Module 1
Managing Change
a. Stories About Change: What Can We Learn?
Changing organizations is as messy as it is exhilarating, as frustrating as it is
satisfying, as muddling-through and creative a process as it is a rational one. This book
recognizes these tensions and how they affect those who are involved in managing
organizational 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 hold about the way in which change should be managed, and of
the role of change agents, affect how we approach change and the outcomes we think are
possible.
Embarking on this exploration, we initiate our journey by immersing ourselves in
three captivating stories that encapsulate recent changes in diverse organizational
landscapes. Each narrative unfolds with its unique set of challenges, strategies, and
outcomes, offering us a rich tapestry through which we can glean insights into the
complex realm of organizational change.
Our first story transports us to the Beth Israel Deaconess Medical Center in
Boston, where a remarkable turnaround unfolds. This tale involves a medical institution
grappling with the need for transformation amid a rapidly evolving healthcare landscape.
The challenges faced by Beth Israel prompt an examination of the intricate decisions
made, the leadership dynamics at play, and the strategic choices that ultimately led to a
successful turnaround. Unveiling the story of Beth Israel allows us to delve into the
complexities of change management within the healthcare sector, where adaptability and
innovation are paramount.
Shifting our focus, the second story unfolds within the retail giant Sears Holdings.
Here, a new organizational model is introduced with the explicit aim of reviving
diminishing sales and profits. The narrative of Sears takes us into the heart of the retail
industry, where the ever-shifting consumer landscape and the rise of e-commerce pose
formidable challenges. Exploring the organizational changes at Sears provides an
opportunity to dissect the intricacies of adapting to technological disruptions, redefining
business models, and addressing the multifaceted dynamics of a highly competitive
market.
Our third narrative takes us into the realm of retail once again, this time with J. C.
Penney. Faced with falling sales and a fading brand, J. C. Penney embarks on innovative
efforts to rejuvenate its market position. This story unveils the resilience and creativity
required to navigate a rapidly changing retail environment. Examining the strategies
employed by J. C. Penney opens a window into the world of branding, customer
engagement, and the delicate balance between tradition and innovation in the retail
sector.
As we delve into these stories, it becomes apparent that each organizational
context is unique, yet the common thread lies in the need for adaptation and
transformation. The healthcare, retail, and medical sectors present distinct challenges, but
the fundamental principles of effective change management – leadership, cultural
alignment, strategic decision-making – remain constant. Through these narratives, we are
poised to unravel the underlying mechanisms that drive, hinder, or reshape the change
process within organizations.
In the subsequent of our exploration, we will dissect each story, probing into the
intricacies of the challenges faced, the strategies employed, and the outcomes achieved.
By doing so, we aim to distill universal principles and actionable insights that transcend
the specific contexts of Beth Israel, Sears, and J. C. Penney. The rich tapestry of these
stories offers not only a glimpse into the nuanced world of organizational change but also
a valuable reservoir of knowledge from which we can draw inspiration and guidance for
navigating change in diverse settings.
iving deeper into the narratives of organizational change at Beth Israel Deaconess
Medical Center, Sears Holdings, and J. C. Penney, it becomes evident that while the
problems they grapple with are distinct, a tapestry of common issues weaves through
each storyline. These commonalities in the management of change present a fertile
ground for reflection, prompting us to ponder the complexities of organizational
transformation in diverse sectors.
As we navigate through the rich details of these stories, it's crucial to recognize
the overarching themes that transcend the specific challenges faced by Beth Israel, Sears,
and J. C. Penney. The multifaceted nature of organizational change is such that common
issues emerge, irrespective of industry or context. These shared challenges often revolve
around fundamental aspects of leadership, communication, organizational culture, and
strategic decision-making.
Considering the unique set of assessment questions accompanying each narrative,
it beckons us to engage in a thoughtful exploration of our own responses or foster a
dynamic exchange of ideas within a class discussion. Let's embark on a preliminary
examination of these assessment questions, laying the groundwork for a more profound
understanding of the complexities inherent in managing organizational change.
In a classroom setting, these assessment questions provide a foundation for robust
discussions, encouraging students to critically analyze the nuances of each narrative and
draw connections to broader theories of organizational change. Moreover, encouraging
individual reflections on these questions fosters a deeper understanding of the intricacies
involved in managing change across diverse settings.
As we engage in this collective exploration, it's essential to recognize that the
narratives offer not just answers but a springboard for further inquiry. The class
discussion or individual reflections serve as a dynamic forum for honing analytical skills,
developing a nuanced understanding of change management, and extracting valuable
lessons that can be applied in a myriad of organizational contexts. The multifaceted
nature of these stories invites us to delve into the complexities of change, fostering a
holistic approach to organizational transformation.
Our aim is to demonstrate that stories about change can be one valuable source of
practical lessons, as well as helping to contribute to our general understanding of change.
These stories are of course distinctive, one-off. How can they contribute to knowledge
and practice in general, in other sectors and organizations? Stories are one of the main
ways of knowing, communicating, and making sense of the world (Czarniawska, 1998;
Pentland, 1999; Dawson and Andriopoulos, 2014). Our stories have actors: change
leaders, other managers, staff, customers. They take 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.
The approach described, rooted in what is termed "narrative knowing" by Langley
(2009), is a method that recognizes the power of storytelling in unraveling the
mechanisms and logics behind sequences of events. These stories, as process theories,
offer a rich tapestry of insights into the complex interplay of factors that either propel
forward, decelerate, hasten, or obstruct the organizational change process. By delving
into the narratives of Beth Israel, Sears, and J. C. Penney, we can discern the nuanced
combinations of factors that contribute to the relative success of their respective change
initiatives.
Narrative knowing, as a methodological approach, emphasizes the importance of
storytelling in capturing the dynamic and evolving nature of organizational change.
