories about Change: What Can We Learn?Changing organizations is as exhilarating as it is messy, as satisfying as it is frustrating, as creative as it is rational. This book recognizes these tensions and how they affect those who are involved in managing change. Rather than pretend that these tensions do not exist or that they are unimportant, we confront them head-on, considering how they can be addressed and managed, recognizing the constraints that they can impose. We also want to demonstrate how the images that we have about the way in which change should be managed, and our image of the role of change agents, affect how we approach change and the outcomes that we think are possible.To begin this exploration, we present three stories of recent changes. The first con-cerns how Roz Brewer restored the “buzz” at Starbucks. The second concerns the orga-nizational model introduced at Sears Holdings in an unsuccessful attempt to restore falling sales and profits. The third describes how Mike Duggan, mayor of Detroit, trans-formed the city’s fortunes. These stories each address different problems: a coffeehouse chain, a retailer, and a city. But they illustrate common issues concerning the manage-ment of change. Each account opens with a set of assessment questions. We ask that you think through the answers for yourself. What can we learn about change management from stories like these? You will find our answers to these questions at the end of the chapter.Our aim is to demonstrate that stories about change can be a valuable source of prac-tical lessons, as well as help to contribute to our general understanding of change. This narrative perspective has a number of advantages. Stories are a familiar and popular medium. They give us rich information set in context. They enable us to put ourselves at the center of the action. They encourage us to consider how we could transfer the issues that we are reading about into our own experience.These stories are, of course, each distinctive, one-off. How can they contribute to knowledge and practice in general, in other sectors and organizations? Stories are one of our main ways of knowing, communicating, and making sense of the world (Dawson and Andriopoulos, 2017; Gabriel, 2019). Our stories have actors: change leaders, other man-agers, staff, customers, etc. They make decisions that lead to actions that trigger responses: acceptance, resistance, departure. There is a plot: a serious problem that could be solved by organizational change. There are consequences: To what extent did the change solve the problem, and were other problems created along the way? The sequence of events unfolds in a typical manner: . . . and then . . . and then. This tells us why the outcomes were reached. These narratives do not simply describe what happened with a change initiative. They also provide us with explanations. These are process narratives. Process narratives have advantages over more traditional (quantitative, statistical) research meth-ods (Mohr, 1982; Langley et al., 2013):•They tell us about the context, give us a sense of the whole, a broader frame of reference.•Complexity can be expressed within a coherent sequence of events.•The nature and significance of the causal factors acting on events are exposed.•The narrative patterns transcend individual cases."

" Chapter 1 Managing Change: Stories and Paradoxes 5This approach is based on what is called narrative knowing (Langley and Tsoukas, 2010; Vaara et al., 2016)—understanding events through the stories that are told about them. Because stories can reveal the mechanisms, or logics, behind a sequence of events, they are process theories. (We will explore process perspectives on change in chapter 10.) What combinations of factors drive, slow down, accelerate, or block the change process? The three stories that follow explain the relative success of the changes in Starbucks, Sears, and Detroit. We will ask you to consider the extent to which those explanations, each based on a single unique case narrative, can be applied to managing organizational change in general, in other settings.LO 1.1The Starbucks StoryIssues to Consider as You Read This Story1.To what extent can management expertise in general, and change management exper-tise in particular, translate from one company and sector to another?2.What elements of Roz Brewer’s approach to change management would be appropriate for you to use in your organization?3.Do you think that senior executives should be closely involved with the frontline day-to-day operations of the business as Brewer was?The ContextFounded in 1971, based in Seattle, with over 30,000 locations, 330,000 employees, and annual revenues of around $25 billion, Starbucks is the largest seller of coffee in the world.The ProblemRoz Brewer joined Starbucks’ business in America as chief operating officer in 2017, the first woman and first African-American to hold such a senior position in the company. In her new role, she had a number of problems to deal with. The company’s iconic founder and executive chairman, Howard Schultz, had decided to leave the company after three decades. After five years of exceptional growth, sales had stalled. In 2018, the company was accused of racial bias after a manager called police to deal with two Black men who had been waiting for a friend in an outlet in Philadelphia; they had not bought drinks and refused to leave when asked. Some customers called for a Starbucks’ boycott after a social media video of the arrest went viral. When Brewer analyzed Starbucks’ business operations in detail in her first three months, she found that the company was “melting down behind the coffee bar.” Paradoxically, this was the result of the success of the mobile order and pay system; customers placed their orders through an app before coming to the store. But the stores were not ready for the sudden increase in orders. Crowds of customers jostled each other as they waited for their drinks, and stressed baristas struggled to keep up with the flow. She also found that 40 percent of employees’ time was spent on tasks away from the customers, such as counting milk jugs three times a day and unnecessarily restocking the floor with cups. And like many other organiza-tions, there were too many development and change initiatives being run by corporate headquarters."

