Change Management - Understanding change

Case study: Borders' failure to change

Borders (the US book store operator) is a classic example of failure to change. In the mid 1990s after almost 30 years of successfully running bricks and mortar bookstores, Borders were faced with a challenge - the e-commerce revolution had arrived and people were now turning to sites like Amazon to buy their books online instead of visiting a store.

So what did Borders do in response? They invested more money in bricks and mortar stores and outsourced their online sales to Amazon - effectively handing the keys to their biggest competitor. Needless to say, that didn't work out too well and by 2011 they had to shut the doors for good.

For Borders, moving away from bricks and mortar stores to online would have been a huge change that meant totally overhauling the business.

It would also have resulted in huge job losses from the book store staff all the way up to the executives that weren't equipped to take the business into the future - so they opted to stick with what they knew and keep their jobs.

Bottom line, change can be tough, especially when people lose their jobs. But change would have created a whole new set of opportunities for others. Instead, Borders went broke, everyone lost their jobs, and the shareholders lost their money.

Types of change

There are many different types of organisational change, from simple process changes to complete organisational restructures.

• Business acquisition or merger - For example, Organisation A merges with Organisation B. If two or more organisations merge, it often creates large scale change on many fronts including restructures, office moves, systems integrations, cultural changes etc.
• Business expansion - For example, introducing products and services, moving into a new line of business and/or moving into new territories.
• Culture change - For example, shifting towards a more customer oriented workforce through training and new recruits.
• Systems and technology change - For example, introducing a new computer system or new machinery.
• Process improvement - For example, changing the way a service is delivered or a product is manufactured.
• Relocation - For example moving offices.

Why change fails

The sad truth is that even with the best of intentions, a lot of changes fall short of their intended goals, or fail altogether.

Research suggests that at least 50% of change initiatives fail to achieve their objectives - some suggest that number is as high as 70%.

There are many reasons why a change might fail; poor planning, lack of resources or even events outside of the control of the organisation.

Change failure is also generally the result of multiple aspects, not just one major flaw. Two factors that are present in almost every failed change initiative, however, are:

1. A lack of management support for the change
2. Employee resistance to change

We will explore both of these concepts later in this module.