Lakeland Wonders’ Code of Change

By | April 22, 2014

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Introduction

Lakeland Wonders is going through a critical stage with a new CEO Cheryl implementing change strategies which are not being welcomed or supported by the rest of management team. In this report, I’ll be analyzing the reasons why Cheryl pushes for a change in the company, and how and what needs to be done for an effective outcome. A critical analysis is also to be presented on Cheryl as the change leader and also her management techniques and relationships with co-management personnel. The rest of the report follows with triggers of change listed first, followed by strategic response of Cheryl as the CEO; a critical analysis of the strategic response is followed using change models to analyze the situation and finally an evaluation is provided on what could be more appropriate steps to ensure successful change implementation. All points are to be supported with examples and relevant literature is identified and explained along the report instead of a separate dedicated literature review section.

 

Triggers of Change at Lakeland Wonders

Triggers of change, or the need for change could be based on either internal reasons within the firm or external changes in the market. In terms of internal shifts, as Cheryl continually highlights that the board of directors have set aggressive growth targets for the management to achieve and which according Cheryl would not be achieved by letting things be the way they were. That is a strong reason for Cheryl to be highly active even though it’s hardly been six months she has been on the job. Other than that, Cheryl’s personality had been one who aggressively pursued new opportunities and her energy and enthusiasm helped her in being one step ahead of the market.

From an external market perspectives, as Elaine from marketing mentioned that the middle-priced segment of the market was the only segment which was projected for double digit growths and the customers for these products were shopping at big Chain’s like Bull’s-Eye. Lakeland Wonders currently specialized in exclusive toys and which were sold in speciality stores.

Based on the above internal and external analysis, Cheryl made a point for change to be initiated for the specific objectives to be achieved. So how the change should be introduced and implemented? Lewin (1951) is one of the earliest proponents of change models and had proposed a simple 3-stage change model: unfreezing, change and freezing.

The first stage involves accepting that the current practices are not achieving the desired goals and so a need to “unfreeze” from the current methods in search of better ones. The second stange involves the actual change with identification of problems and suggested solutions for better performance. And finally, the last stage is ensuring that the new processes are in place and willingly accepted by all stakeholders and so there is a ‘refreeze’ in the organization’s practices to achieve desired goals (Cummings and Worley, 2009).

Since the internal and external analysis for Lakeland Wonders has confirmed that there is a need for change and as Cheryl firmly believes that change is needed from the existing practices to counter these internal and external developments, unfreezing has to be done of the current practices to allow for more appropriate ones to be devised and ‘refrozen’. Now in order to discuss the actual change or moving based on Lewin’s model, I would like to draw upon other academic literature to discuss the type of change being pushed by Cheryl.

 

 

Type of Change pursued by Cheryl

 

In terms of delivering strategic change, Balogun and Hailey (1999) identified four types of strategic change which depend on the scope and nature of the required change. The summary of them is presented in the table below:

Source: Balogun (2001)

Cheryl planned to enter a new market segment of middle-priced toys, outsource the production for this segment to off-shore countries, change from Lakeland Wonders existing designer to award-winning Sampsen Design, recruit other people like Cecil into Lakeland Wonders to support her change plans, have some consolidation with her suppliers of core parts, and more importantly, she wants all this done immediately.

Based on the above, Cheryl is pursuing a reconstructive type of change, which does not really change the core of Lakeland Wonders operations but introduces newer opportunities which require new methods and other than that some changes to her core operations. But she does want everything to be done quickly, so the change she is introducing is what Balogun and Hailey (1999) would call a reconstruction.

 

Cheryl: Visionary Change Leader?

One key critical attribute here is that this change vision is purely a construction of Cheryl herself and there is mixed responses to it from her team. In terms of initiating change, there is much argument as to whether the approach to change management should be top-down or bottom-up. Kotter (1995, p. 60)argued that “a renewal process typically goes nowhere until enough real leaders are promoted or hired into senior level jobs”. Although Kotter’s assertion is not completely judge able in case of Lakeland Wonders, but Cheryl does have impressive credentials preceding her which might make her to be the real leader to implement change. Eccles (1994) also highlights the fact that successful strategic change in modern commercial organisations is never the result of a ‘revolt of the slaves’, which is from low level employees. Therefore, based on conclusions from Eccles (1994) Cheryl seems to be doing the right thing by leading the way of change.