"6Chapter 1 Managing Change: Stories and ParadoxesThe SolutionBrewer was not an obvious choice for the role at Starbucks. Her previous position was as a senior executive at Walmart. Investors were skeptical that her experience with a big-box retailer could translate to a “high touch” coffee shop business. And she preferred green tea to coffee. However, one of Brewer’s colleagues at Walmart said, “Roz is a tough cookie. She’s into the details. She’s not a fluffy person. She gets things done.” Another colleague said, “She’s an operator. She’s not just a person with a point of view and vision. She can execute” (Kowitt, 2019, pp. 86 and 88).Schultz had managed the company by instinct and intuition. Brewer, who trained as a chemist, focused on the numbers and sought to bring some discipline and order to the stores. Brewer and her team simplified, eliminated, or automated tasks to allow store staff to spend more time with customers. Dedicated baristas were appointed to handle the mobile orders in stores where those were popular. Cleaning was carried out when the stores were closed. Two-thirds of the corporate projects were stopped. Only those relating to three priorities—beverage innovation, store experience, and the digital business—were allowed to continue. Brewer earned a reputation for making tough decisions. For example, she asked her team to assess the benefits and disadvantages of Mercato—Starbucks’ fresh food business that was introduced, with much publicity, to 1,500 stores in 2017. The assessment showed that Mercato did not fit the company’s priorities, so she killed it. She also cut specialist stand-alone, time-limited offers, like the Unicorn Frappucino. These were popular with only a small number of customers, and they complicated the baristas’ work. She had the development team work instead on simpler products that could be made with existing ingredients. Following analysis of the timing of customer visits to stores and focusing on converting occasional midday customers to “rewards” members (who account for 40 percent of sales), Brewer was able to grow the afternoon business, which was traditionally a slack period.Following what became known as “the Philadelphia incident,” Brewer flew to Philadel-phia to apologize in person to the two men, and she organized racial bias training for 175,000 employees. Brewer also spent a lot of her time visiting the stores, talking to employees, and assessing their pride in the business. Do employees who recognize her look her in the eye? Brewer says, “If they look down at their feet, they’re not proud about the store. Ninety-nine percent of the time I’m right about that” (Kowitt, 2019, p. 91). Brewer sees Starbucks’ stores as more than coffee shops; they are also public spaces, like libraries, serving the needs of employees and communities. In some shops, if they think that safety will be increased, managers have been allowed to install needle boxes in restrooms, for the disposal of drug users’ syringes. “Brewer wants baristas to make the perfect flat white or pour-over. But she also wants them trained in how to deal with the hardest social situations they could possibly encounter so that everyone feels like they belong in Starbucks” (Kowitt, 2019, p. 92).The OutcomeStarbucks’ sales growth recovered, proving Brewer’s critics wrong. By 2018, there were 15 million rewards members, who spend three times as much as nonmembers. Afternoon customers started to generate 50 percent of beverage sales, and in 2019 Starbucks saw its best sales growth in three years. Starbucks’ stock price rose 70 percent between 2017 and 2019"

" Chapter 1 Managing Change: Stories and Paradoxes 7LO 1.1The Sears StoryIssues to Consider as You Read This Story1. HowwouldyoudescribeEddieLampert’sleadershipstyle?2. Howwouldyouassesshisapproachtoimplementingmajororganizationalchange—inthiscaserestructuringthewholecompanywithaneworganizationalmodel?3. Onbalance,howwouldyouassesshisneworganizationalmodel?4. Whatlessonsaboutmanagingorganizationalchangecanwetakefromthisexperienceandapplytootherorganizations,inthisorothersectors?The SettingAhouseholdnameinAmerica,Searswasoncetheworld’slargestretailer.InOctober2018,thecompanyfiledforChapter11bankruptcy,anditsremainingassetsweresoldtoahedgefund,ESLInvestments,ownedbyEddieLampert.Whathappened?SearsHoldingsCorporationwasaspecialtyretailer,formedin2005bythemergerofKmartandSearsRoebuck.ThemergerwastheideaofEddieLampert,abillionairehedgefundmanagerwhoowned55percentofthenewcompanyandwhobecamechairman.BasedinIllinois,thecompanyoperatedintheUnitedStatesandCanada,with274,000employees,4,000retailstores,andannualrevenues(2013)of$40billion.SearsandKmartstoressoldhomemerchandise,clothing,andautomotiveproductsandservices.Themergedcompanywassuccessfulatfirst,duetoaggressivecostcutting.The ProblemBy2007,twoyearsafterthemerger,profitsweredownby45percent.The Chairman’s SolutionLampertdecidedtorestructurethecompany.Searswasorganizedlikeaclassicretailer.Departmentheadsrantheirownproductlines,buttheyallworkedforthesamemerchan-disingandmarketingleaders,withthesamefinancialgoals.ThenewmodelranSearslikeahedgefundportfoliowithautonomousbusinessescompetingforresources.This“internalmarket”wouldpromoteefficiencyandimprovecorporateperformance.Atfirst,thenewstructurehadaround30businessunits,includingproductdivisions,supportfunctions,andbrands,alongwithunitsfocusingone-commerceandrealestate.By2009,therewereover40divisions.Eachdivisionhaditsownpresident,chiefmarketingofficer,boardofdirectors,profitandlossstatement,andstrategythathadtobeagreedonbyLampert’sexecutivecommittee.Withallthosepositionstofillattheheadofeachunit,executivescompetedfortheroles,eacheagertorunhisorherownmultibillion-dollarbusiness.ThenewmodelwascalledSOAR:SearsHoldingsOrganization,Actions,andResponsibilities"

"When the reorganization was announced in January 2008, the company’s share price rose 12 percent. Most retail companies prefer integrated structures, in which different divisions can be compelled to make sacrifices, such as discounting goods, to attract more shoppers. Lampert’s colleagues argued that his new approach would create rival factions. Lampert disagreed. He believed that decentralized structures, although they might appear “messy,” were more effective and they produced better information. This would give him access to better data, enabling him to assess more effectively the individual components of the company and its assets. Lampert also argued that SOAR made it easier to divest businesses and open new ones, such as the online “Shop Your Way” division.Sears was an early adopter of online shopping. Lampert (who allegedly did all his own shopping online, but had no previous experience in retailing) wanted to grow this side of the business, and investment in the stores was cut back. He had innovative ideas: smart-phone apps, netbooks in stores, and a multiplayer game for employees. He set up a company social network called Pebble, which he joined under the pseudonym Eli Wexler, so that he could engage with employees. However, he criticized other people’s posts and argued with store associates. When staff worked out that Wexler was Lampert, unit man-agers began tracking how often their employees were “Pebbling.” One group organized Pebble conversations about random topics just so they would appear to be active users.The ChairmanAt the time of the merger, investors were confident that Lampert could turn the two companies around. One analyst described him as “lightning fast, razor-sharp smart, very direct.” Many of those who worked for him described him as brilliant (although he could overestimate his abilities). The son of a lawyer, it was rumored that he read corporate reports and finance textbooks in high school, before going to Yale University. He hated focus groups and was sensitive to jargon such as “vendor.” His brands chief once used the word consumer in a presentation. Lampert interrupted, with a lecture on why he should have used the word customer instead. He often argued with experienced retailers, but he had good relationships with managers who had finance and technology backgrounds.From 2008, Sears’ business unit heads had an annual personal videoconference with the chairman. They went to a conference room at the headquarters in Illinois, with some of Lampert’s senior aides, and waited while an assistant turned on the screen on the wall opposite the U-shaped table and Lampert appeared. Lampert ran these meetings from his homes in Greenwich, Connecticut; Aspen Colorado; and subsequently Florida, earning him the nickname, “The Wizard of Oz.” He only visited headquarters in person twice a year because he hated flying. While the unit head worked through the PowerPoint presentation, Lampert didn’t look up, but dealt with his emails or studied a spreadsheet until he heard something that he didn’t like—which would then lead to lengthy questioning.In 2012, he bought a family home in Miami Beach for $38 million and moved his hedge fund to Florida. Some industry analysts felt that Sears’ problems were exacerbated by Lampert’s penny-pinching cost savings, which stifled investment in its stores. Instead of store improvements, Sears bought back stock and increased its online presence. In 2013, Lampert became chairman and chief executive, the company having gone through four other chief executives since the merger."

