Change Intervention at Barnes and Nobles - Case Study Example

 The first two weeks of August 2010 was rife with rumors and, presently, news, of an impending sale of Barnes and Nobles. This was quite surprising for many especially that, until recently, the company has been considered as a force to reckon with in the book retail industry. For close observers, however, such sale was inevitable because Barnes and Nobles has been in dire straits for some time already, losing money and customers to market behemoth, Amazon. This circumstance is the reason why the organization was chosen as the subject of this paper. Either from the perspective of the new buyer or the new management that would inevitably be formed in order to resuscitate the organization to profitability, there would be a need for change intervention. Specifically, such intervention, which would primarily be the aggressive pursuit of the e-commerce model - would have to occur deep starting from the organizational culture to the organizations business strategy. Background Barnes and Nobles was founded by William Barnes and Clifford Noble back in the 1920s. Through the years it has survived and thrived in book retail, taking advantage of the changes and developments that came its way. There was the advancement of printing technologies, the popularity of books, the onslaught of the Depression and the war, among others. At some points, the company has been successful, while, in some, it has failed. In its history, Barnes and Nobles had also been sold and acquired several times. The current owner, who was responsible for its status as a major player in book selling industry, is Leonardo Riggio. After making for himself a name as a book retailer (starting off when he quit college to launch his career as a book seller), Riggio acquired Barnes and Nobles after thirty years of successful business. Barnes and Nobles then was unprofitable but he was able to turn this around. By 1986, the company has been gobbling-up book stores like the Pacman that by the year’s end, the total number of Barnes and Nobles outlet rose to 800, achieving for the company the biggest book seller in the whole of the United States. (Betz 2006, p26) Riggio would introduce several innovations to his business model and they have pretty much been successful until Amazon came. This new development was recounted by Munk: December 16, 1998, was not a good day for Leonard Riggio… Sitting in his cramped windowless conference room at Barnes and Noble’s headquarters in lower Manhattan. Riggio just picked at his lunch… and shook his head in disbelief. Amazon, an upstart with sales of $600 million and losses that grow bigger every year was now worth seven times more than Barnes and Noble Inc, a chain of 1000 bookstores with sales of $3 billion. (Munk 1999, p50) The conundrum that baffled Riggio then was about how Amazon’s stock has shot up in just one day. It was offered at $150 a share then it rose to $400 a share by the day’s end, with 17 million shares sold that, in effect, increased Amazon’s value by 20 percent. (Betz, p26) This case is important because it highlighted the trajectory of two companies that have differing business models. A discourse on Riggio and Barnes and Nobles own dramatic story of success has already been discussed previously. But his feat is starting to be replicated by Steve Bezzo – Amazon’s founder. Under Bezzo’s watch, Amazon became one of the pioneering enterprises to have developed a vision and business model that have been designed to take advantage of the Internet. Amazon was in the league of America Online (AOL) in developing and driving the success of ecommerce. What Bezzo attempted and eventually achieved was for Amazon to adopt a business model that is characterized by the rejection of traditional book retail operations. Instead, it pioneered a web-based store system that features an innovative, visionary and creative strategy much different from the bricks and mortar approach proudly being practiced back at Barnes and Nobles. The attractiveness of this strategy, particularly from the investors’ point of view, is demonstrated in an experience by a long-time Barnes and Nobles stockholder, Suzanne Zak. She attended a meeting held by Amazon in 1998 about the upstart company and its potential and right then decided that there is an opportunity so she immediately sold all her Barnes and Nobles stocks, while other followed suit. After this happened, the Barnes and Nobles’ stocks value has stumbled from $48 to the mid-20s. (Betz, p27) In order to further understand the dynamics of Barnes and Nobles as an organization, it must be underscored that its business model is focused on three areas: the shopping mall chains, the superstore chains and, finally, the online retail. (Michman and Mazze 2001, p156) The emphasis on shopping mall chain operations is demonstrated how Barnes and Nobles have recently acquired B. Dalton, Scribner’s and Doubleday; its superstore concept meanwhile features a space as large as a department store, containing benches for readers, coffee shops and book shops intended to enhance the customer experience; and, finally the aggressive push to dislodge Amazon in the online book selling market. The Counter Arguments There are those who argue that focusing on e-commerce is not advisable for a book retail store like Barnes and Nobles, at least in terms of prioritizing it over its main platform of business, which are the physical stores. This argument is driven by several researches that found online shopping as not a primary point of sale for companies and that consumers prefer the physical store for their purchases. For instance, there was the survey conducted by Accenture that found that 69 percent of the consumers only use the Internet in order to gather background information on the goods they will buy at a store. (Plunkett 2008) Then, there are also people who would point to the fact that Barnes and Nobles have actually forayed into the online business as early as the latter part of the 1990s. This would, in effect, render any attempt at using the e-commerce model no longer new and, generally, would not qualify as radical change. This is especially important because, from this point of view, e-commerce would not necessarily translate into profitability because it has already failed for the organization previously. The Digital Advantage A 180-degree turnaround for Barnes and Nobles by abandoning its previous focus on physical stores and pursue an aggressive restructuring by emphasizing online retail is a sound strategy. Amazon has already done this and that it has proven that people actually buy books online and dispelled what the previously mentioned studies have claimed. Amazon has become very profitable and thousands upon thousands of books are ordered and delivered each day. Certainly, there will always be people who will prefer to shop at the physical store, but this area has very little profitability, due mainly to the exorbitant cost that is required by space rentals, maintenance and all the seemingly unrelated business processes and services that must be provided in order to create the kind of environment that the superstores have for its clients. According to Lucas (2003), e-commerce and the Internet is offering a humungous