1. Statement of the Problem
In 1996, Arctic Timber Engineered Woods Division, a highly mature business unit, faced a market downturn and began losing millions of dollars each month. Before becoming the President of the Engineered Woods Division, Bjorn Gustavsson had already determined that the company could not sustain its commodity business and was not aligned with the new direction devised by Peter Hammarskjöld, the CEO of Arctic Timber. According to Gustavsson, in order to prosper in a more challenging market environment, developing a specialty business was the only viable approach. The goal was to shift 50% of its commodity business into undetermined specialty by 2000. However, the Division had shifted only 10% of its business to specialty products by 1997.
The challenge was to overcome the overall resistance to change and find a way to get the organization behind ArcTech Flooring, the new specialty product. A culture of customer disengagement and communication problems among divisions along with past norms held by key senior managers made initiating radical innovation difficult. These norms made up the division's mechanistic organizational structure, incentives that are based on overall sector performance, operational competencies, and low risk culture, all of which hindered innovation. This paper explores the leadership challenges involved in managing strategic change in a highly mature Arctic Timber Engineered Woods Division.
2. Analysis
As John P. Kotter suggests in his article "Leading Change: Why Transformation Efforts Fail," not establishing a sense of urgency is a number one failure for leaders. Lacking a great enough sense of urgency, senior managers in Engineered Woods Division did not cooperate in moving the division from commodity to a specialty business and the efforts remained fruitless. This was a leadership issue that few members of senior team were motivated and passionate about the transition.
In addition to urgency, Gustavsson could not create a powerful guiding coalition. He established a cross-functional team to develop a new moisture-resistant product. But the team did not include a sales manager who knows customers' needs and eventually sells the product. Although the team developed a commercially-viable product, their efforts, at least in the short term, were unsatisfactory, because with sales people's own doubts about the new product, they were afraid of jeopardizing the reputation of current product. Moreover, these cross functional teams operated within the established organization maintained the company's dominate culture and past norms. We know that structurally independent teams that are tightly integrated into the existing hierarchy with different cultures and processes are often more successful.
It is important in today’s changing economy that business leaders are not afraid to make necessary changes to succeed. When Jack Welch became CEO of General Electric in 1981, it was a lethargic business, satisfied with its output and entangled in bureaucracy. He understood the competition that overseas markets presented and the need for a new global strategic plan. He was able to envision the true potential of his resources and implemented drastic changes such as the Stretch, Work-Out, and Number One, Number Two business concepts (which will be discussed later) to achieve his goals.
Leading Change was named the top management book of the year by Management General. There are three major sections in this book. The first section is ¡§the change of problem and its solution¡¨ ; which discusses why firms fail. The second one is ¡§the eight-stage process¡¨ that deals with methods of performing changes. Lastly, ¡§implications for the twenty-first century¡¨ is discussed as the conclusion. The eight stages of process are as followed: (1) Establishing a sense of urgency. (2) Creating the guiding coalition. (3) Developing a vision and a strategy. (4) Communicating the change of vision. (5) Empowering employees for broad-based action. (6) Generating short-term wins. (7) Consolidating gains and producing more changes. (8) Anchoring new approaches in the culture.
Sarin, S. & O’Connor, G. (2009). First Among Equals: The Effect of Team Leaders Characteristics on the Internal Dynamics of Cross-Functional Product Development Teams. Journal of Product Innovation Management, 26(2), 188-205. Doi: 10.1111/j.1540-5885.2009.00345.x
The New England Wire and Cable (NEWC) present a situation that was quite possibly very common amongst many towns and smaller cities in the United States during the mid-1980s to the early 1990s. As large corporations with new technology swept across the country, small town American and its legacy manufactures and companies struggled to keep pace. This case study references the New England Wire and Cable Company that in some ways was resistant to change. John P. Kotter’s article, Why Transformation Efforts Fail, outlines eight classic errors that are made in the transformation process. Likewise, Kotter’s article also outlines eight steps that could spearhead transformation within an organization. There was clearly a commonly hidden problem within the NEWC the so many times goes unseen. That problem was the leadership of NEWC.
Corning shifted their focus from a domestic and exporting company to a multinational manufacturing company. The lack of specialization and ambiguous leadership imposed by the Houghton family faced the problem of a required organizational structure change. However, changing the corporate structure while imposed by these demands led to an inefficient structure hybrid structure that refuses to give specialized responsibilities to MacAvoy as a Chief Operating Officer, as he has to not only watching over operations globally, but is solely in charge of the North American market, creating an inefficiency with the Chief International Officer.
Change is something that is necessary for the survival of a company, but can sometimes be difficult to instate. That is what is discussed in the book A Sense of Urgency by John Kotter. The central theme of this book is leadership, and how it is required to initiate change.
In today’s ever changing world people must adapt to change. If an organization wants to be successful or remain successful they must embrace change. This book helps us identify why people succeed and or fail at large scale change. A lot of companies have a problem with integrating change, The Heart of Change, outlines ways a company can integrate change. The text book Ivanceich’s Organizational Behavior and Kotter and Cohen’s The Heart of Change outlines how change can be a good thing within an organization. The Heart of Change introduces its readers to eight steps the authors feel are important in introducing a large scale organizational change. Today’s organizations have to deal with leadership change, change in the economy,
The third Case Study “Home Depot’s Blueprint for Culture Change” studied Mr. Robert Nardelli’s role as the CEO of Home Depot. He approached management in an autocratic style, which was criticized by many. This paper will take a look at how Mr. Nardelli’s style follows Kotter and Cohen’s model of change.
Nowadays, organizational change has a serious implication for the survival of an organization (Furst & Cable, 2008). Change is critical, necessary, and has becomes a key factor to win the game.
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The leadership styles present in the company is very important factor in order for the change to be successful. Chris Peterson exhibits the transformational leadership quality to tackle her new project. She is able to empower members on her cross functional team to collaborate and create a new product to launch to current and perspective clients. This type of leadership is effective as the group members were able to tackle challenging expectations considering the work environment and lack of support from other departments. DSS’s departments follow the team leadership structure. Each department vision is to work on their sole projects only. The department is committed to its work which tends to hinder other projects because of the lack of free flowing communication. The lack of communication between the teams shows poor leadership quality. The chief operating officer is ultimately the source of the lack of communication and direction. DSS Chief Operating Officer Meg Cooke has a laissez-faire leadership style. She gave Peterson authority to lead a project but provided no guidance or direction. She also was not responsive to the needs of the
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The change process within any organization can prove to be difficult and very stressful, not only for the employees but also for the management team. Hayes (2014), highlights seven core activities that must take place in order for change to be effective: recognizing the need for change, diagnosing the change and formulating a future state, planning the desired change, implementing the strategies, sustaining the implemented change, managing all those involved and learning from the change. Individually, these steps are comprised of key actions and decisions that must be properly addressed in order to move on to the next step. This paper is going to examine how change managers manage the implementation of change and strategies used
Kotter, J. P. (2007). ‘Leading change: Why transformation efforts fail’. Harvard Business Review, January: 96-103.
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