"The OutcomesInstead of improving performance, the new model encouraged the divisions to turn against each other. Lampert evaluated the divisions and calculated executives’ bonuses, using a measure called “business operating profit” (BOP). The result was that individual business units focused exclusively on their own profitability, rather than on the welfare of the company. For example, the clothing division cut labor to save money, knowing that floor salespeople in other units would have to pick up the slack. Nobody wanted to sacrifice business operating profits to increase shopping traffic. The business was ravaged by infighting as the divisions—behaving in the words of one executive like “warring tribes”—battled for resources. Executives brought laptops with screen protectors to meetings so that their colleagues couldn’t see what they were doing. There was no collaboration and no cooperation. The Sears and Kmart brands suffered. Employees gave the new organi-zational model a new name: SORE.The reorganization also meant that Sears had to hire and promote dozens of expensive chief financial officers and chief marketing officers. Many unit heads underpaid middle man-agers to compensate. As each division had its own board of directors, some presidents sat on five or six boards, which each met monthly. Top executives were constantly in meetings.The company had not been profitable since 2010 and posted a net loss of $170 million for the first quarter in 2011. In November that year, Sears discovered that rivals planned to open on Thanksgiving at midnight, and Sears’ executives knew that they should also open early. However, it wasn’t possible to get all the business unit heads to agree, and the stores opened as usual, the following morning. One vice president drove to the mall that evening and watched families flocking into rival stores. When Sears opened the next day, cars were already leaving the parking lot. That December, Sears announced the closure of over 100 stores. In February 2012, Sears announced the closure of its nine “The Great Indoors” stores.From 2005 to 2013, Sears’ sales fell from $49.1 billion to £39.9 billion, the stock value fell by 64 percent, and cash holdings hit a 10-year low. In May 2013, at the annual share-holders’ meeting, Lampert pointed to the growth in online sales and described a new app called “Member Assist” that customers could use to send messages to store associates. The aim was “to bring online capabilities into the stores.” Three weeks later, Sears reported a first-quarter loss of $279 million, and the share price fell sharply. The online business contributed 3 percent of total sales. Online sales were growing, however, through the “Shop Your Way” website. Lampert argued that this was the future of Sears, and he wanted to develop “Shop Your Way” into a hybrid of Amazon and Facebook. The company’s stock market valuation fell from $30 billion in 2007 to $69 million in October 2018, while car-rying $5 billion in debt. Revenues in 2018 were $16.7 billion, down from $50.7 billion in 2007. Sears had around 3,500 stores in America in 2007, and young shoppers rarely visited the 866 stores that remained in August 2018. Sears filed for Chapter 11 bankruptcy in 2018, and Lampert resigned as chief executive, but stayed on as chairman.Case SourcesKimes, M. 2013. At Sears, Eddie Lampert’s warring divisions model adds to the troubles. Bloomberg Businessweek, July 11. http://www.businessweek.com/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles.Forbes (n.d.), #2057 Edward Lampert, http://www.forbes.com/profile/edward-lampert."

"Sears Holdings, http://www.searsholdings.com.Sears holdings, Wikipedia, http://en.wikipedia.org/wiki/Sears_Holdings.Shop Your Way, http://www.shopyourway.com.The Economist. 2018. The collapse of an American retail giant. October 20. https://www.economist.com/business/2018/10/20/the-collapse-of-an-american-retail-giant.LO 1.1The Detroit StoryIssues to Consider as You Read This Story1.Mike Duggan transformed Detroit without a “management textbook” plan for change. Why do you think he was successful?2.What aspects of Duggan’s change management style would be appropriate for you to use in your organization?3.To what extent can we generalize from managing change in a Midwestern American city to managing change in commercial organizations?The ContextDetroit, Michigan, has a population of over 4 million people. It was once the fourth largest city in America. In the early twentieth century, Henry Ford and other motorcar manufacturers made Detroit famous as the automotive capital of the world; Detroit is also known as the Motor City and Motown. But decades of decline, starting in the 1970s, made Detroit famous as America’s worst urban disaster story, as an iconic city in America’s Midwestern rust belt.The ProblemOil crises in the 1970s meant that customers wanted smaller, fuel-efficient vehicles, not the “gas guzzlers” that Detroit made. In the late twentieth century, with falling employment in the motor industry and other businesses leaving, Detroit’s population fell. As skilled workers found employment elsewhere, the proportion of poor people in the city’s population increased. These factors led to a smaller tax base, lower property prices, abandoned homes, and higher crime rates. The city administration was corrupt, and several officials (including the mayor) were imprisoned. In 2011, half of Detroit’s property owners failed to pay their taxes.By 2013, Detroit was bankrupt, and $18.5 billion in debt. When the current mayor, Mike Duggan, was elected in 2013, 40 percent of the city’s streetlights and 25 percent of the fire hydrants were not working and 40,000 properties were vacant. The city had stark racial, economic, and social divisions. In the run-up to his election, Duggan organized house parties with small groups of residents across Detroit. In total, 8,000 people turned up to these meetings, and Duggan described this experience as powerful: You go to a house party at Mack and Beals, where the people had an abandoned house on each side of their property, and their streetlights were out, they have one perspective on the city of Detroit. And then you go to Indian Village and they have a different perspec-tive. And East English Village has a different perspective. But the aspirations of the people "