Stories, in this context, serve as vessels that encapsulate not only the visible outcomes but
also the underlying processes, tensions, and choices that shape the trajectory of change
within an organization. As such, the narratives become invaluable resources for
dissecting the complexities inherent in change management.
The factors influencing the change process, as elucidated in these narratives, are
multifaceted. It is crucial to explore the interconnections and dependencies among these
factors to gain a holistic understanding of their impact on organizational change. For
instance, examining the combination of leadership styles, organizational culture, and
external influences provides a comprehensive lens through which to assess the driving
forces or impediments to change.
The dynamics of change, whether propelled by visionary leadership, cultural
adaptability, or strategic alignment, are inherently interconnected. The stories of Beth
Israel, Sears, and J. C. Penney likely weave a narrative fabric that includes a delicate
balance of these factors. Understanding how these elements synergize or clash provides
actionable insights for organizations grappling with their change initiatives.
Delving further into the significance of the temporal dimension within the
narrative knowing framework, it becomes evident that time is not merely a backdrop but
a crucial character in the unfolding drama of organizational change. Change processes are
inherently dynamic, marked by a series of events, milestones, and evolving circumstances
that shape the narrative trajectory. Adopting a longitudinal perspective through narratives
allows us to traverse the temporal landscape, providing a comprehensive understanding
of the patterns, tipping points, and critical junctures that influence the change journey.
One key aspect of the temporal lens is the ability to discern patterns that may
emerge over time. Through careful analysis of the narratives of Beth Israel, Sears, and J.
C. Penney, we can identify recurrent themes, behaviors, or decision points that form
discernible patterns. Recognizing these patterns enhances our predictive capacity,
enabling organizations to anticipate challenges, capitalize on successes, and refine their
change strategies based on historical insights.
Tipping points within the change narrative represent pivotal moments that can
catalyze a significant shift in the direction of the change process. Identifying these tipping
points allows for a deeper understanding of the catalysts that accelerate or decelerate
change. It is within these critical junctures that decisions, actions, or external influences
may exert an outsized impact, shaping the overall trajectory of organizational change. By
meticulously examining these tipping points in the narratives, organizations can gain
valuable foresight into potential inflection points in their own change initiatives.
Furthermore, the temporal dimension permits a nuanced analysis of factors that
may evolve or shift in significance over the course of the change journey. Leadership
styles, organizational culture, and external influences are not static; they evolve, adapt,
and respond to changing circumstances. Understanding the temporal dynamics of these
factors allows organizations to tailor their change strategies to the evolving landscape,
recognizing that what may be a facilitator at one stage could become a challenge in
another.
The temporal lens also underscores the importance of pacing and sequencing in
organizational change. Some changes may necessitate a gradual, phased approach, while
others may require a more rapid and decisive implementation. Narratives provide a
contextual understanding of the pacing strategies employed by organizations, shedding
light on the considerations that guided their temporal choices. This insight is invaluable
for organizations seeking to align their change efforts with the optimal tempo for their
specific context.
Moreover, the temporal perspective allows for a more nuanced exploration of the
emotional and psychological dimensions of change. As time unfolds, individuals within
the organization experience a range of emotions – from initial resistance to acceptance,
from uncertainty to confidence. Examining these emotional trajectories within the
narratives offers insights into the human dynamics of change, providing a foundation for
fostering a positive emotional climate during periods of uncertainty.
In conclusion, the temporal dimension in narrative knowing serves as a critical
analytical tool, unraveling the dynamic and evolving nature of organizational change. By
understanding the patterns, tipping points, and critical junctures embedded in the
temporal landscape, organizations can enhance their change management strategies,
fostering adaptability, resilience, and a more nuanced response to the multifaceted
challenges of the change journey.
Expanding on Langley's narrative knowing, it's worthwhile to explore the
cognitive and emotional dimensions embedded in these stories. How did individuals
within the organizations perceive and respond to change? What emotions were evoked,
and how did these emotions influence the overall change trajectory? Examining the
human aspects of change, as revealed in the narratives, adds depth to our understanding
of the factors that drive or impede organizational transformation.
Moreover, as we explore the combinations of factors, it is essential to
acknowledge the unique organizational contexts within which these stories unfold. Each
organization possesses its own history, culture, and external environment, shaping the
landscape in which change occurs. Recognizing the idiosyncrasies of organizational
contexts enhances the transferability of insights while acknowledging the need for
customized approaches to change management.
In summary, the narrative knowing approach provides a robust foundation for
unraveling the intricate combinations of factors that influence organizational change. By
delving into the stories of Beth Israel, Sears, and J. C. Penney, we embark on a journey of
understanding the dynamic interplay of leadership, culture, external influences, and the
temporal dimension, contributing to a nuanced comprehension of the mechanisms driving
or hindering the change process.
Certainly, let's delve into the broader applicability of the explanations derived
from each unique case narrative to the general management of organizational change
across diverse settings. Each case narrative, with its distinctive challenges and solutions,
provides a lens through which we can extract valuable insights and principles applicable
to a wide array of organizational change scenarios.
In exploring the potential transferability of these explanations, it's essential to
recognize the underlying principles that transcend specific contexts. The tensions
identified in the case narratives, such as resistance to change, leadership-culture
dynamics, and the complexities of cultural shifts, are universal aspects of organizational
change. Therefore, the strategies employed to navigate these tensions and the choices
made in response to them can offer valuable lessons for managing change in other
settings.
For instance, the challenge of overcoming resistance to technological change, as
highlighted in Story 1, is a recurring theme in organizations adopting new systems or
processes. Recognizing the psychological aspects of change resistance and implementing
effective communication strategies can be applied in various contexts to foster a more
positive reception of change initiatives.
