Source: Financial Times, August 26, 2002
Dismantling resistance to change
A-z of Management Restructuring
Restructuring is one of the most traumatic and difficult things a business can do.
Restructuring occurs when the organization is no longer capable of meeting the needs of the business.
Restructuring falls into two types. Proactive restructurings occur when businesses see change coming and attempt to adapt; reactive restructurings are forced on the business.
Emergency restructurings are also employed when the company is losing money.
It can be difficult to change structures because of the psychological identification by employees with the organization. Organization theorist, Chris Argyris, identified what he calls 'defensive routines', actions that employees take in order to resist change.
Sometimes these defensive routines are prompted by fear of change. Other defensive routines are the result of employees believing that the proposed changes are harmful.
Successful restructuring depends on three conditions: sound planning, effective leadership and organizational commitment. These conditions will not guarantee success, but they will reduce the risks.
Source: Financial Times (USA Edition), July 22, 2009
Starbucks' restructuring starts to filter through into results
Starbucks, the coffee retailer, reported improvements in its comparable sales and transaction trends during its third quarter, pushing its shares up almost 10 per cent in after-hours trading.
Howard Schultz, chief executive, said the results showed that a drive to improve the company's performance that has included closing hundreds of stores and working to improve its service was bearing fruit. But he remained cautious about the outlook: 'There is no victory lap going on at Starbucks ... we realise how tough the environment is in terms of the economy ... and we have to be very careful to recognise that the headwind is still in front of us.'
In addition to closing stores and cutting costs, Starbucks has been trying to drive sales to more budget-conscious customers with lower-cost food and drink combinations and discounts for its loyalty-card holders.
It has also been conducting its biggest marketing campaign, aimed at countering what it says in an unjustified popular perception that its prices are too high – at the same time as McDonald's, the fast-food chain, has been promoting its new lower-cost McCafe expresso coffee offerings.
Mr Schultz said there had been an 'unprecedented' level of advertising aimed at coffee consumers in the quarter, which he argued had reinforced Starbucks' own advertising efforts. 'I think we are quite pleased with the fact that the things that we are doing in both in store and out of store are beginning to resonate with our customers.'
Gather information on a restructuring case which is of interest or of importance to you, (e.g. ABN Amro, Philips or a smaller company that you know personally).
Try to find out what the key obstacles were in this situation of organizational change.
In what way(s) was 'resistance to change' managed positively? Or was change not successful at all?
Is Starbucks a company with a new discipline, in being more cost-conscious (in 2010)? What further actions did Starbucks implement to regain position?