"of the city are really the same. They want their neighborhoods back. They want the police to show up. They want the abandoned buildings dealt with. And they want to be able to stay in their neighborhood and not leave. They did teach me about the different issues in those neighborhoods. They were enormously educational. Anyone can come up to me from any neighborhood in this city, and I’m able to have a conversation about their problems and what we’re going to do about them. The SolutionDuggan’s past experience involved turning around the Detroit Medical Center, which had lost $500 million over the six years, before he was appointed chief executive in 2004. The Center generated over $57 million net income in 2012. Duggan’s priority as mayor of Detroit was once again to reverse the decline. He describes his strategy as “focusing on the boring.”Get the boring stuff right—streetlights, fire hydrants, ambulance response times—and the rest falls into place. If each individual person says, OK my job is to get the grass cut in the parks; my job is to get the tractors repaired 20 percent faster to get the grass cut in the parks, turnaround occurs. People get into public service because something in their heart wants them to help people, and over time the bureaucracy beats that idealism out of them. We are trying to bring idealism back. Duggan continued to hold weekly meetings with residents, in their homes, where he asked them what he could fix next.The OutcomesBankruptcy brought some debt relief. Wealthy Detroit families invested in redevelopment, which brought sports teams and businesses back to the city. Entrepreneurial start-ups came to Detroit for its low costs and light traffic and because “rust belt” became trendy. Now the streetlights work, the fire hydrants have been repaired, and the city’s population is growing again. In 2018, Duggan bid to host the new U.S. headquarters for Amazon (subsequently awarded to northern Virginia). “Mike Duggan is an unremarkable guy who has done unremarkable things to achieve extraordinary results.”Case SourcesHagen, N. 2018. Halting Detroit’s decline. Financial Times, January 8, p. 24. https://www.crainsdetroit.com/awards/mike-duggan-making-improbable-inevitable.On YouTube, find ‘The revitalization of Detroit — Talks at GS’, (2016, 15 minutes).LO 1.3LO 1.4Tension and Paradox: The State of the Arttensionwhen two or more ideas are in opposition to each otherparadoxwhen two or more apparently correct ideas contradict each otherFrom a management perspective, organizational change is seen as problematic. How do we persuade people to accept new technologies that will make their skills, knowledge, and working practices obsolete? How quickly can people who find themselves with new roles, and new relationships, learn to operate effectively after a major reorganization? How about"

"this new system for capturing and processing customer information? We prefer the old system because it works just fine. Change can be difficult. Change that is not well man-aged, however, can generate frustration and anger.Most estimates put the failure rate of planned changes at around 60 to 70 percent (Bucy et al., 2017; Stouten et al., 2018; Keller and Schaninger, 2019). There is, therefore, no short-age of advice. However, that advice is both extensive and fragmented. The literature—research and other commentary—can be difficult to access, and to absorb, for several reasons:many perspectivesThere are contributions from different academic disciplines and theoretical perspectives—there are several literatures.rich historyWork dating from the 1940s is still interesting and useful; recent research has not necessarily made previous commentary irrelevant.range of conceptsThe concepts that are used vary in scale, from schools of thought or perspectives on change, through methodologies, to single tools.blurred boundariesDepending on the definitions of change and change management in use, the boundaries of the topic vary between commentators.varied settingsAs with our stories, evidence and examples come from a range of organizational types and contexts, using different methodologies.Many perspectives is the most significant of these properties. That is usually seen as a problem—“the experts can’t agree.” We disagree and prefer instead to emphasize the advan-tages in adopting a multiple-perspectives approach to the management of organizational change. First, a perspective that works in one context may not work well in a different setting: We will explore contingency frameworks in chapter 10. Second, this is a way of opening up debate: “Should we define our problem in these terms, or in some other way?” Third, multiple perspectives encourage the search for creative solutions: “Can we combine ideas from two or more approaches and adapt them to fit our context?” We will meet all these characteristics again in later chapters.The practicing manager, less interested in theoretical perspectives, wants to know “what works?” It is difficult to give a clear answer to that question, too, for the following reasons:many variablesEven with simple changes, the impact is multidimensional, and measuring “effectiveness” has to capture all the factors to produce a complete picture.slippery causalityIt is difficult to establish cause and effect clearly across complex processes that unfold over time, usually at the same time as lots of other changes.many stakeholdersDifferent stakeholders have different views of the nature of the problem, the appropriate solution, and the desirable outcomes. Whose measures should we use?What works well in one setting may not work well in another. The broad outlines of a good change strategy are widely known and accepted. However, what matters is the detail,"

"concerning how an intervention is designed for a particular organization. For example, most practical guidelines begin by suggesting that change will be more readily accepted if there is a “sense of urgency” that underpins the business case for change. That sense of urgency can be seen in the issues facing Starbucks, in the falling profitability at Sears, and in the many problems in Detroit. Note, however, that there are many different ways in which a sense of urgency can be established and communicated. Some methods emphasize the (negative) “burning platform” that heightens anxiety and encourages escape. Other approaches encourage a (positive) “burning ambition” to confront and solve the problem.What works depends on the context. It is rarely possible to just do what someone else has done. Change is in part a rational process; we know what kinds of issues need to be taken into account. Change is also a creative process; it is always necessary to design—to create—an approach that is consistent with local circumstances. However, creatively adapted, such accounts of how other organizations have handled change can be helpful in addressing similar problems in other settings.The field of change management is also rich in tensions and paradoxes. We will explore six of these briefly, in the form of key questions. These issues will also appear in later chapters. You will probably encounter further tensions in your reading across the subject and in practice. How these tensions and paradoxes are managed has implications for the process and outcomes of change.Transformational Change, or Sweat the Small Stuff?Where to start—with sweeping radical changes, or a gradual process of incremental initiatives? We will explore a simple model for “locating” the scale of change in the next section. How-ever, faced with geopolitical, economic, demographic, sociocultural, and technological devel-opments, most organizations seem to think in terms of deep transformational change. The Sears story reflects this view, implementing whole-organizational changes to deal with survival threats. In contrast, Roz Brewer at Starbucks began by focusing on operational details—“be-hind the coffee bar”—and Mike Duggan turned Detroit around by focusing on “the boring stuff.” A focus on transformation may mean that minor changes are seen as less valuable and important and are overlooked in favor of “high impact” initiatives. This could be a mistake. Moore and Buchanan (2013), for example, demonstrate how an initiative designed to fix small problems quickly in a hospital generated major improvements for almost no cost. In this case, “sweating the small stuff” was an enabling strategy, getting people involved (the small prob-lems were identified by staff), establishing a reputation for getting things done, and creating the platform for further developments. Shallower changes can facilitate and complement the deeper initiatives, and evidence suggests that these should not be underestimated.Systematic Tools, or Messy Political Process?If one looks below the surface of cases of managed change, one can always discern the ever-present effect of the “other side” of organizational life. The ambiguities, uncertainties, ambivalences, tensions, politics and intrigues are always involved, and are influential and addressed in some manner—however half-cocked, fudged, guessed at, messed up or little understood.(Badham, 2013, p. 24)Most practical guidelines on change implementation (chapters 9 and 10) suggest a systematic sequence of steps, with support from diagnostic tools and assessments (chapters 4 and 5). We have already suggested that change is a creative process as well as a rational"