Story 2, centered around leadership transitions and cultural alignment, speaks to
the broader issue of change leadership. The importance of understanding and
harmonizing leadership styles with organizational culture is a transferable insight.
Organizations undergoing leadership changes can draw from this narrative to inform their
approaches in ensuring a seamless integration of new leadership while preserving the
core values that define the organizational identity.
In the context of Story 3, which emphasizes organizational culture shifts, the
challenges and choices made resonate with any organization seeking cultural
transformation. Acknowledging the need for a phased approach, aligning cultural shifts
with strategic goals, and involving employees in the change process are principles that
can be extrapolated to guide similar initiatives across different industries and sectors.
Moreover, the external factors influencing change identified in the narratives,
such as economic conditions and technological advancements, are crucial considerations
applicable to diverse organizational contexts. Organizations across sectors must remain
vigilant and adaptive to the external environment, recognizing that successful change
management is not just an internal process but also a response to the ever-evolving
external landscape.
To enhance the generalizability of these insights, it would be beneficial to
consider the scale and scope of the organizational changes in each narrative.
Understanding how these principles scale from small-scale departmental changes to
large-scale organizational transformations enriches our understanding of their versatility.
In conclusion, while each case narrative offers a unique perspective on
organizational change, the underlying principles, strategies, and challenges identified
possess a generalizability that can be applied to a variety of settings. Recognizing these
commonalities allows organizations to draw upon the wealth of experiences documented
in these narratives to inform and enhance their own change management efforts. The
Roundup section at the end of the may further illuminate these cross-cutting principles
and provide additional insights into their broader applicability.
Certainly, let's delve deeper into the common features, issues, and processes that
shape the outcomes of organizational change across the three distinct stories. Despite the
apparent differences in these narratives, a closer examination reveals underlying themes
that resonate with the broader dynamics of organizational transformation.
One consistent theme is the inherent tension that accompanies any significant
organizational change. Whether it be a shift in leadership, a restructuring of roles and
responsibilities, or a cultural overhaul, organizations inevitably grapple with conflicting
forces during the change process. These tensions can stem from resistance to change, a
fear of the unknown, or the clash of competing interests within the organization.
In Story 1, for instance, the resistance to the introduction of new technologies
echoes a common challenge faced by many organizations undergoing digital
transformation. The fear of job displacement, the need for upskilling, and the disruption
to established workflows are universal concerns that surface in various change initiatives.
Story 2, focusing on leadership transitions, brings attention to the intricate
interplay between individual leadership styles and organizational culture. The tension
here lies in aligning the vision and values of the new leader with the existing
organizational ethos. Navigating this delicate balance requires a nuanced understanding
of both the leader's strengths and the organizational culture, exemplifying a recurrent
challenge in change management.
Lastly, Story 3, centered around organizational culture shifts, sheds light on the
complexities of instigating and sustaining cultural change. This often involves
challenging ingrained beliefs, altering longstanding practices, and fostering a sense of
shared purpose. The tension arises as organizations grapple with the tension between
preserving elements of their heritage and adapting to contemporary demands.
Examining the change processes in these stories, a common thread emerges in the
strategic choices organizations must make. The decision-making process involves
weighing short-term disruptions against long-term benefits, managing stakeholder
expectations, and effectively communicating the rationale behind the changes. The
choices made in these pivotal moments significantly shape the outcomes of
organizational change.
Furthermore, it is crucial to consider the external factors influencing change.
Economic conditions, technological advancements, and global trends can act as catalysts
or constraints in the change process. Organizations that successfully navigate these
external forces demonstrate agility and foresight, reinforcing the notion that change is not
just an internal affair but a response to the evolving external landscape.
As we reflect on our own assessments in response to the questions preceding each
story, the Roundup section at the end of the is anticipated to provide valuable insights and
potentially align with our observations. This extended exploration underscores the
intricate nature of organizational change, emphasizing the nuanced interplay of tensions,
choices, and external influences that contribute to its outcomes.
b. The Story of Beth Israel Deaconess Medical Center
This is the story of a corporate turnaround, rescuing the organization from
financial disaster and restoring its reputation, competitiveness, and profitability. Based in
Boston, Massachusetts, the Beth Israel Deaconess Medical Center (BID) was created in
1996 by the merger of two hospitals. The business case for the merger was that the larger
organization (over 600 beds) would be better able to compete with, for example, the
Massachusetts General Hospital and the Brigham Women’s Hospital. The two merged
hospitals had different cultures. Beth Israel had a casual management style that
encouraged professional autonomy and creativity. Deaconess Hospital was known for its
rules-based, top-down management. Staff were loyal to their own organization. After the
merger, the Beth Israel culture dominated, and many Deaconess staff, especially nurses,
left to join the competition.
In the tumultuous year of 2002, the Beth Israel Deaconess Medical Center (BID)
found itself entrenched in a financial quagmire, losing a staggering $100 million
annually, and on the precipice of what was ominously termed a "financial meltdown."
This dire financial situation was not merely a fiscal challenge; it was indicative of a
broader crisis enveloping the institution, permeating through the realms of healthcare
quality, staff morale, and the intricate dynamics between clinical staff and management.
The financial hemorrhage was symptomatic of deeper issues plaguing the
healthcare delivery at BID. Quality and safety concerns cast a long shadow over the
institution, raising questions about the efficacy of patient care and the robustness of
internal processes. The specter of low staff morale loomed large, suggesting an internal
malaise that extended beyond the balance sheets. As morale plummeted, so did the
collaborative spirit within the organization, amplifying existing challenges and creating
an environment ripe for further complications.
Compounding these internal tribulations, poor relationships between clinical staff
and management added an additional layer of complexity. The disconnect between those
providing direct patient care and the administrative leadership exacerbated
communication breakdowns, hindering the cohesive functioning of the medical center.
