4 Shaping and Sustaining Change Ryan McVayPhotodiscThink.docx

4 Shaping and Sustaining Change
Ryan McVay/Photodisc/Thinkstock
Learning Objectives
After reading this chapter, you should be able to do the
following:
1. Describe the major reasons why organizational change
programs fail and succeed.
2. Evaluate how to recruit and empower employees.
3. Analyze the five pillars of successful, sustainable change.
4. Explain the characteristics of built-to-change organizations
that position themselves to successfully sustain
change.
5. Examine useful principles and practices in sustaining change.
wei82650_04_c04_155-206.indd 155 12/15/15 9:44 AM
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Introduction
Nothing is easier than saying words. Nothing is

harder than living them day after day.
—Arthur Gordon
Pretest Questions
1. True/False: Because speed and efficiency are hallmarks of
the American business
system, a short–term fix approach to organizational change is
often successful.
2. True/False: Recruiting experienced individuals to a company
that is planning trans-
formational change is risky because such people tend to resist
change.
3. True/False: Knowledge management is a system in which
organizations sustain
change by making intellectual capital available to employees so
they can continu-
ously learn.
4. True/False: Built-to-change organizations prioritize
temporary competitive advan-
tage over long-term stability by continuously implementing
important changes.
5. True/False: A self-designed organization is one in which
stakeholders choose the
direction of the company.
6. True/False: A common mistake in implementing change
strategy is to reject a
“blockbuster” innovation in favor of small, unexciting changes.

In Chapter 3 we discussed three companies that underwent
significant planned organizational
changes. They are summarized here to illustrate two successful
overall outcomes (Ford and
AlliedSignal/Honeywell) and one unsuccessful change (Avon).
Ford
After working at Ford for 25 years, Alan Mulally retired as CEO
on July 1, 2014—8 years after
leading Ford’s transformation. Chair Bill Ford said, “Alan
deservedly will be long remembered for
engineering one of the most successful business turnarounds in
history. Under Alan’s leadership,
Ford not only survived the global economic crisis, it emerged as
one of the world’s strongest auto
companies” (as cited in Media.Ford.com, 2014, para. 4).
Mulally’s change strategy, “One Ford,” worked. In 2006 Ford
lost $12.7 billion, its worst
performance ever. In 2010, however, the company had net
income of $6.6 billion, its highest
profit in a decade. The stock price was $1.25 a share in 2006
when Mulally came on board;
it closed at $17.21 on the day he retired. In 2011 he was
awarded stock bonuses worth
$56.5 million (Henry, 2011).
After careful research, Mulally targeted major problems at Ford
as “inefficiencies in production,
bad relationships with suppliers, unrealistic delivery dates—and
management that deflected
blame” (as cited in Henry, 2011, “One World, One Plan,” para.
2). With the One Ford strategy, he
reorganized the company’s operations and global managers to
focus on the same agenda.

Mulally’s overall success factors were that he had a compelling
vision for Ford as a mobility
company. He focused on technological innovation (for example,
MyFord Touch entertainment)
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Introduction
across vehicles and led product development with partnerships
in the consumer electronics
industry. This allowed Ford cars and trucks to transform into
mobile centers of entertainment
and communication that grew in concert with smartphones and
social media. Now all major
automakers focus on personal technologies to make cars mobile
entertainment and information
centers (Caldicott, 2014).
Mulally promoted accountability and collaboration across
leadership structures. He also carved
a path for outstanding execution. Ford moved forward with new
product vehicle development,
redesigning the Taurus, Focus, and Fiesta models. Mulally then
streamlined Ford’s products,
removing 97 weak auto products and concentrating on 20. This
resulted in a simpler, leaner
product line that allowed Mulally to focus on and showcase
manufacturing, product development,
and customer service excellence (Caldicott, 2014).