Now to consider the question of whether Cheryl is pushing for changes too quickly and/or too radically for a 94-year old company, there are mixed suggestions in academic literature. According to Quinn (1980), business strategies should be constructed in a ‘logical incrementalism’ manner where a step by step process of change is implemented with an incremental effect (Arnaboldi and Azzone, 2005)Johnson and Scholes (2005) claimed that during change, managers must organise tasks to give priority to the processes offering ‘quick and significant improvements’. They suggest a turnaround strategy which emphasises the ‘speed of change and rapid cost reduction and/or revenue generation’. Seven key elements of their turnaround strategy are:

  • Crisis stabilisation
  • Management changes
  • Gaining stakeholder support
  • Clarifying the target market(s)
  • Re-focusing
  • Financial restructuring
  • Prioritisation of critical improvement areas.

Cheryl has defied Quinn’s suggestion as she has gone ahead with all at once change programme rather than a small step-by-step incremental approach. More critical from the Johnson and Scholes view is that Cheryl seems to be lacking the stakeholder support as she complains that she feels employees are ‘dragging their feet’ to her orders and then again that the board might also vote against her in the presentation meeting.

The most notable literature on change management could be considered of Beer and Nohria (2000) who claim studying the nature of corporate change from more than 40 years. They suggest that there are two theories of business’s change: Theory E which is change based on economic value and Theory O based on organizational capability. According to Beer and Nohria, Theory E involves a hard approach where shareholder value is the only legitimate measure of corporate success while Theory O is a soft approach where objective is to develop corporate culture and human capability through individual and organizational learning the process of changing, obtaining feedback, reflecting, and making further changes. Both are valid models, each theory of change achieves some of management’s goals, either explicitly or implicitly.

For this case, I would use the Beer and Nohria framework to critically analyze change at Lakeland Wonders.

 

Lakeland Wonders’ Code of Change

Analyzing Lakeland Wonders through dimensions of Beer and Nohria’s corporate change, it is evident that Cheryl is a Theory E practicing CEO. Cheryl fails to appreciate the long-standing culture of Lakeland Wonders and this has been pointed by the ex-CEO Wally to her when he mentioned to her that some of the employees had been working from generations and would be scared off by her rapid changes. As Beer and Nohria (2000) elaborated that for a Theory E change leader, shareholder value is the ultimate law and so does Cheryl’s regular insistence on achieving targets and boosting growth confirm her to be in that side of style.

A theory E approach could prove to be disastrous if it starts challenging well established cultures of any organizations. And more importantly, theory E fundamentally ignores one important stakeholder: the employees. One of the explanations as to why Cheryl faces stiffness from her employees is because she hadn’t taken them all in confidence about the proposed changes and it appears she tends to dictate terms based on what she feels are economically best for the company. For example, she insists on using Sampsen Design even though her designer director felt otherwise. She expects the workers’ union to oblige to her requests for efficiency by introducing bonus schemes. She has no concern for her manufacturing director’s viewpoints over quickly outsourcing production overseas and insists on her way. All such approaches do not go very well with organizations which have established years of corporate culture and in this case, Wally the ex-CEO does mention that Cheryl’s actions are challenging the established culture and she needs to slow down.

 

Critical evaluation of the case so far

Based on the above analysis, I will now present a critical evaluation of the situation so far in Lakeland Wonders. Cheryl is right in suggesting that change is needed to cope with the developments in market; however, she has adopted a wrong approach. By adopting a theory E approach of maximizing shareholder value and adopting a rather autocratic management style, she has gone into the wrong side with her key management personnel. First of all, it is highly likely that she is perceived as an ‘outsider’; that is, a new employee who just got in 6months ago from another organization is now coming and trying to dictate terms to people who have worked for decades in the organization. This may also be the case that even though Cheryl is doing her job pushing for changes, she might be doing it too quickly for the liking of others.

Cheryl is adopting to change several things (if not all), and insists on quick compliance and action by her employees. This is clearly not working and Cheryl herself knows it. And what is worrying is that instead of sorting it out with her team, her contingencies involving hiring other people who are more likely to support her plans. She is doing the right thing as a leader by planning things, but her key mistake seems to be failing to win the hearts and minds of her employees.

She has to place trust on her other employees, specifically directors like Mark and Barry, to receive their feedbacks and consider their arguments genuinely as they have been around long with the company to know what works well. There are several cases where new CEOs failed miserably to achieve their goals simply because they failed to understand the existing cultural practices in their organizations. This phenomenon is also widely present in academic literature in different industries; for e.g. Prasad and Prasad (2000) studied the failure of change strategies after takeover by new management of a hospital in US and concluded that the new owners failed to understand the existing corporate culture amongst staff of the hospital. Fronda and Moriceau (2008) studied the resistance by staff to change policies initiated by new management in a French telecom company and the major explanation given by staff were because it clashed with their years of existing practice.