This strained relationship not only contributed to internal strife but also attracted
unwarranted media attention, further tarnishing BID's reputation.
The media scrutiny served as a public spotlight on BID's woes, amplifying the
institution's struggles and painting a bleak picture for both the public and stakeholders.
The damaging media coverage not only underscored the gravity of the challenges faced
by BID but also threatened to erode the trust of patients and the broader community.
In the face of such multifaceted challenges, the leadership at BID was compelled
to confront the urgent need for comprehensive and strategic organizational change. The
stakes were high, encompassing not only financial viability but also the very fabric of
healthcare delivery, staff well-being, and the institution's standing in the eyes of the
public.
Understanding the gravity of the situation, it becomes imperative to unravel the
intricate details of the change initiatives that were undertaken. Examining the strategies
employed, the decisions made, and the outcomes achieved will provide invaluable
insights into how an organization, on the brink of financial ruin and reputational damage,
navigated the treacherous waters of transformation. The story of BID's journey from
financial peril to a revitalized state serves as a compelling case study, offering lessons
that extend beyond the realm of healthcare management into the broader landscape of
organizational change.
In the critical juncture of 2002, faced with the imminent threat of financial
collapse, the Beth Israel Deaconess Medical Center (BID) sought salvation through
external management consultants who prescribed nothing short of drastic measures. This
pivotal moment marked the appointment of Paul Levy as the Chief Executive Officer of
BID, a move that carried both strategic foresight and an intriguing departure from
conventional norms in the healthcare industry. Levy's entrance into the realm of
healthcare leadership was notable not only for its timing but also for the unconventional
nature of his background.
Unlike his predecessors, Levy lacked a traditional healthcare background and held
little knowledge of the intricacies of hospital management. This departure from the norm,
however, was not perceived as a limitation but rather as an opportunity. Levy, a self-
proclaimed "straight talker," believed that his outsider status could be an asset in driving
change. His lack of preconceived notions about the healthcare industry positioned him as
an "honest broker," someone unencumbered by industry dogma and capable of bringing a
fresh perspective to the table.
This bold decision to appoint a CEO with a non-traditional background reflected a
willingness on the part of BID's leadership to break from convention and embrace
innovation in the face of crisis. The choice of Levy signaled a recognition that
unconventional challenges might require unconventional solutions. His outsider status,
rather than being a point of skepticism, was positioned as a potential catalyst for
transparency, openness, and transformative leadership.
The skepticism that greeted Levy's appointment was a natural reaction from the
staff, given the uncharted territory the hospital was navigating. The healthcare industry,
known for its complex regulatory landscape and unique operational challenges, tends to
place a premium on leaders with a deep understanding of its intricacies. Levy's lack of
healthcare experience raised eyebrows and perhaps triggered concerns about his ability to
navigate the complexities of the medical field.
However, this initial skepticism also set the stage for an intriguing dynamic.
Levy's commitment to being a "straight talker" meant that he would need to establish
credibility swiftly, addressing the concerns of the skeptical staff head-on. The success of
his leadership hinged on his ability to build trust, communicate effectively, and
demonstrate tangible results that would validate the unconventional choice made by the
hospital's leadership.
As we delve into the unfolding narrative of BID under Levy's leadership, it
becomes a compelling case study not only in healthcare management but also in the
broader realm of change leadership. The juxtaposition of a leader with no healthcare
background taking the helm during a financial crisis challenges traditional paradigms,
inviting us to consider the role of adaptability, innovation, and unconventional thinking in
steering organizations through turbulent times. In the that follow, we will unravel how
Levy's unique approach played a pivotal role in reshaping the destiny of BID, offering
valuable lessons for leaders navigating change in diverse sectors.
Paul Levy's tenure as the Chief Executive Officer of Beth Israel Deaconess
Medical Center (BID) was characterized by a strategic and transformative turnaround
plan anchored in two overarching themes: transparency and an unwavering commitment
to quality. In the throes of a financial crisis, Levy recognized the imperative of
establishing an open and honest dialogue with the entire staff at BID, and he articulated
his vision through two distinct yet interrelated strategies.
The first cornerstone of Levy's strategy was transparency. In a bold move that laid
the foundation for a radical cultural shift, his initial action was to openly share the full
extent of the financial challenges facing BID with the entire staff. This approach was
aimed at creating what he termed as a "burning platform," a metaphorical precipice from
which the only escape would be through the implementation of transformative and, at
times, radical changes. By transparently presenting the dire financial reality, Levy sought
to galvanize collective awareness, urgency, and a shared sense of responsibility among
the staff.
This radical transparency was not merely a strategic maneuver; it was a paradigm
shift in organizational communication. The decision to unveil the financial difficulties
without sugarcoating the severity of the situation underscored Levy's commitment to
openness and honesty as foundational principles for the change process. The creation of a
"burning platform" was not meant to instill panic but rather to instigate a collective
acknowledgment of the need for change, laying the groundwork for a collaborative
response.
The second pillar of Levy's strategy was a resolute commitment to the continuous
improvement of quality in healthcare delivery. Recognizing that financial stability alone
would not secure BID's long-term success, he emphasized a dual focus on financial
recovery and a relentless pursuit of excellence in patient care. By signaling an
unwavering commitment to quality, Levy aimed to foster a culture where continuous
improvement became ingrained in the organizational DNA.
This commitment to quality was not a mere slogan but was substantiated through
concrete initiatives and a relentless focus on measurable outcomes. Levy's approach
involved not only acknowledging deficiencies but actively engaging the staff in a
collective pursuit of better practices and enhanced patient outcomes. This dedication to
quality served as a rallying point, uniting the staff under a common goal and instilling a
sense of pride in delivering exceptional healthcare services.
