Sometimes even the most successful companies need to go through organizational change in order to continue their success. But it’s rarely an easy process and 70% of transformation programs fail. There are many reasons why a company may decide to undergo major organizational changes. Below are a few examples:
- New technology – Technology is constantly evolving and oftentimes your company must evolve with it – whether internally or externally. This can include implementing a new HR system, or innovating your product offerings.
- Competition – Even if your company doesn’t change with the times, you can bet that your competition will.
- Changes in management – When new managers come on board, it can often result in changes of policy or direction.
- Poor performance – If your company is not performing well, some organizational changes may be in order.
In this article, we’ll look at three companies who have either successfully implemented organizational changes, or are currently in the process of doing so.
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Microsoft is one of those companies that is continuously evolving – both internally and externally. One of their most notable recent changes came from a product innovation involving their Microsoft Office offerings. In 2016, Microsoft decided to reorganize its Office unit to combine everything into one application as opposed to selling individual products. The company combined PowerPoint, Word and Sway into one app, and Excel and Access in another.
The idea behind the move, according to Julie Larson-Green, Chief Experience Officer for Microsoft’s Applications and Services group, was to “think more broadly and more deeply about the future of those technology areas and the future of that kind of content creation rather than focusing so much on the individual applications themselves.”
For Microsoft employees, this innovation meant that instead of being divided into product groups (ie: one group for Exel, one group for PowerPoint, etc), they would be divided up according to consumers’ tasks. For example, one group would be focusing on presentations and content creation, and another on analytics and reporting tools, etc.
Shell went through some major changes in 2004, after the oil crisis. The company hired a new Chairman, Jeroen Van Der Veer, who started a company-wide transformation known as Downstream-One.
Downstream-One was an IT initiative that implemented global standardized processes, affecting 80 Shell operating units. The goal was to put simpler, standard processes in place, which included everything from common invoicing to more centralized distribution networks.
A team of experts, including senior leaders and external change experts, were chosen to lead the change. The messaging behind Downstream-One was that what was best for Shell globally took precedence over local, individual needs, and that the only way for the company to move forward was to put forth these changes.
As a result of Downstream-One, Shell’s staff now has the ability to access the same company-wide system, with consistent data and processes and a uniform basis for reporting.
With Van Der Veer’s determination, Downstream-One was a success and the company is currently in a healthier position than when the transformation first began.
While Wal-Mart is currently undergoing a major organizational change since acquiring Jet.com, it’s certainly worth mentioning how their efforts are going thus far. In September 2016, the acquisition was completed and by the end of January 2017, hundreds of layoffs were made. Jet.com’s founder, Marc Lore, has reportedly been studying the way Wal-Mart is run, both internally and externally, and from all appearances, some major changes are in the works.
According to an internal memo obtained by CNBC, Wal-Mart’s president and CEO Doug McMillon wrote that “we need more speed and less bureaucracy” and said that the elimination of positions is part of the effort “to stay lean and fast.” He added that although there would be layoffs, new positions would also be created.
Since Wal-Mart began as a traditional brick-and-mortar retailer, it makes sense that with their growing online presence, as well as the online presence of their competitors (e.g. Amazon), changes within the organization would be needed. One example is with their leadership teams. Many consumers now shop both online and in-store, resulting in integrating leaderships teams that once may have been separate operational divisions, to one.
As Wal-Mart dives further into the e-commerce world, changes to their organizational structure will only continue.
Implementing Organizational Changes
Managing change effectively requires a seamless transition of the organization from its current state to the desired future state. For both Microsoft and Shell, the changes we chronicled above seemed to transition smoothly, however, this is not always the case. Wal-Mart’s layoffs and creation of new positions after their acquisition, for example, may not be as seamless – only time will tell. Implementing changes within any organization is without a doubt a difficult process, but there are some key things you can do to make the transition easier:
- Define your goals. Make sure you understand where your company is currently and where you want to take it. According to Inc, you should identify the problems your company is facing, assign a level of importance to each one, and assess what changes are needed to solve the problems.
- Communicate your goals. Your team members are more likely to embrace changes when they are made aware of what is happening, and why. Be transparent and communicate your company’s vision to ensure everyone is on the same page. According to a Robert Half study, 65 percent of managers said that communication was the most important aspect of leading a team through a transition.
- Make sure the transition is managed effectively. You will likely need to draw up a plan, allocate resources, and assign a key person to lead the process.
The Robert Half Management Resources highlighted some change management Dos and Don’ts:
- Communicate early
- Consider the volume of communication
- Manage expectations
- Bring in project professionals for specific expertise and to reduce the burden on your staff members
- Communicate the benefits for your team
- Recognize the implementation is only the start; the new process is th ebeginning of your company’s future and requires ongoing communication and training for employees
- Celebrate success and reward those involved
- Leave employees out of the loop and let rumors spread
- Share limited information or, conversely, overwhelm people with irrelevant details
- Sugarcoat issues or set unrealistic goals and timelines
- Overload staff, expecting them to help with the transition in addition to maintaining peak performance with their core responsibilities
- Forget the success of your business — and every initiative supporting it — is dependant on your employees
- Stop communicating after the change is implemented
- Fail to acknowledge staff contributions