Organizational Change Challenges and Fails - Case Study Example

Introduction

All companies have different challenges, which should be handled to maintain better activities. Some businesses try to produce organizational changes, which can add more adaptability to keep the market position. However, in many cases, companies fail due to many reasons, which will be thoroughly discussed in present paper(Courtis, 1988). Furthermore, examples of the famous failures will be analyzed to find out the most frequent causes for such misconducts, hence, there are special patterns of bad managerial decisions, which lead to such failures and undermine activities and can even lead to devastating outcomes. Thus, avoiding of such issues is primary responsibility of the leader, since it impacts the business in high scale.

Failing to change

Some leaders think that organizational changes are not so important for business to grow and fail to maintain proper activities, when it is needed. Among such businesses is newspaper industry, it has many issues, which are associated with innovations and organizational changes. It is good to implement changes in business activities, especially, when the company is working along with other developing companies, which invest resources in innovations(Courtis, 1988). It should serve as driving factor, but not for conservative companies like San-Jose Mercury News. This company was strong enough to compete with other newspapers and got substantial revenues, however, with appearance of new ideals and values, which are associated with internet, company lost its opportunities and future of company become forfeit. It is associated mainly with the conservatism and strong belief that newspapers will always be so important and valuable as they were before, however, with development of internet, customers expect something different and certain changes in company should have been done to avoid problems with progress. However, failing to carry out them resulted in a row of failures and finally substantial drop of activities to undesirable level.

Fails in organizational changes

However those companies, which strive to innovate business activities not always get positive results and promote their services. There are problems, which associated mainly with improper innovation process that failed to bring some results(Courtis, 1988). It happens, when the new idea is not supported with good study of the market, furthermore, customers’ opinion should be reviewed to define the most appropriate change. It is useless to innovate business in undesirable for customers way, since, all businesses work to provide something positive for customers, instead of ruining things, they had before, which were good for customers.

Bad understanding of market

One good example of the wrong activities can be found in Walmart business, that tried to innovate its organization patterns to target new market. However the result was just the opposite. With introduction of expensive goods, high-end customers were just not impressed, hence, they expected middle price to –low-end products instead of expensive ones in the Walmart(Courtis, 1988). There are shops, which are from the very beginning focused on the expensive products and high-end customers know such shops. However, changing the low-price oriented retail shop to the high-end shop is almost impossible venture. It cannot be done just by changing the price tags and innovation in assortment. Business could have done some changes in the design of shop, it could have done it in a few years to achieve desired effect, however, instant change of products, which were offered resulted in the drop of profits, since, high-end customers decided to look for normal products in their usual shops, while low-end customers decided to look for more bargains in other shops, since, such prices were not affordable for them. It is the example of the unprepared innovation in organization that causes more problems than benefits. Furthermore such activities can seriously affect the further business activities(Courtis, 1988). Changing all assortment and price tags cannot make customers believe that they are stable and would be changed for something different. Customers like to use stable shops, which in case of some innovations add something they want. Such innovations carry out Tesco that asks customers about their wishes towards the improvement of services. Surely, they do that indirectly and use this information in their organization changes to maintain better services.

Poor understanding of customers’ wishes

One more example is associated with the wrong expectation of the result from customers and their opinion towards the changes. There are many surveys, which can be carried out to get the insights towards the current services and probable improvements. Furthermore, idea generation for further change is carried out through few processes such as: collection of ideas, processing, evaluation and implementation. Most problems in the creation of good idea appear in the stage of collection of ideas and their estimation, since, all ideas should be checked and the probable effect on customers should be examined. Failing to do so can result in serious misconducts, which will lead to devastating outcomes and drops of revenues. This example can be observed in activities of the JCPenney. This company sells furniture, decors and other fashionable things, however, it had problems with sales, thus, they decided to attract more customers through the new program that will set decreased prices for the whole month after particular purchase or through purchasing special month coupon. However, this idea has taken with hostile reception and customers were reluctant to purchase something in this store. It happened due to the fact that customers liked the way how store did their price policy. They needed more assortment of products, they needed better delivery services, thus, changes in prices affected sales and company lost almost 30% of sales. It is quite strong impact on the company’s activities. Furthermore, many customers have left tons of negative reviews and damaged overall corporate image. JCP cannot restore its image even now and tries to introduce new services to get customers back, however, unsatisfied customers will use other company and will never come back. That is critical blunder many companies do in the process of innovation that lies in failing to process the idea and estimate the probable effect on sales(Griffith, 2001). Company could have studied this idea with employees, who work closer with customers, hence they know customers’ expectations and know what customers like in the company’s activities. It could prevent such problems and damage to corporate image(Griffith, 2001).

Timely innovation

There are issues, which related to the timing of innovations. Leader should know the moment when innovations in organizations are necessary. Furthermore, too late innovation can be useless or too costly to do(Griffith, 2001). Thus, the moment should be chosen correctly. Problems with proper timing are result of the bad analysis of the own activities and the market, since, it can show new trends and developments in industry. Failing to react in the proper time can result in serious misconducts and drops of sales. It is important to know that company should adapt to changes in the market. It should have the idea managers, which will look through the possible ideas for their implementation to use them when they are required(Griffith, 2001). Leader should have few possible options for company’s development to face market requirements. It is well-known fact that newspaper companies, which fail to produce internet version of their newspaper never get such revenues like their competitors, which have managed to produce the developed sites with advertising and associated products. It is the example of the proper reaction to the changing environment. It works with all products, which were used in some particular way and with development of technologies should be reviewed to face new expectations. Considering the book-stores, one should underline that brick-and-mortar stores are not popular now, comparing them to the web-stores like Amazon, etc(Jain & Murray, 1984). Thus, company borders faced substantial problems facing the new requirements, since they missed the moment to innovate, when e-readers become popular(Jain and Murray, 1984). They could have introduced their own e-readers with their books, however, they did this long after their competitors that resulted in decreasing of incomes and closing of many shops, which were the important part of the company. Even now, when the technology is used, being once the mainstay of the book-market, Borders is just a little company that has only loyal customers, which prefer to stay loyal to certain brand(Poole and Van de Ven, 2004). There are quite little amounts of new customers. It shows that innovation should be undertaken long before the actual need in it, hence, competitors also know about the new technology to come and will start their own development. Thus, company should manage to do that ahead of the competitors to keep the market position. Furthermore, doing studies of the development of competitors, company can maintain products, which look and work different than those, which are going to be released by competitors. It will produce the diversity in the market that always attracts customers(Poole and Van de Ven, 2004).