The interplay of transparency and a commitment to quality became the bedrock of
Levy's change leadership at BID. These themes were not isolated strategies but were
mutually reinforcing, creating a dynamic and interconnected framework for
organizational transformation. As we delve deeper into the narrative, it is essential to
explore how these themes manifested in specific actions, initiatives, and cultural shifts
within BID, contributing to the institution's remarkable turnaround and offering valuable
insights for leaders navigating change in complex and dynamic environments.
c. The Story of Sears Holdings
Sears Holdings Corporation was a specialty retailer, formed in 2005 by the
merger of Kmart and Sears Roebuck. The merger was the idea of Eddie Lampert, a
billionaire hedge fund manager who owned 55 percent of the new company and who
became chairman. Based in Illinois, the company operated in the United States and
Canada, with 274,000 employees, 4,000 retail stores, and annual revenues (2013) of $40
billion. Sears and Kmart stores sold home merchandise, clothing, and automotive
products and services. The merged company was successful at first, due to aggressive
cost cutting.
Lampert decided to restructure the company. Sears was organized like a classic
retailer. Department heads ran their own product lines, but they all worked for the same
merchandising and marketing leaders, with the same financial goals. The new model ran
Sears like a hedge fund portfolio with autonomous businesses competing for resources.
This “internal market” would promote efficiency and improve corporate performance. At
first, the new structure had around 30 business units, including product divisions, support
functions, and brands, along with units focusing on e-commerce and real estate. By 2009,
there were over 40 divisions. Each division had its own president, chief marketing
officer, board of directors, profit and loss statement, and strategy that had to be approved
by Lampert’s executive committee. With all those positions to fill at the head of each
unit, executives jostled for the roles, each eager to run his or her own multibillion-dollar
business. The new model was called SOAR: Sears Holdings Organization, Actions, and
Responsibilities.
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 that 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) wanted to grow this side of the business, and investment in the
stores was cut back. He had innovative ideas: smartphone apps, netbooks in stores, a
multiplayer game for employees. He set up a company social network, “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 managers began tracking how often their
employees were “Pebbling.” One group organized Pebble conversations about random
topics so that they would appear to be active users.
Instead 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 salesmen 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, no cooperation. The Sears and Kmart brands suffered. Employees
gave the new organization model a new name: SORE.
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
shareholders’ meeting, Lampert pointed to the growth in online sales and described a new
app, “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.
d. The Story of J.C. Penney
J. C. Penney Company, Inc. (known as JCPenney, or JCP for short) was one of
America’s largest clothing and home furnishing retailers. An iconic brand, founded by
James Cash Penney and William Henry McManus in 1913, the headquarters were in
Plano, Texas. By 2014, with annual revenues of around $13 billion, and 159,000
employees, JCP operated 1,100 retail stores and a shopping website at jcp.com. JCP once
had over 2,000 stores, back in 1973, but the 1974 recession led to closures. The
company’s main customers were middle-income families, and female. JCP had a
“promotional department store” pricing strategy with a confusing system of product
discounts. There were around 600 promotions and coupon offers a year. Mike Ullman,
chief executive since 2004, had grown sales with a strong private label program, with
brands such as Sephora, St. John’s Bay clothing, MNG by Mango, and Liz Claiborne.
Another 14 stores were opened in 2004, and the e-commerce business exceeded the $1
billion revenue mark in 2005.
When the stock reached an all-time high of $86 in 2007, JCP was performing
well. However, the recession in 2008 affected sales badly; core customers had mortgage
and job security problems. Between 2006 and 2011, sales fell from $19.9 billion to $17
billion. JCP had one of the lowest annual sales per square foot for department stores
(around $150). Macy’s and Kohl’s, the main competition, had sales per square foot of
around $230. In 2011, the catalogue business, with nineteen outlet stores, was closed,
along with seven other stores and two call centers. The New York Times accused JCP of
“gaming” Google search results to increase the company’s ranking in searches, a practice
called “spamdexing.” Google’s retaliation dramatically reduced JCP’s search visibility.
In 2008, JCP struck a deal with Ralph Lauren to launch a new brand, American
Living, sold only in their stores. But JCP was not allowed to use Ralph Lauren’s name or
the Polo logo. The idea failed. Sales continued to fall. In 2011, 50 to 70 percent of all
sales were discounted, based on a “high-low” pricing strategy. An item would be priced
initially at, say, $100. Customers would see the product and like it, but not like the price.
After six weeks, the price was marked down, say, to $50, and the goods started to sell.
But those items had been sitting on a shelf doing nothing for over a month.
In 2010, two billionaire investors, Bill Ackman and Steven Roth, approached
Ullman with an offer to buy large amounts of JCP stock. They felt that the company had
potential. Ackman and Roth were invited to join the board, attending their first meeting in
February 2011. Leaving that meeting, Ullman was involved in a serious car accident,
suffered multiple injuries, and spent three months in a neck brace, making his existing
health problems worse. The board wanted a replacement, and there were no internal
candidates. Ullman suggested Ron Johnson, who was working for Steve Jobs at Apple.
Johnson then met with Ackman and Roth to explore possibilities. Johnson said that he
was concerned about the lack of innovation in department stores, and he brought a
positive, “can do” approach more typical of Silicon Valley than retailing.
The speed of these changes would be motivating and unifying, Johnson thought.
He wanted to rebrand an old, stale company with a modern name and logo. Johnson was
a charismatic and passionate presenter. He said that the changes would be painful and
would take four years to complete. The board were awed by the scale of the
transformation, but they did not challenge him. Johnson talked about the “six Ps”:
product, place, presentation, price, promotion, personality. One analyst noted, “One ‘P’
that seems to be missing is people.” Employees were also excited about the
developments, especially when Johnson threw them a lavish party, costing $3 million.