"one. It is also a political process. Organizations are political systems, and because there are often “winners and losers,” change is a political process. The systematic tools-based approach, the creativity, and the politics work hand in hand. We will explore the political skills that change managers require later (chapter 12). It is important to recognize that, despite what the textbook or the change management consultant says, those systematic tools are only part of the answer to, “how to do it, and how to get it right.”Organizational Capabilities, or Personal Skills?Starbucks’ founder Howard Schultz grew the company on a combination of instinct and intuition. Roz Brewer brought a different style, based on the evidence, data, and the numbers. Either of these approaches works well in the right context, particularly with regard to whether or not the organization will welcome change. We thus need to pay attention to organizational readiness and capabilities, as well as individual personalities and skills, to understand the change drivers and barriers (chapter 5). The skills of change agents are, of course, also important. However, skilled change agents struggle in rules-based organizations, and agile organizations still need capable change agents. We will explore the capabilities of effective change managers in chapter 12.Rapid Change, or the Acceleration Trap?The pace of change—social, political, economic, technological—appears to have accelerated. Can organizations keep up? There is now a considerable amount of advice on how to speed up change, to accelerate the pace. Rapid change, however, can cause problems. Can people keep up? Change too fast, and you run the danger of destabilizing the organization and creating staff burnout (Buchanan and Macaulay, 2019). There is also, therefore, advice on how to manage “painless change,” and how to avoid “the acceleration trap” (see chapter 8).Change Has Never Been So FastThat this is an age of change is an expression heard frequently today. Never before in the history of man-kind have so many and so frequent changes oc-curred. These changes that we see taking place all about us are in that great cultural accumulation which is man’s social heritage. It has already been shown that these cultural changes were in earlier times rather infrequent, but that in modern times they have been occurring faster and faster until to-day mankind is almost bewildered in his effort to keep adjusted to these ever-increasing social changes. This rapidity of social change may be due to the increase in inventions which in turn is made possible by the accumulative nature of material cul-ture [i.e., technology]. (Ogburn, 1922, pp. 199–200).Change Leader, or Distributed Leadership?There is a personality at the heart of each of our stories: Roz Brewer, Eddie Lampert, Mike Duggan. It seems that the fate of change is in the hands of the leader. This is rarely the case. It is widely assumed that change needs a champion, a senior figure, who sets the direction, inspires others, and drives the project. A lot of work has gone into identifying the competen-cies of this “ideas champion,” the effective change leader. This parallels work on the capabil-ities of effective leaders in general (although the evidence says that leadership success is highly contingent). However, in most organizations, change is not a solo performance but a "

"team effort. There is usually a “guiding coalition” of more or less senior managers, who guarantee permission for change, oversee progress, and unblock problems. Different models of change delivery units have evolved (chapter 12). Research has shown how change is often driven by large numbers of organizational members, through “distributed leadership” or “lead-ership constellations,” or “leadership in the plural.” As you read the case history “The Van-uatu Plastics Ban,” note the number of individuals, groups, agencies, government ministers, and government departments contributing to this change. Vanuatu is a nation state, not a company, but this distributed approach to implementing change is typical. The Vanuatu Plastics BanVanuatu in the South Pacific is made up of 80 islands stretching over 1,000 kilometers, with a population of 300,000 people. Three and a half hours flight time from Sydney on the east coast of Australia, Vanuatu’s coral reefs and World War II wrecks are popular with scuba divers.Ocean plastic is a global problem, harming marine life and polluting the food chain. It is estimated that by 2050, there will be more plastic by volume in the world’s oceans than fish. Most of this marine pollu-tion comes from East Asian and Pacific countries. The United Nations has “declared war” on marine litter, noting that a garbage truck of plastic is dumped into the ocean every minute. Vanuatu makes a tiny contri-bution to global plastic waste. However, the waste damages the islands’ ecosystems and biodiversity. Vanuatu hosted cleanup days to develop awareness of the problems that plastics created. But after these cleanups, the plastic waste would gradually return.Solution: First PhaseThe war on plastic in Vanuatu started with a campaign organized by Christelle Thieffry and Georges Cumbo. Having seen the plastic rubbish on the beaches around the capital Port Vila, they launched their Face-book page in March 2017, calling for a ban on plastic bags. Their Facebook campaign attracted a lot of sup-port, so they launched a petition in May 2017, gaining 2,000 signatures. Their efforts attracted the attention of politicians. In July 2017, the Prime Minister, Charlot Salwai, announced the government’s intention to eradicate plastic bags within a year.In 2018, Vanuatu banned single-use plastics, in-cluding bags and polystyrene containers, with fines of $175 to $900 for violations (World Bank, 2019). When the ban was introduced, it was resisted. But people became accustomed to the idea, and shops became more comfortable about not giving shop-pers plastic bags. Ellen Jimmy, a stallholder in Port Vila’s market, said that her business had not been harmed by the ban, and customers rarely com-plained (Visser, 2019).Solution: Second PhaseDonna Kalfatak became Director of Vanuatu’s De-partment of Environmental Protection and Conser-vation in 2019. To implement the second phase of the plastics ban, she worked with Vanuatu’s waste management team, the Ministry of Climate Change, and the Ministry of Foreign Affairs. The Centre for Environment, Fisheries, and Aquaculture Science conducted a waste audit and concluded that the ban should be extended to disposable diapers, drinking straws, grocery packaging, Styrofoam food contain-ers, and plastic cutlery. Christina Shaw and her col-leagues at Dive Against Debris gathered further data. The Minister of Foreign Affairs and External Trade, Ralph Regenvanu, announced the expanded list of banned items, endorsed by the Council of Min-isters, in December 2019.The OutcomesThe ban had an immediate effect, with locals noting the absence of trash on the capital’s streets and urban areas. The ban was helped by the islands’ handicrafts tradition of making biodegradable bags woven from pandanus fronds. Sales of these bags grew, benefitting those who made them (Bulvanua "