 

 

 

Recommendations for success

Therefore, the situation is quite clear and now I would provide some suggestions through which Cheryl can hopefully gather support for her change plans and make Lakeland Wonders move on towards the growth path. By first conducting a Lewin’s force-field analysis, I am able to identify what are the forces pushing need for change and what are the forces resisting it. Lewin’s force-field analysis is a powerful tool to weigh in the pros and cons of change plans. It involves weighing in all the forces in support of a particular change plan and all those against it. Ratings are then provided to each of the listed forces with 1 = weak to a scale of maximum 5 = strong. The change plan in Lakeland wonders is of course all the proposed changes of Cheryl and the summary of the force-field analysis of her plan is in the table below:

It is easily understandable that the problems Cheryl faces in getting her change implemented is due to employees resistance and she has to overcome that for the move to be successful. As mentioned earlier, her relationship particularly with Mark seems to be quite off the mark and of course she has problems with other people too. The suggestion for Cheryl here is to change her management style and be a bit more receptive to feedback from her co-management colleagues. She needs to improve communication and establish two-way feedback systems in order for the employees to understand her rationale for pushing changes and to make them more willing to support the change moves. The Johari window of communication proposed by Joseph Luft and Harry Ingham (1955) could be quite useful for her to refer to. The two key concepts of the Johari window is that individuals can build trust between themselves by disclosing information about themselves and that they can learn about themselves and come to terms with personal issues with help of feedback from others (Mind Tools, 2010).

As the image from Mind Tools (2010) shows that an individual can move from area #1, to area #4 by disclosing self information to others and receiving feedback about self from others. Area #2 represents information which an individual doesn’t know but is known by others about the individual. Area #3 is information which the individual keeps hidden from others. Area #4 is an unknown area which either doesn’t know but information is held subconsciously and finally Area #1 is an open area where common information is known.

Cheryl needs to follow the process of getting involved into more two-way communication with her employees to reduce the forces of their opposition and resistance. She needs to take feedback from others about mistakes she is likely to make in managing Lakeland Wonders and she also needs to share information about her motives and plans to others so that there is more common understand and harmony amongst all stakeholders. She has to get herself accepted as a leader who cares and is willing to consider employees concerns and overall smooth the affects likely to be caused by her change plans.

It would be useful for Cheryl to perhaps scale back and take a fresh start. It is understood that time is of essence and she likes to be one step ahead of market, but if she needs the support of a 94 year old organization, she has to come to terms that she is moving too quick for them to change. And finally, for an effective change plan to be created, I would suggest Cheryl to make use of the Ford et al (2008) 5-P model of change.

Ford et al (2008) claimed that for a successful change plan, change leaders must effectively address each of these 5 components: purpose, priorities, people, processes and proof. The first p in the 5-p model looks at the purpose of introducing change in the organization. As Denning (2005) claimed that since change is disruptive, it should not be initiated without a clear intended purpose in mind. Therefore, change should only be initiated with determined objectives which need to be effectively made aware to all within the organization in order to gather support for the change plans implementation from everyone expected to be affected by the change. The next P looks at priorities and makes use of the components of the McKinsey 7-S model (see diagram in next page). This stage involves formulating the desired changes required amongst the 7-S and ensuring that the change actions are carried out at an appropriate sequence and time frame.

Source: Ford et al (2008)

The people element in the 5-p model expects to recruit and place the “right people for the right job” since it would be people who would both be implementing the change and are to be affected by it. When talking about processes, it refers to the style in which the change initiatives are introduced in the company. Using Dunphy and Stace (1993), there are three types of styles; autocratic, consultative and consensus approach. And finally, in terms of proof, the model suggests to carefully review and see whether objectives are being achieved and that the change is leading to desired results. Should that not be the case, there should be a review of the entire policy.

Therefore, the purposes of Cheryl’s actions need to be logically understood by the whole organization and their support should be earned including from Mark, board of directors and trade unions. Then priorities should be listed as to what should be done first; for example is offshore outsourcing more important now risking conflict with trade union during upcoming negotiations? Finally, the right people should be there to support the change event and if Cheryl feels she really needs Cecil from Kids & Company in her team, then by all means she should go ahead and employ her. Finally, in terms of processes, she has to change her style which is more consultative and consensus generating to make the change events smooth and efficient. And in the end, continual monitoring should be done to ensure the change plans are effective in achieving overall goals for Lakeland Wonders.

However, word of caution must be presented here that no suggestion or academic literature can guarantee success for any one organization. Cheryl in the end would have to use her subjective intuition to judge what is best for the future of Lakeland Wonders.

 

 

 

 

 

 

 


References

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