Johnson wanted to make checkout simpler, with roving clerks taking payment on
iPads. Millions were spent on equipping stores with Wi-Fi. He also wanted all items to
have an RFID tag, but that proved to be too expensive. He also decided to separate the
store buying group from the JCP.com buying group, an approach used by Apple.
However, this meant that there was no coordination between what was available online
and what customers could find in the stores. Johnson was more concerned with “the look
and feel” of the physical stores, and less support went to the website.
Johnson hired his own new team of top executives, who distanced themselves
from the existing staff; most of them refused to move to Dallas, flying there weekly
instead. If you were not part of this new team, you were out of the loop. One director
called the “old” staff DOPES: dumb old Penney’s employees. Veterans called the new
team the Bad Apples. The new human resources director cancelled performance reviews
as being too bureaucratic. This made it easier to fire people; managers did not have to
consult performance data before making that decision. The new team recruited Ellen
DeGeneres—a television celebrity and lesbian—to appear in JCP advertising. A
conservative group, One Million Moms, threatened a boycott, claiming that, “DeGeneres
is not a true representation of the type of families that shop at their store. The majority of
J.C. Penney customers will be offended and chose to no longer shop there.” The
relationship with DeGeneres was discontinued. Johnson introduced a new exchange
policy; customers could return an item, without a receipt, and receive cash. This policy
was immediately abused, and one popular item was returned so often that its sales turned
negative. The plan to put Martha Stewart stores into JCP stalled when Macy’s sued,
claiming breach of its own agreement with the home furnishings brand.
The results published in February 2012 were poor. Revenues had fallen by $4.3
billion, making a $1 billion loss. The stock fell to $18, and Standard & Poor’s cut JCP’s
debt rating to CCC+ (a long way from “triple A”). In April 2012, JCP laid off 13 percent
of its office staff in Texas, closed one of its call centers, and also “retired” many
managers, supervisors, and long-serving employees on the grounds that new working
practices required less oversight. In May 2012, store sales were down 20 percent
compared with the previous year. Johnson had projected a short-term drop in sales, but
not by that much. He commented that, “I’m completely convinced that our transformation
is on track,” leading to a 5.9 percent rise in the stock. In July 2012, a further 350
headquarters staff were laid off. By October 2012, online sales were almost 40 percent
down over the year. It was estimated that the decision to separate the two buying groups
had cost JCP around $500 million.
During Johnson’s two-year tenure, the price of the JCP stock fell by almost 70
percent, and sales fell in 2012 by 25 percent, resulting in a net loss of $985 million. JCP
had alienated its traditional customers, who were used to shopping for discounts, but had
not attracted new ones, and 20,000 employees had lost their jobs. In March 2013, Steven
Roth, who had backed Johnson’s appointment but who had now lost faith, sold over 40
percent of his JCP shares at a loss of $100 million. Bill Ackman resigned from the board
in August, selling his shares at a loss of $470 million.
In April 2013, the company chairman told Johnson that the board would be
accepting his resignation; within a few weeks, all but one of the other senior staff hired
by Johnson had also left. Mike Ullman was reinstated. He immediately restored the old
promotional pricing model. In May, JCP ran an “apology ad,” with an earnest female
voice admitting, “We learned a very simple thing, to listen to you.” A coincidence of
timing, in June, Johnson’s renovated home departments opened in stores, selling Jonathan
Adler lamps, Conran tables, and Pantone sheets. Too expensive for core customers, these
departments failed and were withdrawn. However, traditional sales in stores started to
grow slowly, and by November, Internet sales had increased by 25 percent on the
previous year (Ullman had reintegrated the stores and online buyers). Sales of the private
brand merchandise lines that had been restored also began to return to previous levels.
The JCP brand had been damaged. Sales per square foot of shopping space had
fallen steadily since 2010 as shoppers turned to Macy’s and Kohl’s. Macy’s sales per
square foot had risen. With sales and profitability falling, in January 2014, JCP closed 33
underperforming stores (3 percent of the total), with 2,000 layoffs. This would reduce
annual operating costs by $65 million, but the company had made a loss of $1.4 billion in
2013. After 100 years in business, with Mike Ullman back in charge, JCP stock
continued to fall in the first half of 2014. Commenting on Johnson’s legacy at JCP, one
analyst said, “Nobody will be attempting something similar for a very long time.”
e. Tension and Paradox: The State of the Art
From 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 how 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 managed, however, can generate frustration and anger.
Most estimates put the failure rate of planned changes at around 60 to 70 percent
(Keller and Aiken, 2008; Burnes, 2011; Rafferty et al., 2013). In a global survey of 2,000
executives by the consulting company McKinsey, only 26 percent of respondents said
that their transformational changes had successfully improved performance and enabled
the organization to sustain further improvements (Jacquemont et al., 2015). There is,
therefore, no shortage of advice. However, that advice is both extensive and fragmented.
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. What matters is the detail,
concerning how a strategy or 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 financial meltdown at Beth Israel and the falling
profitability at both Sears and J. C. Penney. Note, however, that there are many different
ways in which a sense of urgency can be established and communicated. Some methods
may emphasize the “burning platform” in a way that heightens anxiety and encourages
escape. Other approaches might encourage instead a “burning ambition” to confront and
solve the problem.
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. However, faced with geopolitical, economic, demographic,
sociocultural, and technological developments, most organizations seem to think in terms
of deep transformational change. The Beth Israel, Sears, and J. C. Penney stories reflect
this view, implementing whole-organizational changes to deal with survival threats. This
may mean that minor changes are seen as less valuable and important and are overlooked
in favor of the “high impact” initiatives. This could be a mistake. Moore and Buchanan
(2013), for example, demonstrate how an initiative designed to fix small problems rapidly
in an acute hospital generated major performance improvements for almost no cost. In
this case, “sweating the small stuff” was an enabling strategy, getting people involved
(the small problems 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.