"Arts and Crafts Cooperative members). But bottle caps and chip packets still wash up on the beaches, and plastic bags and water bottles have not disap-peared. To evade the ban on bags, some shops packaged fruits and vegetables in plastic netting. These will eventually be banned, too.Foreign Minister Ralph Regenvanu thinks that Vanuatu’s success may be explained by the fact that it is a small country. Only one company that makes plastic products and the government have helped them to adapt to the new regulations. Regenvanu says, “It’s because we’re so small that we can do it. We’re like a little laboratory for being able to do things like this. One of the advantages here is that it is so small that you can do things that you may think impossible in other places” (Visser, 2019).Case SourcesVisser, N. 2019. Vanuatu has one of the world’s strictest plastic bans. It’s about to get tougher. Huffington Post, February 24. https://www.huffingtonpost.com.au/entry/vanuatu-plastic-ban-law-ocean-pollution_n_5c6ee757e4b0f40774cd355d.World Bank. 2019. Meet the innovator battling plastic waste in Vanuatu: Donna Kalfatak. June 4. https://www.worldbank.org/en/news/feature/2019/06/04/meet-the-innovators-battling-plastic-waste-in-vanuatu-donna-kalfatak.Learning Lessons, or Implementing Lessons?Change following crises, accidents, misconduct, failures, and other extreme events often does not happen. There is always an investigation, which produces recommendations for preventing such an event from happening again (or at least reducing the probability). The evidence shows that those recommendations are often ignored. One might assume that, in such circumstances, change would be welcome, rapid, and straightforward. The distinc-tion between passive learning (identifying lessons) and active learning (implementing changes) is important here. The latter does not automatically follow. Why is that not the case? In exploring “why organizations change’ in chapter 3, we will also consider why organizations do not change, when perhaps they should.The perceptive reader will have noticed that the answer to each of these six paradoxes, these six questions, is in every case “both.” We need big change and small change. Change is at the same time a systematic process and a political one. We need both organizational and individual capabilities. The pace of change must, if possible, vary with circumstances. It almost always takes “a cast of characters” that includes champions and supporters to drive change. There is no point in learning lessons if we do not then implement them. As noted earlier, the way in which these tensions are confronted and managed both drives and constrains the change process and influences the outcomes.LO 1.4Assessing Depth of ChangeWe have noted the tension between transformational change and the small stuff. Depth is one metaphor that can be used to categorize change. Figure 1.1 presents a framework for that assessment.At the bottom of Figure 1.1 sits the “small stuff” that may not even be regarded as “change.” In the middle of the scale, we have “sustaining innovation” that involves "

"FIGURE 1.1Assessing Depth of ChangeOff the scaleDisruptive innovationFrame-breaking, mold-breakingRedraw dramatically organization and sector boundariesDeeperParadigm shift, strategic changeNew ways of thinking and solving problems, whole system changeNew ways of doing businessDeep changeChange the mission, vision, values, the organization’s philosophy, in order to symbolize a radical shift in thinking and behavior Change the organization’s definition of successCreate new goals, objectives, targetsSustaininginnovationImprove business planning to symbolize a shift in thinkingTighten up on documentation, reporting, controlsReallocate resourcesGrow some departments, cut others, create new unitsShallow changeFine-tuning: cut costs, improve ecienciesConstantly “nibble away” making minor improvements Not on the scale“Sweat the small stuff”—quickly solve the minor annoying problems that nobody has bothered to fix; “grease the wheels"

improving on current practices. At the top of the scale is “disruptive innovation,” which involves radically new business models and working methods (Christensen et al., 2015). Clearly, in considering change in an organization, the proposed solution should be con-sistent with the diagnosis of the problem. Using shallow changes to address strategic challenges may not be appropriate. Attempting to solve minor difficulties with disruptive innovation could consume disproportionate amounts of time and resources.Shallow changes are often easier to implement than frame-breaking changes. Transfor-mational “off the scale” changes are more challenging because they are costly and time consuming and affect larger numbers of people in more significant ways, potentially gen-erating greater resistance. However, in most organizations, several changes at different depths are likely to be under way at the same time (see the box “Turnaround at Etsy”). Many large organizations have thus established corporate project or program management offices (PMOs), or delivery units, to support and coordinate their multiple initiatives (Ward and Daniel, 2013; Wylie and Sturdy, 2018)."

