By Melinda Collins
We recognise change as the event that occurs when something passes from one state or phase, to another. It is a broad term which, by definition, infers neither negative or positive connotations, aside from those cast by the individual.
At its very essence, change has perhaps the most pervasive influence over life itself; its presence is one of life’s few inevitabilities.
But how does change play out in the corporate arena? Some organisations can handle it. Some can’t. But like it or not, change, and the ability to adapt to it, has moved from desirable skill to indispensable process.
Definition of change management
In the corporate arena, the process of managing change is, quite aptly, known as change management. It is a structured approach to transitioning individuals, teams and organisations from a current state, to a desired future state. Put simply, change management is planned change.
It has long been suggested that if it’s not broke, don’t fix it. However, as our understanding of change has developed, we have come to the realisation that constant change is a prerequisite to success, making ‘it’s not broke, fix it anyway’ a more apt adage when pertaining to business.
Because, failure to change, is failure to adapt to the ever-changing needs of a global marketplace. And, as you sit and stagnate, you can be sure your competitors will be adapting and gaining themselves precious marketshare.
Importance of managing change
“The art of progress is to preserve order amid change and to preserve change amid order.” Alfred North Whitehead.
Change is simple by definition, yet complex by nature. It is the complexities involved in the change process which make change management one of the most important disciplines in any organisation.
Successful adaptation is as crucial within an organisation as it is in the natural world. Just like plants and animals, organisations and the individuals in them inevitably encounter changing conditions they are powerless to control. The more effectively you deal with change, the more likely you are to thrive.
Increasingly, an organisation’s ability to respond and adapt quickly, while providing increased stability in the midst of change, is a great leverage point for achieving sustainable competitive advantage. But this is not about predicting or riding trends; change needs to be deeper than that.
Adaptation may involve establishing a structured methodology for responding to changes in the business environment (such as a fluctuation in the economy or a threat from a competitor) or establishing coping mechanisms for responding to changes in the workplace (such as new policies or technologies).
Paulson on Change author Terry Paulson quotes an uncle’s advice. “It’s easiest to ride a horse in the direction it is going.” Quite simply, don’t struggle against change; learn to use it to your advantage.
Once you know why change is needed, you then need a plan for getting from ‘where you are now’ to ‘where you want to be’. However, unchartered change territory without a map puts you at an immediate disadvantage. The map is the essence of change management.
One of the first stages in charting the territory is to understand the type of change you wish to make. Quite simply, where you want to get to and how you plan to travel.
Change management can be broken into three distinct categories; structural, behavioural and strategic change. Understanding which of these is necessary to your organisation is the first step to implementing a successful change management strategy.
Strategic repositioning
We hear a lot about the role founders play in startup companies and the importance of corporate culture in developing organisations that survive and thrive for decades. There’s an unusual parallel between people and companies. People are a combination of DNA from their parents and their life experiences; likewise, companies are a blend of DNA from their founders and their experiences.
But like people, companies can lose their way, going far afield from the DNA their founders imprinted on them. What happens then? Can you change a company’s DNA, or reinvent a corporate culture?
In a nutshell the answer is yes. This method of change management is what has become known as strategic change.
Strategic or institutional change is the conduct of drafting, implementing and evaluating cross-functional decision making that will enable an organisation to achieve its long term objectives. It is the process of specifying the organisation’s mission, vision and objectives, developing policies and plans, often in terms of projects and programmes which are designed to achieve these objectives, then allocating resources to implement the policies and plans, projects and programmes.
It is how the organisation responds to these changes which determines its success.
Strategic change gone wrong
In 1985 The Coca-Cola Company’s share lead over its chief competitor had been slowly slipping for 15 consecutive years. Consumer preference for Coca-Cola was dipping, so was consumer awareness.
On April 23, 1985 Coca-Cola took arguably the biggest risk in the history of consumer goods, announcing the first formula change for the world’s most popular softdrink in 99 years.
It spawned extreme consumer angst. The ensuing public protests, boycotts and emptying of bottles in the street saw the company return to the original formula just 77 days after its introduction. Within six months after the brand reverted back to the old formula its sales had increased at more than twice the rate of Pepsi’s and by the end of the year, the company was back into the number one position it has enjoyed ever since.
In the late 1990s, Sergio Zyman, the marketer behind the failed launch of New Coke summed up the experience. “Yes it infuriated the public, cost a ton of money and last only 77 days before we reintroduced Coca-Cola Classic. Still, New Coke was a success because it revitalised the brand and reattached the public to Coke.”
In our own backyard, Cadbury replaced some of the cocoa butter in its chocolate products with palm oil in mid-2009. Despite stating this was in response to consumer demand to improve taste and texture, there was no “new improved recipe” claim placed on New Zealand labels.
Consumer backlash was significant and by August 2009, the company announced it was reverting to the use of cocoa butter in New Zealand and would source cocoa beans through Fair Trade channels. Inside reports suggest the change to palm oil cost Cadbury New Zealand $12 million in sales.
Palm oil is a contentious ingredient with reports blaming its plantations for huge contributions to global warming and intensive habitat destruction leading to the deaths of orang-utans in Indonesia and Malaysia.
Cadbury managing director Matthew Oldham says the decision to go back to using only cocoa butter was in direct response to consumer feedback. “We genuinely believed we were making the right decision, for the right reasons. But we got it wrong.
“Now we’re putting things right as soon as we possibly can, and hope Kiwis will forgive us. Cadbury Dairy Milk’s quality is what’s made it one of New Zealand’s most trusted brands for many years. Changing the recipe put that trust at risk and I am really sorry.”
Strategic change gone right
Kellogg created All-Bran to the fibre sector of the cereal market in the 1930s and the product experienced steady growth throughout the years.
After underspending its competition in marketing and product development, Kellogg’s US marketshare hit a low 36.7 percent in 1983. A prominent Wall Street analyst called it a “fine company that’s past its prime,” and the company was prompted to renew consumer interest.
The company ran a three million pound campaign to urge consumers to re-appraise the products and pumped significant time and effort into market research. The result was identifying existing products which offered the best present and future prospects and the introduction of new products, including Just Right, which remains a popular cereal around the world. The company regained its marketshare and now stands as one of the world’s leading cereal producers.
