Change Management Scenario
The contemporary business environment is rapidly evolving. Globalization has taken over the organization environment, and with this business is forced to undergo continuous and rapid change driven by increasing stakeholder expectations, new technological advances, and competition that is not only global, but viral (Bendell, 2005). This has resulted in a dramatically different business environment in which the modern business, in order to survive and prosper, is forced to evolve and regularly revise their internal and external business processes. Typically, aggressive and rapid change management systems germinate within the private sector — only after trial and error, testing, and numerous permutations did they become standard within the public sector organization. This paradigm, however, changed in the late 1990s with a combination of rising client expectations to effectively address major socio-culture, economic, and demographic issues, and change in governmental oversight and minimal requirements pushed management in the public sector to adopt more entrepreneurial trends (Choi, 1995; Fairfield, 2001).
Change management within an organization involves a number of variables: internal and external theory management, change planning and specific strategic and tactical methodologies that will ensure the likelihood of long-term success (Culp, 2001). The type of theory, or combination thereof, is dependent upon the organization culture and executive direction, and is as unique as the organization it represents. It is important to note, though, that the combination of globalization and technology have profound effects upon any organization, particularly those that depend on selling to both business and private sectors, like Hewlett-Packard and Home Depot. Technology is now changing the modern organization so fast that it is now far more than geometric. Instantaneous communication is now commonplace, combined with the increased power and memory capability of desk and laptop computers, the ease of global communication, and the accessibility of infromation through the Internet. While the tools of technology clearly increase the depth and complexity of services available, they also increase issues surrounding rapid technological growth — training and retraining, new versions/necessary upgrades, consumer expectations vis a vis improvements in technology, and the new moral and ethical issues surrounding the nature of this technological boom (Sauser, 2002).
Change Management at HP- In the last few years, HP has undergone some important strategic changes that require a new paradigm of both management style and philosophy. In August 2011, HP decided to strategically leave the smartpohone and tablet business to focus more on higher-margin “strategic” goals (Cloud, enterprise solutions, commercial and governmental markets). The company briefly considered selling its personal computer business, but decided that it was too integrated and part of the overall culture that it reaffirmed its commitment to that group. The overall philosophy of HP seemed to say that they cannot serve two masters adequately — the consumer and the corporation. As a result, HP opted for more focus on the corporate accounts, finding that they would need to sell far more, spend more on marketing, and compete heavier for a dwindling consumer margin. If, however, they can refocus energy and expertise on the corporate and governmental market, they can use their infrastructure to refine and redevelop, even selling other third-party platforms and equipment and making a better margin (Robertson, 2011). This goes along quite well with change management theory, in which innovation is typically not clean, neat, or smooth. Instead, by its very nature, it is disruptive to the patterns and procedures within an organization. Often, this disruption takes the form of dissent — meaning that individuals prefer to go in a different direction or pattern than the status quo. The difficulty for most managers, and all levels, is to encourage dissent without feeling threatened by it. As the axiom of a wise CEO said, “I don’t shoot messengers — that’s why I have them” (Goffee and Jones, 1996).
All this change culminated in the appointment of former eBay CEO Meg Whitman to lead HP. Whitman had marching orders and within six months restructured the printing and PC divisions, announced plans to lay off almost 29,000 employees, and want to streamline their operations to use solar energy and other renewable sources while still remaining viable globally (Whittaker, 2012).
HP faces a number of barriers in its bid to reface itself. In trying to beef up its software-and-services function it will run head to head with Oracle and IMB, both of whom have more experience and plenty of money to put up a competitive fight. HP is putting some of its hopes on Europe’s second largest software company, Autonomy, to mitigate some of the barriers it faces now on the global market. Their challenge is indeed global, they will need to optimize the organization so that Whitman can use her skills to navigate the transition period (Kolakowski, 2011; Ricadela, 2012).
Change Management at Home Depot- The global recession and housing downturn post-2007 hurt Home Depot, likely contributing to CEO Robert Nardelli’s exit. Nardelli’s replacement, Frank Blake had to then oversee the layoff of several thousand associates, closing of 54 stores, and sales in 2009 about $20 billion down from previous years. Home Depot, once a strong international presence, has had to close many of its operations in China, while still seeing positive growth in Mexico and South America (Burkitt, 2012).
Despite falling profits that may have had more to do with the external environment than Nardelli, Nardelli’s tenure at Home Depot was fraught with a fight over entrepreneurialism and an exacting, stricter approach. Nardelli’s first job, as he saw it, was culture change for the organization. Essentially, this involved moving the culture into a more professional organization, but one that was in touch with the cultural changes of the new century. This included a more structured approach to modern design, streamlining of the supply chain, increasing awareness of cultural diversity among employees and philanthropic causes, and greater executive managerial control over product placement and pricing strategies (Charan, 2006).
Home Depot’s biggest barrier to change is decided what it wants to be when it “grows up.” Despite research showing that women make up half of its sales, it has not focused on them until recently. It must balance the decline in the housing market and larger contractors with ways to entice women into the store to purchase higher ticket items and use Home Depot’s services in the design paradigm. Blake has focused less on expansion and more on internal performance, believing if the organization can get its stores to perform, expansion will be on the table in the future (Home Depot, Inc., 2012).