AlliedSignal/Honeywell
During Larry Bossidy’s term as CEO, Honeywell emerged from
a disastrous merger with
AlliedSignal in 1999, when the latter purchased Honeywell for
$14.4 billion. Honeywell operated
in the controls and aerospace business; AlliedSignal was at the
time an aerospace, automotive,
and engineering firm. There was a clash of cultures.
AlliedSignal was overwhelmed with cost
control, which caused it to neglect its long-term investments
and strategic planning. By contrast,
the original Honeywell was known for being customer-centric
and creative, but not for execution.
Bossidy was asked to find a successor who could handle the
challenge of merging the two warring
cultures. In 2002 he took a chance on David Cote, who had
worked under Jack Welch at GE.
Cote’s first step toward a turnaround was to terminate a long-
standing aggressive accounting
policy used by AlliedSignal and Honeywell and adopt a
conservative approach that put both
firms on a more level playing field. Secondly, Cote introduced a
new collaborative strategy for
dealing with Honeywell’s difficult legacy and litigious approach
to solving asbestos lawsuits
and environmental liabilities. Honeywell established a trust for
the claims, making expenses
predictable.
Cote also introduced principles of best practices in all
businesses to stop the conflicts between
the companies. He focused attention on manufacturing practices
in particular, sending

70 managers to a Toyota plant to master output production
methods. The rewards were
described as spectacular. Since 2002 the company’s sales have
grown by 72%, while its head
count only increased by 21% (Tully, 2012). By keeping fixed
costs like labor relatively flat, Cote
generated “operating leverage” that magnified brisk revenue
growth into outsize earnings.
Since 2003 Honeywell has increased sales by 7% each year, and
operating profits have grown by
12% (Tully, 2012).
Cote also excelled at company acquisitions. Honeywell acquired
70 companies. These moves
tripled Honeywell’s profits. In effect, Cote’s collaborative,
detailed, and big-picture approach,
along with his relentless focus on integration, has made him a
change champion at Honeywell
and within its industry.
Avon
Avon Products’ ex-CEO Andrea Jung stepped down in 2011 and
was succeeded by Sherilyn McCoy.
Several large change efforts had faltered and failed under Jung
since 2005 (Martin, 2012), and
Avon’s profits had declined every year since 2008. McCoy said
in 2012:
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Introduction
Avon’s products and pricing were “off target.” Technology and
service “did not
keep pace.” Senior managers were moved so often they couldn’t
gain traction.
Avon doesn’t need yet another new strategy. We need to focus
on the core of
Avon’s business: representatives, consumers and our people.
The challenge
we’re facing didn’t materialize overnight. They developed over
years, and our
solutions will take time as well. (as cited in Martin, 2012,
paras. 23–25)
What went wrong with Jung’s transformation efforts? What led
to her eventual downfall?
Himsel (2014) answered this question by identifying five
“traps.” Trap 1: Jung failed to develop
the agility to factor global scale and local requirements into
decisions. Avon attempted to
manage economies of scale and local customization
requirements with erratic business moves.
First it decentralized the system; then the following year it did
the opposite and went back to
centralized control. This led to the company being unable to
meet customer demands and being
perceived as overly reactive.
Trap 2: Jung did not align organization culture with strategy.
She may have underestimated the
power of culture, which can and did undermine even the
strongest strategy. She failed to evolve
the culture with the strategy.
Trap 3: Jung occasionally refused to hold leaders, including

herself, accountable for controversial
changes and performance-related decisions. When leaders do
not send clear, certain, and
consistent messages and follow-up actions, employees lose
confidence in them.
Trap 4: Jung failed to understand the demands of officers and
leaders when globally integrating
the company. During this transition, Avon needed a CFO who
could improve and consolidate its
financial systems, create consistent financial controls and
processes, and increase margins while
decreasing inventory. Instead, the company hired a CFO
generalist and “deal maker.” These skills
did not match the demands of a company expanding and
integrating into emerging markets.
Trap 5: Jung failed at due diligence and vigilance in having
employees work in “at-risk” global,
emerging markets. The result: Avon paid a $135 million
settlement with the U.S. Securities
Exchange Commission and the U.S. Department of Justice for
allegedly bribing Chinese
government officials. CEOs and their staff must screen and train
new hires to follow corporate
values and codes of law and ethics both at home and abroad
(Kowitt, 2012).
When McCoy took over from Jung in 2011, Avon’s revenue was
$10.7 billion. The loss from
continuing operations was $38 million. In 2014 revenue was
$8.9 billion, and the net loss from
continuing operations was $385 million. Avon’s numbers have
continued to decrease with McCoy
as CEO.