Cutting staff in the process of change

Main shortcoming that most leaders do in the process of the organizational change, they cut the staff to decrease costs for labour resources. However this activity can provide only negative results, since, labour resources are important asset for company(Senior and Fleming, 2006). They can produce substantial buy-in the company, hence, they carry out some services, they can be engaged in other activities. Most large companies, which rely on their employees and pay them high salaries can decide to cut the staff to get some resources for change, however this decision can provoke substantial drop in the activities and cause even more problems to solve than benefits. There is Virginia Mason Medical Centre that has serious problems with the debts and employee morale(Senior and Fleming, 2006). Staff in this company was ineffective and the first step in change and handling the corporate issues is associated with cut of the staff. However, this scenario could lead to bankruptcy of company and liquidation. Better scenario was carried by its leader Gary Kaplan, who managed to turn the labour resources in the important asset that improved the situation of the hospital and increased its revenues. He just made the analysis of the most successful practices of handling the problem of employees and find out the example of the Toyota production system that helped Caplan to create Virginia Mason Production System. Since this change, hospital started to cut wastes and improved its processes. It helped to handle the problem with debts and lack of resources for development. To handle the problem with employees, hospital maintained policy of non lay-off. It means that even in the strongest problems, hospital will not fire its employees. To tackle problem with employees Caplan just redeployed them within the hospital to find them more useful positions(Senior and Fleming, 2006).

General issues

There are even more general mistakes, which many leaders make in the process of change. First one is related to the unrealistic goals. It is completely impossible to start from a little unperspective business and to grow in something like Google in a few years(Taylor and Van Every, n.d.). This can be done in 5-10 years in case of good idea application, however, organization change cannot change the company to be the giant in industry, though it can add more revenues to the company. Company’s abilities should not be overestimated. Leader always knows what company can do and what it still cannot do, however, these “cannots” should be replaced with “cans”, however it is impossible to do in a few years(Tidd, Bessant and Pavitt, 2001). There are economic wonders, which were absolutely unpredictable and impossible to do. However, these are exclusive cases, which happen quite rarely. Goals should be realistic. Firstly, leader should study all weaknesses company has and what weaknesses can be tackled with reasonable loss of resources and then proceed to more complicated. It is impossible to handle all issues and become the top company.

One more mistake of leaders is giving directions to implement the ideas without personal involvement in the process of change. CEO should be visibly committed to some change. Staff should see that Chief executive is working on his/her initiative as well(Denison, 2001). One cannot just delegate it to HR. All company’s parts should be engaged in change starting from the CEO, hence he/she is initiator of change and it should be strictly supervised by CEO to avoid undesirable results.

Reason of most mistakes

Generally all mistakes in the process of organizational change happen due to the misunderstanding of the main principle of the business. One should work-out all facets of the problem that is important for business to solve. Thus, all moments should be considered, thorough studies of the market should be made in order to avoid negative results from attempts to make business better. There are many cases, when businesses failed due to the wrong application of change opportunity that caused even more problems(Denison, 2001). Change is necessary when the technologies are developing, hence, they produce new expectations from customers and business should respond to them to keep the market position, furthermore, there could be changes in customers’ expectations due to the changes in trends, fashion, etc., all these changes force business to change as well. Failing to develop something new that will respond to innovations in the external environment will seriously affect the overall business performance and effectiveness. It is impossible to stay in the same state that company had before. Changes cannot be done without thorough consideration, since many businesses have successful business practice and they should change them for more developed practices, which will help it to get the same or even stronger position. It is the most important feature of the organizational change. It is possible only through the developed study that should be carried out by all employees, including those, who work with customers directly, as they can be good source for insights(Denison, 2001).

Conclusion

Summing up, there are many issues, which influence the result of the organizational change. There are some things, which influence it in positive way, however, nowadays, most attempts to innovate results in damage to brand. Lack of understanding that customers have their own wishes and insights towards the brand, lack of information regarding the demand, serve as the main factor that predetermine the negative result of change. Furthermore, sometimes changing of the main features of business can be quite complicated issue that is hard to solve. Thus many leaders fail in the creation of the better option for business. Furthermore, ever-changing environment cannot provide some basis for correct forecasts or expectations. Thus, process of organizational change requires involvement of specialists like idea managers and CEO, hence they have all information regarding the brand and they can produce better ideas for business. Most businesses appoint lower managers to the ideation process. Latter have neither understanding of the ultimate business goal, nor means how to improve the state of affairs. Ideation process should be powered with the employees, who work with customers, since they know the main expectations and can provide some important insights. Furthermore, CEO should be involved in the process to produce better idea. Once idea is made, leader should proceed to the next stage that is all about the estimation of idea of change and its analysis. This stage involves the thorough study of factors, which can somehow influence the result of change and only after these two basic stages, leader can release idea for implementation and for the process of organizational change. Otherwise business is doomed for fail, sometimes it presents no shortcomings, however, in the most cases, it produces substantial problems.