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.
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.
High cohesiveness is an effective tool in the success and effectiveness of an organization. However, in order for ...
Change is a double-edged sword (Fullan, 2001). Change is a word that might inspire or put fear into people. Leadership is challenging when it comes to dealing with change and how individuals react within the organization to the change. Marzano, McNulty, and Waters (2005) discuss two orders of change in their book School Leadership that Works; first and second. Fullan (2001) also adds to the discussion in his book Leading in a Culture of Change, with regard to understanding change. In Change Leadership, Keagan and Wagner (2006) discuss many factors of change and the systematic approach to change. Change affects people in different ways. Leaders need to be able to respond to the individuals throughout the change process.
... organization to do so. Leaders galvanize commitment to embrace change through three interrelated activities: more usefulying strategic intent, building an organization, and shaping organizational culture.”(Pearce, 2004)
In his book, Leading Change, Dr. John P. Kotter communicates why organizations fail or succeed based on ten years of conducting research on more than 100 companies to see what contributed to their successful transformations and what hindered those transformations. “In October 2001 Business Week magazine reported a survey they conducted of 504 enterprises that rated Professor Kotter the number one “leading guru” in America.” The two significant aspects I took from this book were the reasons why change initiatives fail and an eight-stage process to lead the organization through a successful transformation.
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.
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.
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.
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,
Kotter, JP 1995, Leading change: why transformation efforts fail. In Harvard Business Review on Change, Harvard Business School Press, Boston.
“Leading Change: Why Transformation Efforts Fail” is an article written by John P. Kotter in the Harvard Business Review, which outlines eight critical factors to help leaders successfully transform a business. Since leading requires the ability to influence other people to reach a goal, the leadership needs to take steps to cope with a new, more challenging global market environment. Kotter emphasizes the mistakes corporations make when implementing change and why those efforts create failure; therefore, it is essential that leaders learn to apply change effectively in order for it to be beneficial in the long-term (Kotter).
Kotter, J. P. (2007). ‘Leading change: Why transformation efforts fail’. Harvard Business Review, January: 96-103.
Ms. Winters’ predecessors had learned the hard way the importance of an integrated peer network. When Maddox reorganised the divisions in 1999 in order to encourage collaboration and enhance the combination of expertise across units, he unintentionally separated the marketing and product development teams. Similarly, as some DMPS employees had noted, CW tended to isolate their new ventures “while they were ‘incubating’ ” – possibly stemming from the existing culture that valued individual contributions over combined efforts – and that there was indeed a need to have a more integrated network of groups.
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