Critical-Thinking Questions
1. What went wrong at Avon, according to this brief case
scenario?
2. As a student of organizational change, identify a few key
concepts you have studied
that would have helped diagnose Avon when its sales began to
decline.
3. Identify a few actions that Mulally took at Ford that helped
turn Ford around at that
time.
4. Identify and briefly state your opinion on a strategic action
that Cote implemented
that helped changed the direction of AlliedSignal and
Honeywell at that time.
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Section 4.1 Failing and Succeeding at Change
Introduction: Back to the Future
Sustaining major organizational changes—that is, ensuring that
planned changes
endure—does not involve “one-shot” or quick-fix solutions.
Embedding change in organiza-
tions requires continuous top-down, bottom-up leadership and
process improvements—
including supportive and innovative actions throughout the

enterprise. The CEO and top-
level team generally define and lead the change, but everyone
must be involved in managing,
re-creating, and rejuvenating the ongoing renewal processes.
The transformational change programs at Ford, AlliedSignal,
and Avon required years to plan
and complete. Looking back at their successes and problems
informs us about the people and
processes used to implement change goals and the initiatives
undertaken in response to dif-
ferent environments.
4.1 Failing and Succeeding at Change
Although some transformational changes may start with a “big
bang,” embedding and sus-
taining them takes time, talent, and effort. Rosabeth Moss
Kanter (2002), Harvard profes-
sor and change expert, noted that effective change is sustained
by “long marches” not “bold
strokes.” In order to revitalize and sustain large-scale changes,
it is important to know some
of the major reasons why changes fail and also what makes
them succeed.
Why Change Programs Fail
There are more than enough reasons why organizational change
programs fail. We previously
discussed some in this text and have selected some of the more
notable ones to discuss here.
Understanding and learning from each of these can prevent
failure and help facilitate strate-
gies and efforts to sustain change. Fletcher and Taplin (2002)
list these reasons why organi-
zational change programs fail:

• Opposition to change
• Failure to recognize the need for change
• Superficial recognition of the need for change
• Failure to systematically implement change
• Short-term fix approach
• Structural impediments to change
• Cultural impediments to change
• Failure to sustain change
Large-scale, planned organizational changes are generally
complex processes that require
expertise and systematic methods that take the entire enterprise
into consideration. Just
as important, the people involved in and affected by the change
must not be excluded. Fail-
ing to communicate with and involve professionals and
employees who are affected by such
changes often creates opposition and resistance.
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Opposition to Change
Change programs are often destined to fail because of the top-
down imposed nature of the pro-
cess (Nohria & Beer, 2000). The following scenario is all too
common: a CEO or top-level team
member gets some new ideas from either talking to friends,
witnessing a change in a competi-

tor, attending a seminar, reading current business trends, or
following a current management
fad. He or she then decides to try something new with a division
or the entire company.
When change is arbitrarily imposed, poorly explained, and
hastily announced from the top, man-
agers and employees can become disillusioned, lose motivation,
and become increasingly resent-
ful and resistant to the change. Their work often changes and
increases, while resources and
attention to quality decreases. Managers in particular are thrown
into confusion when they are
asked to implement and guide changes that are not adequately
explained and for which they
have few or no blueprints or models. Also, when managers are
given little strategic direction or
rationale for implementing change, they typically revert to
emphasizing what they know best:
operational detail that is activity (not goal) driven (Fletcher &
Taplin, 2002).
For example, Friendly’s restaurant chain filed for bankruptcy in
October 2011 (Reuters, 2011).
Although many reasons explain this chain’s failure—including
the slumping economy and the
chain’s debt and financial situation—the lack of a clear
strategic direction was also an issue.
One author described Friendly’s in the following way:
The restaurant smells like a bus station. Food takes a long time
to arrive at the
table, no matter how painfully empty the dining room is. The
salad looks like
it was assembled a few weeks before I ordered it. Only the
nostalgia keeps me