Most of the practical guidance on change implementation suggests a
straightforward sequence of steps, with advance support from diagnostic tools and
assessments. This is a systematic process, with helpful tools. 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. 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.”
Beth Israel, you may remember, was formed by the merger of two organizations
with different cultures. One had a casual management style that encouraged professional
autonomy and creativity. The other was known for its rules-based, top-down
management. The research evidence suggests that the “casual” style is likely to be more
open to change, and that this will be a more “agile” and responsive organization. Top-
down management and rules suggest that change will be slow, if it happens at all,
dependent on due process and committee cycles. In other words, we need to pay attention
to organizational capabilities to understand the change drivers and barriers. The skills of
change leaders are of course also important. However, skilled change agents struggle in
rules-based organizations, and agile and responsive organizations still need capable
change agents.
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. There is also, therefore, advice on how to
manage “painless change” and how to avoid “the acceleration trap.”
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 competencies of the “ideas champion,” the effective change leader. This parallels
work on the capabilities of effective leaders in general (although most researchers argue
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 that arise. Research has also shown how change is driven by large
numbers of organizational members, in an approach that is also called “distributed
leadership,” “leadership constellations,” or “leadership in the plural.”
The perceptive reader will have noticed that the answer to each of these six
paradoxes, these six questions, is in each 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. Change is almost always driven by “a cast of characters” that
includes one or more champions and many supporters. 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.
f. Assessing Depth of Change
In understanding the dynamics of organizational change, a useful conceptual
framework emerges from considering the scale and impact of various innovations. At the
foundation of this framework lies the "small stuff," which, at times, might not even be
explicitly perceived as change. Ascending the scale, we encounter "sustaining
innovation," characterized by endeavors to enhance and refine existing practices. At the
pinnacle of this scale resides the transformative realm of "disruptive innovation," where
organizations delve into the realms of radically new business models and revolutionary
working methods, as articulated by Christensen (2000).
The "small stuff" represents the minutiae, the subtle shifts in day-to-day
operations that might not trigger significant attention but cumulatively contribute to the
overall fabric of an organization. These changes could involve procedural adjustments,
minor tweaks in communication protocols, or incremental improvements in specific
functions. Acknowledging the importance of the "small stuff" is crucial, as it reflects the
recognition that change is not solely confined to grand overhauls but is an amalgamation
of myriad small adaptations that collectively shape an organization's trajectory.
In the middle echelons of the scale, we encounter "sustaining innovation," a
domain where organizations focus on refining and optimizing current practices. This
involves a deliberate effort to build upon existing strengths, improve efficiency, and
respond to evolving market demands. Sustaining innovation acknowledges the need for
adaptability without necessarily deviating drastically from established norms. It embodies
a continuous improvement ethos, ensuring that organizations remain competitive and
responsive to the changing landscape without necessitating a complete overhaul of their
modus operandi.
At the zenith of the scale, "disruptive innovation" takes center stage. This
represents a paradigm shift, involving the introduction of entirely new approaches,
business models, or methodologies. Christensen's framework positions disruptive
innovation as a bold and transformative strategy that challenges established norms and
ventures into uncharted territory. Organizations adopting disruptive innovation aim not
only to adapt to change but to be architects of change, driving industry-wide
transformations.
One critical consideration within this framework is the alignment between the
proposed solution and the diagnosed problem. It underscores the importance of a strategic
match between the depth of change required and the nature of the challenges faced by the
organization. Shallow changes, relegated to the domain of the "small stuff," may prove
inadequate in addressing deep-rooted strategic challenges. Conversely, attempting to
resolve minor difficulties with disruptive innovation might lead to an inefficient
allocation of time and resources.
As organizations navigate the spectrum of change, they must carefully assess the
nature and magnitude of their challenges to deploy appropriate innovations. This
framework encourages a nuanced understanding of change initiatives, recognizing that
the scale of innovation should align with the organizational context and the specific
issues at hand. By doing so, organizations can optimize their change efforts, fostering
adaptability and resilience without succumbing to the pitfalls of over-engineering
solutions or underestimating the impact of seemingly minor adjustments.
Shallow changes are usually easier to implement than frame-breaking changes.
Transformational “off the scale” changes are more challenging because they are costly
and timeconsuming, and they affect larger numbers of people in more significant ways,
potentially generating greater resistance. In most cases, many changes are likely to be
under way at the same time, at different depths. Recognizing this, many organizations
have established corporate project or program management offices (PMOs) to support
and coordinate their initiatives (Ward and Daniel, 2013). The U.S. Project Management
Institute’s white paper (2012) gives examples of the aims and benefits of PMOs at the
State Auto insurance company in Ohio and the National Cancer Institute in Maryland.
Within the framework of organizational change, a notable tension emerges,
centered around the aspirations and ambitions of individual managers. This tension
becomes particularly pronounced when considering the narratives and stories managers
choose to highlight, especially in the context of seeking career advancement or the next
promotion. In this dynamic, stories about spearheading deep and transformative changes
often take precedence over narratives related to more incremental or minor adjustments.
The inherent tension lies in the contrast between the perceived impact of deep
transformations and the seemingly less glamorous nature of minor adjustments. When
managers are vying for the next promotion, the narrative they craft about their
professional journey plays a pivotal role in shaping perceptions. Deep transformations,
characterized by large-scale initiatives and disruptive innovations, are naturally more
attention-grabbing and impressive on a professional resume. These stories often
showcase a manager's ability to navigate complex challenges, drive organizational
change, and contribute to substantial shifts in strategy or structure.
On the flip side, narratives around the "small stuff" might be overshadowed in the
quest for recognition and career progression. These stories might involve less flashy but
equally crucial aspects of management, such as optimizing processes, improving team
dynamics, or refining day-to-day operations. The challenge arises when the ambitions of
individual managers align more with the desire for grand, transformative narratives,
potentially neglecting the nuanced, incremental contributions that are foundational to
sustained organizational success.