opportunity for retailers such as Barnes and Nobles that its managers must waste no time and take advantage of it by adopting a business model anchored on this technology. (px) What happened was that the previous attempt by Barnes and Nobles to penetrate the online book retailing ended in a dud because the strategy was adopted half-heartedly. Policymakers back Barnes and Nobles headquarters were proudly resisting to adopt the change because they were clinging to the past successes of their traditional business processes. As a result, there was no actual synchronicity in the various areas of operations to the point that the online business adversely affects the performance of the physical bookstores. To demonstrate this, I did some interviews with random people at school and inquired about their experience with online book retailers. One very interesting account was by a 23-year-old graduate student. She said: I have actually tried to purchase a book in Barnes and Nobles online store. The site usability was pretty decent but the problem occurred in the delivery. I have been shopping at Amazon for my academic sources and have never had any problem with the same day delivery. With Barnes and Nobles, it was a bad affair. I have to wait for an extra 24 hours after having complained about the delivery. It was the only time I have used their service because I have been using Amazon since. (Gonzales 2010) Several other resource persons echoed the sentiment above. What this account confirmed is that Barnes and Nobles online infrastructure and processes had their flaws somewhere but, unfortunately, there were only half-hearted attempts to rectify the mistakes, in effect, turning off customers. In fact, while Amazon is amassing millions of consumers on its online store, Barnes and Nobles was only able to muster about 320,000 users during its initial run. (Betz, p27) This seemingly lack of interest in the online retailing can be attributed to the rigidity of the organizational culture. The organization is already a well-established player in the book retailing industry and has all the right – in its people’s opinion perhaps – to rest on its laurels. But the fact is that there is no business strategy that can last forever. Riggio himself knows this as his book retailing experience saw his restructuring of Barnes and Nobles from a smallish bookstore to the largest bookstore chain in America wherein books are regarded as consumer goods that entail several consumerist artifacts as well. The Possibility of Change Even companies with rigid organizational culture can successfully undertake change intervention. Barnes and Nobles is not an exception. To start with and, as has previously mentioned, Riggio himself have successfully restructured Barnes and Nobles earlier with his effective transformation of the organization from a small enterprise to a chain of specialty book store across America. In its current case, the organization can effectively rise to the occasion again by implementing change from within – starting with the employees of the organization. Intervention Implementation De Caluwe and Vermaak (2003) defined the change intervention plan as “an integral, consistent, feasible and relevant plan for an organization aimed at the actual implementation of the intended outcomes of a change.” (p136) In line with this, there is a need to create a uniquely tailored strategy that would assure the achievement of corrective action to change specific employee behavior and expertise in order to address the required performance on several areas such as the individual, in a group setting, in organizational processes and in an organization that would last not only in the short-term but also in the long-term. At this point, it is important to cite the need to study the target audience of the intervention. For example, a study should be conducted in order to determine the reasons and motivations that would compel employees to accept or reject behavioral change initiatives. Fishbein suggested several steps in implementing interventions in a target audience, which has not as yet developed a strong willingness to change. This is applicable to Barnes and Nobles. According to him commitment can be strengthened by: training or other programs that would fill the gaps in knowledge; the correction of misconceptions in the employees beliefs as well as the outcome expectations; promoting self-efficacy; the constant motivation of the employees by linking the desired change in behavior to those things and concepts they value very much; the creation of supportive social norms. (cited in CDCP 1995, p65) An important strategy that could be integrated in the above plan is the integration of the alignment model, which, wrote Khosrowpour (2003), recognizes the common source from which both information system and the business strategy “originate and evolve – target environment – unlike current orthodoxy that assumes a separation between the motivations behind business strategy and IS strategy.” (p. 461) Conclusion Judging from the recent woes of Barnes and Nobles, the organization clearly need a change intervention that would steer it to profitability – one that is not only designed to ensure that e-commerce is integrated in its business processes but also the intervention on its people in order for them to be able to adopt behaviors, skills and expectations that are aligned with such objective. The lukewarm reception of the consumers on the company’s initial foray in e-commerce is not entirely driven by a given belligerent attitude. Poor service as demonstrated by delayed deliveries clearly showed how the company has been caught flat-footed by the surge of Amazon, adopting e-commerce in a change strategy only in immediate reaction and possibly without any comprehensive thoughts or vision about the online retail’s place in the overall organizational objectives. The change intervention as proposed by this paper must be designed to address this. And so, before a sophisticated online infrastructure or an efficient distribution and logistics system, the corrective strategy to change expertise and behaviors of its employees and management must be prioritized. References Betz, F 2002, Executive Strategy: Strategic Management and Information Technology, Wiley. Centers for Disease Control and Prevention (CDCP) 1999, Promoting physical activity: a guide for community action, Champaign, IL: Human Kinetics. de Caluwe, L and Vermaak, H 2003, Learning to change: a guide for organization change agents, London: SAGE. Gonzales, F 2010, Discussion on Barnes and Nobles purchasing experience. [email] (Personal communication, 20 August 2010). Khosrowpour, M 2003, Information technology and organizations: trends, issues, challenges and solutions, Volume 1. London: Idea Group, Inc. (IGI). Lucas, H 2003, Strategies for Electronic Commerce and the Internet, MIT Press Michman, R and Mazze, E 2001, Specialty retailers: marketing triumphs and blunders. Westport, CT: Greenwood Publishing Group. Munk, N 1999, "Title Fight," Business Week, November 13, pp. 50-53. Plunkett, J 2008, Plunkett's E-Commerce and Internet Industry Almanac 2008: E-Commerce and Internet Business Industry Market Research, Statistics, Trends and Leading Companies, Plunkett Research, Ltd. Read More