"One of the tensions in this framework concerns the ambitions of the individual man-ager. When one is interviewed for the next promotion, stories about the impact of the deep transformations for which one has been responsible are typically more impressive than stories about minor stuff. If an initiative looks like “change for the sake of change,” find out who will be adding it to their resumé.Turnaround at EtsyWhen an organization is in trouble, should manage-ment focus on changing the high-level strategy or on fixing “the small stuff”? Here is an example of a com-pany that did both, while cutting the number of change initiatives that were running.Founded in 2005 and based in New York, Etsy is an e-commerce company linking customers with sup-pliers of handmade and vintage items such as jewelry, bags, clothing, toys, art, craft supplies, and furniture, with 60 million items for sale at any given time. But in this sector, Etsy is a small company, with less than 900 staff, competing with large e-commerce compa-nies (such as Amazon Handmade), which offer fast, consistent, and reliable online shopping.When Josh Silverman became chief executive in 2015, Etsy was making a loss. Sales were slowing. A major investor wanted the company to be sold if business did not improve. Etsy had 800 active busi-ness development initiatives. Silverman cut half of these, and most of the rest were fast-tracked to com-pletion in weeks rather than months or years. Tech-nical resources were moved to a cloud platform to give the technical team more time to focus on Etsy’s issues. In his first few weeks in the job, Silverman made a quarter of the employees redundant—a deci-sion he described as “tough love.” Etsy has 40 mil-lion active buyers, but 60 percent make a purchase only once a year, with the average shopper spending $100 annually. With its ethos of “keeping commerce human,” Etsy has a loyal base of customers and sup-pliers. To grow, Etsy has to reach beyond this core group.Silverman also focused on the “nuts and bolts” of the online business. An autocorrect feature was added to the website’s search box. Customers were reassured about the safety of using credit cards for online payments. Silverman made sellers use the company’s own payments system, allowing Etsy to charge transaction fees and standardize the check-out procedure. Tools to support the sellers were in-troduced, including a dashboard to track orders and streamline payments. The search algorithm was re-designed: While it used to prioritize low-value items that sold more often, it now finds higher-priced items of better quality, encouraging shoppers to consider buying a desk, for example, when searching for a desk lamp. The new algorithm also prioritizes sellers who offer free shipping.What Silverman has not changed, however, is Etsy’s youthful, idealistic organizational culture. The headquarters in Brooklyn has a bicycle garage, local food in the cafeteria, and a plan to offset its shipping-related carbon dioxide emissions. Sales revenue rose by 65 percent over two years, to $604 million in 2018. The company has been profitable for two years, and its stock value was five times higher in 2019 than when Silverman took over (based on Wahba, 2019).LO 1.4What’s Coming Up: A RoadmapThis text is divided into three parts. Part 1, including this chapter, sets out the groundworkand is concerned with understanding and diagnosing change and with different images of change management. Part 2 focuses on implementation, exploring the substance of change, the role of vision, managing resistance, developing communication strategies, and several approaches to the implementation process. Part 3 examines two running threads, which"

"late to all the previous chapters. The first concerns managing the sustainability of change, which we argue has to be considered from the beginning, and not managed as an afterthought. The second running thread is an assessment of what it takes to be an effec-tive change manager—which is, of course, the theme of the book as a whole. Figure 1.2 sets out a roadmap, an overview of the content.FIGURE 1.2To Be an Effective Change Manager, This Is What You Need . . .to be aware ofchange managerimages,and to see the changeprocess throughdifferent lenses: directorcoachnavigatorinterpretercaretakernurturerPart 1 chapters 1 and 2 to understand thepressures and driversfor change, internal and externalto diagnose thenature and depthof the changes required andindividual and organizational readiness Part 1 chapters 3 and 4 to determinewhat is going to changeto develop a credible and compellingvisionof the organization’s futureto design “high impact” change communication strategiesto anticipate and respond toresistance to changeto decide how the process will be driven:organization development and sense-making approaches to decide how the process will be driven:checklist, process, and contingency approachesPart 2 chapters 5 to 10strategies to embed change andmanage sustainabilityeffective change managersindividuals and teamsPart 3 chapters 11 and 12 "

"One of the main assumptions underpinning this roadmap is that our images of the roles of change leaders affect how we approach the other issues on the map. Remem-ber, for example, how the different change leadership styles adopted by Roz Brewer at Starbucks, Eddy Lampert at Sears, and Mike Duggan in Detroit colored their approaches to designing and implementing the changes that they wanted to implement. This explains why “images,” chapter 2, is at the center of the figure. However, by necessity, a book such as this follows a linear sequence for presentational reasons. This is not necessarily the sequence in which change leaders will need to consider these issues or in which instructors will wish to introduce and explore these themes. What will work best depends on context. In some cases, the question of “vision” may be fundamental to the change process, and it would be unwise to proceed until that issue has been resolved. In many change models and textbooks, the question of sustainability is pre-sented at the end, as it is here. However, if sustainability is not built into change implementation from the beginning, then this may become an unnecessary problem. Communication is another issue that is typically involved throughout the change process.This roadmap comes with an added caution. If you follow a recipe correctly, that cake should be perfect; enjoy. However, success is not guaranteed by following a set of change implementation guidelines. There are two main reasons for this. First, designing a change process is a task with both technical and creative components; blending these components can in many circumstances be a challenging business involving much trial and error. Second, what works depends on organizational context, which is not stable, but which can change suddenly and in unpredictable ways. External conditions can change, intensi-fying or removing the pressures for change. Budget considerations may mean that resources are diverted elsewhere. Key stakeholders change their minds and shift from supporting to resisting. There are numerous factors that are not under the control of change leaders, and things go wrong despite careful planning and preparation. This is one reason why, as chapter 12 explains, resilience or “bouncebackability” is a core attribute for effective change leaders.LO 1.1Change Diagnostic: The Starbucks StoryHere are the three questions that you were asked to consider while reading Roz Brewer’s story, followed by our answers.1.To what extent can management expertise in general, and change management expertise in particular, translate from one company and sector to another?Critics argued that Brewer, with experience of the big-box retailer Walmart, was not a good choice for Starbucks’ coffee shop business. But she is not the only executive to transfer her capabilities to a completely different sector. Before joining and managing the turnaround of the computer company IBM, Lou Gerstner worked for American Express, a financial services company, and Nabisco, a cookie and snacks manufacturer. Most management skills are “portable”: strategic thinking, commercial awareness, com-munication and listening, diagnostics, data analysis, problem-solving, teamworking—and, of course, change management expertise. Gerstner may have had a limited "