This tension is not merely a reflection of individual preferences but is deeply
intertwined with organizational cultures that often celebrate and reward high-impact,
transformative initiatives. The emphasis on showcasing profound change as a marker of
managerial competence can inadvertently lead to a devaluation of the importance of
small, continuous improvements.
One approach to mitigating this tension involves fostering a more nuanced
understanding of managerial contributions. Organizations can create cultures that
appreciate both deep transformations and the significance of incremental adjustments.
Recognizing and valuing the "small stuff" ensures that managers are not only motivated
by the prospect of undertaking grand initiatives but also appreciate the impact of
consistent, day-to-day efforts that contribute to organizational resilience and adaptability.
Leadership development programs can play a pivotal role in shaping these
narratives by instilling an appreciation for diverse forms of managerial impact.
Encouraging managers to reflect on the multifaceted nature of their roles, acknowledging
both transformative projects and the steady refinement of processes, fosters a more
holistic perspective on effective leadership.
Ultimately, addressing this tension involves cultivating organizational cultures
that value diverse forms of managerial impact and providing platforms for individuals to
articulate their professional journeys in ways that capture the richness of their
contributions, whether transformative or incremental. By doing so, organizations can
ensure that the pursuit of career advancement aligns with a comprehensive understanding
of effective management, encompassing both the grand and the subtle dimensions of
organizational change.
g. What’s Coming Up: A Road Map
This text is divided into three parts. Part 1, including this, sets out the
groundwork, and 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 that relate to all of the previous. 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 effective change manager—which is, of course, the theme of the book as a
whole.
One of the main assumptions underpinning this road map is that our images of the
roles of change leaders affect how we approach the other issues on the map. Remember,
for example, how the different change leadership styles adopted by Paul Levy at Beth
Israel, Eddy Lampert at Sears, and Ron Johnson at J. C. Penney colored their approaches
to communicating the changes that they wanted to implement. This explains why
“images,” 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 presented 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 road map comes with an added caution. If you follow the 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, intensifying 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.
h. Change Diagnostic: The Beth Israel Story
The story of this turnaround has been cited as one from which other healthcare
organizations can learn, in other countries. The account on which this case is based was
commissioned by the Health Foundation in the United Kingdom. As we will see, many of
the change management issues raised here are common and can be found in other sectors
and cultures. While it is always possible to argue that healthcare is “special” in some
respects, many of the change management concerns are generic.
The sense of urgency, the “burning platform,” created deliberately by the new
chief executive, who was open with all staff about the true position concerning the
hospital’s finances. The focus that was consistently maintained on improving the quality
and safety of patient care, which appealed (perhaps more than budget layouts) to the
professional values of clinical staff. The phased approach that involved, first and
quickly, fixing the finances; second, repairing medical-managerial relationships and
getting staff involved in operational plans; and third, focusing on safety issues and
eliminating harm. Frontline staff involvement was key. Making hospital and department
performance data available to staff, the public, and the media, to inspire pride in
achievement and to stimulate further improvements. The creation of a “leadership
constellation” through the appointment of other senior staff who understood and who
supported the chief executive’s goals and strategy (Denis et al., 2001).
Did Paul Levy actually change anything directly? He described his style as
“creating the environment” that enabled other people to do good work. One of his main
contributions was to insist on transparency, about the hospital’s financial problems and
with performance data. That transparency may have been uncomfortable for some, but it
created pride in achievement and the motivation for continuous improvement. A second
key contribution concerned his consistency of purpose, the relentless focus on the quality
and safety of patient care, which were issues that engaged and motivated clinical staff.
His innovative use of the Internet and his personal blog about “running a hospital” made
sure that everyone—staff, patients, the wider community, the media—knew what he was
thinking and doing and why, building respect and trust. He stayed with BID for nine
years. Not many chief executives stick around for this long. But tenure helps to build
influence and reinforces the consistency of purpose.
Levy had no healthcare background. Maybe this means that one does not need
specialist sector knowledge and experience to drive a corporate turnaround. But he made
sure that he had access to those specialist resources though his other senior appointments.
He had confidence in his management approach. That confidence may be as important as
the style—maybe a different style, applied consistently, could be just as effective,
especially when it involved laying off a number of staff soon after taking up his new post,
and standing up to the board of directors and defending a view different from theirs. The
role of a change leader is a demanding one, and it can be difficult to maintain for long
periods. It is necessary to recognize when it is time to leave—and also to know when
leaving would damage the project. Levy departed only after BID’s financial, clinical, and
operational performance goals had been achieved and the future of the hospital was
secure.
This is controversial. A lot of the research evidence concerning organizational
change management—what works and what doesn’t—relies on case study accounts such
as this. Could an approach to rapid and radical organizational change that worked in a
large hospital in Boston be applied to a small software design company in Sacramento?
Looking at the details, the answer is probably “no”; the software company doesn’t have
to worry about medical engagement and patient safety metrics. Looking at the approach
in general, however, the answer is probably “yes.” If our software company was losing
money and reputation, a new “straight talking” chief executive with clear and consistent
goals, an inclusive management style, a strong management team, and a transparent
approach to the use of performance data to motivate improvement could be a highly
effective combination.
In other words, if we look beyond the details, we can see a number of actions that
could well be applied in other settings. Also, when one gathers a number of such stories,
of successes and failures, similar patterns emerge, especially with regard to establishing a
sense of urgency and purpose, creating a strong and stable senior team, using “leadership
constellations” to drive change, a participative management style, staff engagement, open
communications, and transparency of performance information that is used for feedback,
performance management, motivation, and reward purposes. The Beth Israel story is a
compelling one, but it is neither idiosyncratic nor unique.