Creating and Managing Change at Home Depot- Home Depot has a series of challenges: internal, external, and global. To effectively change the culture, the approach needs to be both top down and bottom up — as contradictory as that seems. Prior to the Nardelli years, most tactical direction flowed up from the stores. Under Nardelli the opposite happened, and his approach learned at General Electric was not really effective for a mega-retailer facing a downward sloping economy. Instead, Nardelli’s approach, while looking good on paper, lost much of the talent that made the company such a success. Looking at effective change for the company, though, we see the following:
Issue
Internal
External
Global
Performance
Without a strong internal focus, HD sales may continue to slide.
HD emerged from the recession with adequate cash and good credit.
China failing, Mexico and South American succeeding.
Growth
Concentrate on internal structure.
Concentrate on improving market share from stores already built.
Rethink the need to be too global too quickly.
Market Perception
What is it that consumers want? Who is your consumer (hint: it isn’t the male contractor).
Why was share lost to Lowes? What can the individual store do to recapture the market?
Find growth opportunities in areas that are actually growing and have strategic value.
Market Leadership
In order to lead the market, HP must decide what it “wants to become.”
Focus on improving image and design, sell more per sq. foot.
Lead in appropriate areas; cut back and save $$ in others.
Culture
Structure the company on its strengths.
Realize the company cannot be a utility company- but depends on consumer trends.
Do not try to be the best at everything, find a niche in the home improvement market.
(Sources: Canacord, 2011;
Change Paradigm — Improve the shopping experience while offering less fluff.
Refocus, refix, rehire, and make the experience of the shopper and employee empowering.
Worry less about titles and more about the progression of careers through solving business and organizational challenges.
Express the message simply — and focus on the 21st century customer.
Ask — what do customer’s want — and remember, “because of the customer, we exist.”
Focus on the “orange apron cult” — success of failure in communicating change will happen at the micro level between the sales association and the customer.
Focus on the digital experience; WOW the customer with up-to-date new technologies that are a big “bang” for a small investment
Price wars cannot be won over time in the 21st century; therefore, Home Depot needs to take the battle to the consumer and win with service and attitude (Aluise, 2012; Cardin, 2011; Tode, 2012).
REFERENCES
Home Depot, Inc. (September 29, 2012). The New York Times. Retrieved from:
http://topics.nytimes.com/top/news/business/companies/home_depot_inc/index.html
Aluise, S. (January 19, 2012). Frank Blake Has Brought Home Depot Home. Investorplace.
Com. Retrieved from: http://investorplace.com/2012/01/frank-blake-has-brought-home-depot-home/
Bendell, T. (2005). “Structuring Business Process Improvement Methodologies.” Total
Quality Management. 16 (8-9): 969-78.
Burkitt, L. (September 14, 2012). Home Depot to Shut Seven China Stores. The Wall Street
Journal. Retrieved from: http://online.wsj.com/article / SB10000872396 390444709004577650512492181658.html
Canaccord, G. (August 17, 2011). Home Depot Outperforms; Future Looks Bright. Futures.
Retrieved from: http://www.futuresmag.com/2011/08/17/home-depot-outperforms-future-looks-bright
Cardin, E. (February 18, 2011). Home Depot CEO Explains. NIQUE.NET. Retrieved from:
Charan, R. (2006). Hope Depot’s Blueprint for Culture Change. Harvard Business Review.
Retrieved from: http://hbr.org/2006/04/home-depots-blueprint-for-culture-change/ar/1
Choi, T. 1(995). Conceptualizing Continuous Improvement: Implications for Organizational Change. Omega, 23(6): 607-624.
Culp, C. (2001). The Risk Management Process: Business Strategy and Tactics. New York:
Wiley.
Fairfiled, J. (2001). Corporate Culture and the Quality Organization. New York: Quorum
Books.
Goffee, R. And Jones, G. (1996). What Holds the Modern Company Together? Harvard Business
Review. Retrieved from: http://mgeiscee.files.wordpress.com/2010/01/b5-goffee.pdf
Kolakowski, N. (August 21, 2011). HP Strategy Faces Immense Challenges, Oracle, IMB.
Eweek.com. Retrieved from: http://www.eweek.com/c/a/Desktops-and-Notebooks/HP-Strategy-Faces-Immense-Challenges-Oracle-IBM-145526/
Ricadela, A. (August 23, 2012). Hewlett-Package Sales Slump Shows CEO Whitman’s
Challenge. Bloomberg Business. Retrieved from: http://www.bloomberg.com/news/2012-08-22/hp-cuts-full-year-forecast-as-pc-and-data-center-revenue-stall.html
Robetson, J. (August 18, 2011). In Nod to IBM, HP Overhall Minimizes Consumers. Yahoo Finance. Retrieved from: http://finance.yahoo.com/news/In-nod-to-IBM-HP-overhaul-apf-707823588.html?x=0
Tode, C. (April 17, 2012). Home Depot Takes Tablet-First Strategy. Mobile Commerce
Daily. Retrieved from: http://www.mobilecommercedaily.com/home-depot-takes-iPad-first-strategy-for-new-style-guide
Whittaker, Z. (September 10, 2012). HP Revises Restructuring. ZDNet. Retrieved from:
http://www.zdnet.com/hp-revises-restructuring-figures-now-cutting-29000-jobs-7000003973/
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