"understanding of how computers work or how they were made, but he had people around him who did and on whose expertise he could draw. It was probably easier for Brewer to develop an operational understanding of Starbucks’ business.2.What elements of Brewer’s approach to change management would be appropriate for you to use in your organization?The main elements of Brewer’s approach were:•Focus on the evidence, not on intuition.•Understand in detail how the company meets the needs of its customers.•Be prepared to make tough, controversial decisions.•When the company makes a mistake, apologize openly and take remedial action.•Develop rapport and empathy with employees.•See the organization as a part of the community, not just as a bunch of sales outlets.3.Do you think that senior executives should be closely involved with the frontline day-to-day operations of the business as Brewer was?This is a difficult judgment call. If you want to make improvements, it helps if you have a good understanding of the details of the operations that you want to change. Often, top management is accused of being too remote from the day-to-day, of not understanding frontline operations, and of making poor (or even unworkable) decisions as a result. Frontline staff members often complain that they never see top management or that any visits management does make are too short to be worthwhile. Understand-ing the operational details of the business can thus enhance management credibility and establish goodwill with employees on the frontline. However, acquiring that under-standing takes time for someone not familiar with the business. Brewer spent three months doing little else. Shouldn’t top management focus on more important strategic issues? There is also a danger that frontline and middle managers will feel threatened by a senior executive appearing to do their jobs. If you want to know what is going wrong, why not ask them, rather than doing it for yourself? It is helpful to pause and consider the benefits and disadvantages, before dropping into the operational details, as Brewer did. Should you draw on the expertise of the current team instead of doing this yourself?LO 1.1Change Diagnostic: The Sears StoryIs this the Sears story or the Eddie Lampert story? One commentator said that, as well as the other issues facing retailers, Sears had a unique problem—Lampert himself. Here are the four questions that you were asked to consider while reading the Sears story, followed by our answers.1.How would you describe Eddie Lampert’s leadership style?Lampert could be described as a transformational leader. He was highly intelligent and decisive. He was innovative, concerning both the company structure and its service delivery. He had a clear and interesting vision for the online future of the business. Check out Shop Your Way for yourself"

"However, he also appears to have been an autocratic leader. There is little evidence to suggest that he either sought or considered the views of others, includ-ing his senior colleagues, before making business-critical decisions. He was some-thing of a recluse, preferring to meet with his division heads infrequently and through a video link (and he rarely allowed media interviews). His “engagement” with staff through the company’s social network was more confrontational than consultative.2.How would you assess his approach to implementing major organizational change—in this case restructuring the whole company with a new organizational model?If rapid action is necessary to rescue an organization that is experiencing extreme difficulties, then an autocratic approach may be appropriate. It takes time to pause, to ask everyone else what they think should be done, to process that feedback, to develop a more widely informed decision, to check that with those involved, and then to implement the approach. By that time, the company could be bust. Lampert’s “crisis management” style may thus have been appropriate immediately after the merger. Although profitability was declining, it is debatable whether that approach was appropriate in 2008.A more prudent approach in this case would probably have been to listen to the views of colleagues, at all levels of the company, and to take those into account, before imposing that reorganization. There could have been many other ways in which to achieve the required end results, including improved divisional and corporate perfor-mance, and data transparency. Whatever restructuring was implemented, it was prob-ably going to be more successful if those who were affected understood the decision, had contributed significantly to it, and had agreed with it. “Behavioral flexibility” is one of the core capabilities of managers and leaders at all levels in an organization. This means adapting one’s overall approach and personal style to fit the circumstances. Lampert did not do that.3.On balance, how would you assess his new organizational model?From 2005 to 2013, the company’s sales, profits, and share value fell. Although not mentioned in the case account, many experienced executives left the company, frus-trated by the impact of the restructuring. Divisional collaboration was stifled, and it appears that the competition stimulated by the new organizational model was not healthy competition. The model, therefore, appears to have been damaging to the company’s performance and to its reputation. The new model, however, made it easier for Lampert to set up the online business as a division run independently of the other units. The balance of benefits and costs, however, appears to be weighted on the costs side.4.What lessons about managing organizational change can we take from this experience and apply to other organizations, in this or other sectors?Change leaders need to adapt their style to fit the context. An autocratic style can rapidly resolve a crisis. In other circumstances, “decisive action” may leave others feeling that they have been excluded, and they may decide to undermine decisions that they feel were ill-advised (especially where the approach was considered to be idiosyn-cratic), as well as imposed on them."

"Change Diagnostic: The Detroit StoryHere are the three questions that you were asked to consider while reading Mike Duggan’s story, followed by our answers.1.Mike Duggan transformed Detroit without a “management textbook” plan for change. Why do you think he was successful?First, Duggan did not have a detailed plan to “sell” to Detroit’s residents and employ-ees. He had a single, clear aim—to reverse the city’s decline. The operational details came from the residents themselves, and most, if not all, of the employees were also Detroit residents. Instead of telling the residents what he wanted to do, he asked them what they wanted him to do. As he was doing what the residents were asking him to do, there was no resistance to the changes that he made. Second, the changes that he introduced were immediately visible and beneficial: The streetlights and the fire hydrants worked again, and the city’s population started to grow. Third, he won support for these changes from more affluent residents, creating a “virtuous circle,” which enticed entrepreneurs to the city, which became fashionable. This could be described as a textbook case of participative change management, although there was no formally documented change strategy.2.What aspects of Duggan’s change management style would be appropriate for you to use in your organization?Duggan’s change management style had four components. First, he had previous successful turnaround experience and sincerely believed that he could do a similarly good job for Detroit. Second, he was willing to listen and to learn from those on the ground before launching into a major change program. Third, he paid attention to the operational details of the city’s infrastructure, in the belief that minor improvements would be cumulative and transformational. Fourth, he trusted the public-service idealism of the city’s employees. Self-belief, willingness to listen, atten-tion to detail, trust in others—are those attributes useful for you in your change management role?3.To what extent can we generalize from managing change in a Midwestern American city to managing change in commercial organizations?Can we take general advice from a sample of one? The answer to this question, traditionally, is “no.” But this is misleading. Of course, we can. We are always look-ing at single instances and asking ourselves, “Would that work for me or for my organization?” The technical term for this is naturalistic generalization; we naturally consider whether or not the behaviors and methods and techniques that we see, in single examples, would apply to us in some way. We can ask whether Duggan’s approach to Detroit’s residents would apply to a chief executive’s approach to employees. We can consider how Duggan’s focus on the “small, boring stuff” could contribute to a change program in a commercial organization or public-sector agency. Duggan’s belief in the idealism of his employees applies in other parts of the public sector (healthcare, for example), and also in some commercial organizations."