One of the most important aspects of a society is that it must be willing to change in order to continue thriving. “Managing change well is a continuous and ongoing combination of art and science that assures alignment of an organization’s strategies, structures, and processes (Worley and Vick, 2005).” Failure to do so can often result in a stagnation that negatively affects the performance of the individual, company, or country. As such, it is important that society finds a way to enforce a change that will aid it in not only adopting a new behavior, but induce a discouragement of the previous behavior. This process is known as organizational change, which is “[A] field of management theory that focuses on the stages that companies go through as they evolve. The principles of organizational change theory apply to both short- and long-term changes. When you know the general characteristics of the different stages of organizational change, you can adopt strategies appropriate to your own specific circumstances at the stage you’re currently navigating (Gartenstein, 2018).” This process, when used correctly, can help a person or company to overcome a period of stagnation or discourage poor behavior altogether. To understand how this process works, it’s best to see the varying steps that must be taken to enforce organizational change, how this change can be successful, and how it can be detrimental if not used correctly.
The process of organizational changes begins with a term called “unfreezing,” where a problem is located within the culture and then targeted for elimination. “Awareness of a problem may grow out of frustration with an existing system or a crisis that highlights its problems (Gartenstein, 2018).” This could be as simple as a poor habit of forgetting to check if the doors are locked each night after closing, or a much larger problem such as toxic behavior amongst coworkers. Once the problem is found, then it must be dealt with through a “transitional” period. Gartenstein recommends that, “Once you decide on a solution, you must get your staff on board with the changes. Communication is key, as well as listening to and respecting employee questions and concerns. Some of these issues may come from legitimate insights about the proposed innovations, whereas others can grow out of a natural resistance to change (Gartenstein, 2018).” This could mean that a memo is sent out to encourage employees to check the doors each night to see if they’re locked by having a reminder set on their calendars, or serious discussions are held with the staff to highly discourage the toxicity of their behavior lest they have their pay cut or lose their jobs. However, when approaching the situation, be careful not to try and cause more damage. “The best defense against doing no harm is to take a holistic approach. Too often, and with the best of intentions, managers change one facet of the organization without regard for the whole system. Many organizations need to develop better peripheral vision or whole systems thinking in recognition that all parts of the organization are connected directly or indirectly and that tinkering with one component exerts tension on other parts (Worley and Hick, 2005).” When significant progress has been made to eliminate the problem, “refreezing” takes place and the new behavior is permanently set in the culture.
Implementing organizational change has led to great success for multiple companies. The Walt Disney Company, the largest media studio in Hollywood, went through two periods of decline that saw the need to implement organizational change. The first occurred during the 1970s following the death of Walt Disney in 1966. Without the influence of their leader, many of the staff implemented a policy of “What Would Walt Do?” and tried to approach the developmental process of their films and theme park attractions as if he was still alive. However, the lack of innovation put the studio in a period of stagnation that nearly bankrupted the company. In 1984, “Saul Steinberg attempted to take over this company so that he could sell the corporation, in pieces, for more than the stock cost (Howell, 1997).” This, combined with the box office failure of the 1985 animated film The Black Cauldron, led to the ousting of the late Roy Miller as CEO and the subsequent installation of former Paramount CEO Michael Eisner in that position. Utilizing a “singles and doubles” strategy that would see smaller, lower-budget features released every year that would either make a decent profit or minimize losses if it failed, Eisner reinvigorated the company to a new period of unprecedented success during the 1990s. The period of time known as “The Disney Renaissance” saw their movies met with critical acclaim and high box office totals. However, another change was necessitated after Eisner’s tenure saw a saturation of lower-quality movies in the direct-to-video market, the critical and financial failures of several of Disney’s movies, and a change in public tastes from traditional animation towards the computer animation industry launched by Pixar, who’s relationship became strained with Disney. This decline saw the company nearly taken over by Comcast, who “[Proposed] a combination that would unite Comcast’s cable systems, the largest in the nation, with Disney’s film and TV studios and other properties (Fabrikant, 2004).” Soon afterwards, Eisner was ousted and replaced with Bob Iger, who sought to diversify the company’s portfolio that saw the acquisition of the Jim Henson Company, Pixar, Marvel Entertainment, Lucasfilm, and 20th Century Fox, leading to a period of unprecedented success that no other studio has obtained. Both of these periods were only made possible because the company saw a problem (a period of stagnation), transitioned to make changes (the ousting of the people behind the problem), and refroze itself when the problem was solved.
However, there lies a danger from failing to utilize organizational change. Remaining stuck in a period of behavior that could be detrimental in the long run has actually bankrupted companies, one such unfortunate business being the retail video-rental store Blockbuster. “In 2000, Reed Hastings, the founder of a fledgling company called Netflix, flew to Dallas to propose a partnership to Blockbuster CEO John Antioco and his team. The idea was that Netflix would run Blockbuster’s brand online and Antioco’s firm would promote Netflix in its stores. Hastings got laughed out of the room. We all know what happened next. Blockbuster went bankrupt in 2010 and Netflix is now a $28 billion dollar company, about ten times what Blockbuster was worth (Satell, 2014).” At its basis, this failure was because the company was unwilling to change from its brick-and-mortal model and switch to the online market because it thought it was too big to fail. Looking into this further, Blockbuster’s failure lies within its own system. According to Satell, the company relied heavily on late fees from customers that had failed to return their rentals on time, whereas the upstart Netflix offered a monthly subscription service for video rentals that could be sent back at any time. “Netflix proved to be a very disruptive innovation, because Blockbuster would have to alter its business model—and damage its profitability—in order to compete with the startup (Satell, 2014).” From there, the problem could be simply viewed as ego on Blockbuster’s part; it’s profits were high and it was the king of the rental service, so assuming that Netflix could beat them at their own game seemed foolish. Had they recognized this problem and discouraged underestimating the competition, they might have been more willing to make a deal and could have been around today. Instead, they remained frozen in their culture, and found themselves down to all but one store today.
References:
Worley, C., and Hick, Y. (2005). Leading and Managing Change. Graziado Business Review. Retrieved from https://gbr.pepperdine.edu/2010/08/leading-and-managing-change/. Accessed February 12, 2019.
Gartenstein, D. (June 27, 2018). What is the Meaning of Organizational Change? Chron. Retrieved from https://smallbusiness.chron.com/meaning-organizational-change-35131.html. Accessed February 12, 2019.
Howell, Pamela (January 1, 1997). Walt Disney Company: The 1984 Attempted Takeover and the Recovery Plan Devised by Michael Eisner. Western Kentucky University. Retrieved from https://digitalcommons.wku.edu/cgi/viewcontent.cgi?article=1053&context=stu_hon_theses. Accessed February 12, 2019.
Fabrikant, G. (April 29, 2004). Comcast Pulls Disney Bid Off the Table, And Wall Street Breaths a Sigh of Relief. The New York Times. Retrieved from https://www.nytimes.com/2004/04/29/business/comcast-pulls-disney-bid-off-the-table-and-wall-street-breathes-a-sigh-of-relief.html. Accessed February 12, 2019
Satell, G. (September 5, 2014). A Look Back At Why Blockbuster Really Failed And Why It Didn’t Have To. Forbes. Retrieved from https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-and-why-it-didnt-have-to/#2ff6e7731d64. Accessed February 12, 2019.
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