coming back. (Baab-Muguira, 2011, “Times Have Changed,”
para. 3)
Restaurants like Friendly’s, which was founded in 1935, must
continually differentiate themselves
from similar establishments in order to remain competitive in
the marketplace. They must be
sure that the public knows what makes them unique. In 2009
Friendly’s former CEO, Ned Lidvall,
stated that the restaurant’s differentiator was ice cream and that
the lines and definitions of
brands in the industry were starting to blur (O’Brien, 2009).
Friendly’s attempts at competitive-
ness by emphasizing ice cream and other piecemeal marketing
ideas proved unsuccessful.
Failure can also occur when the pur-
pose of the change is not shared by the
people and is, in turn, separated from
the organizational processes required
for implementation. When an affiliate
of the private equity firm Sun Capital
Partners took over Friendly’s restau-
rant chain and filed for Chapter 11
bankruptcy protection in 2011, 1,260
workers, or more than 12% of that
chain’s 10,300 member workforce,
were told one evening they would lose
their jobs the following day. A spokes-
person for Friendly’s at that time
AP Images/Charles Krupa
Unfavorable economic circumstances, competition,
and unsuccessful change to differentiate Friendly’s
from other restaurants contributed to restaurant

closures and bankruptcy.
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stated, “We’re not trying to put people out of jobs. We’re trying
to ensure the future of the com-
pany” (as cited in Hines, 2011). That spokesperson noted that
closed locations were unprofit-
able and that closing those locations would help the company
and its parent, Sun Capital, gain
control over $296 million in outstanding debt (Hines, 2011).
The company survived the painful
downsizing and emerged from bankruptcy, then in 2012 hired
John Maguire, who helped rein-
vent the chain (Pohle, 2015).
Failure to Recognize the Need for Change
In the 1970s and 1980s, CEOs of some of the largest, most
innovative world-class U.S.-based inter-
national firms were entering a period they did not anticipate,
one featuring fierce global compe-
tition and new ways of streamlining operations. IBM, Digital
Equipment Corporation, Polaroid,
and General Motors were still resting on their past successes,
because they believed they could
continue to dominate their industries with bulky hierarchies,
unrealistic overhead costs, and out-
dated operations. As a result, Digital Equipment Corporation
and Polaroid did not survive.

Japanese auto and electronics companies entered the scene with
the first wave of new and
competitively priced products that were made with higher
efficiency operational methods.
The result was 2 decades of radically induced change for all
U.S. industries: total quality man-
agement, just in time, reengineering, and the introduction of
information technology into the
assembly line process.
Failing to recognize the need for change is not relegated to the
past. In 2014 the Huffington
Post published a list titled “9 iconic brands that could soon be
dead” (Jacques, 2014) because
of failure to adjust to contemporary markets, customers, and
business models. These included
Quiznos, JCPenney, Zynga, Red Lobster, BlackBerry, the
Women’s National Basketball Associa-
tion, Volvo, Martha Stewart Living magazine, and Abercrombie
& Fitch (Jacques, 2014).
The inability to recognize the need for change continues to be a
major cause of failed change
programs. Other causes for failure include changes that are
initiated too late to regain com-
petitiveness; are initiated poorly, without proper attention to
how change processes should
be planned; or are not initiated at all.
Superficial Recognition of the Need for Change
Some CEOs and organizations move forward with a change
without the necessary commit-
ment to allot the resources and harness the energy of the entire
enterprise. They believe that
targeting a certain division, business unit, department, program,

or management practice for
change will be enough to solve the problem and generate new
opportunities throughout the
entire organization.
In such instances concern for cost, in terms of time and money,
is the prohibitive factor. In other
instances such shortsightedness may be due to a top-level
individual, team, or dominant coali-
tion’s lack of political or business acumen or some other
limiting capacity. Whatever the spe-
cific reasons for not understanding or taking action on the need
for total change, this general
type of thinking has been characterized as myopic or
nearsighted (Colea & Coltea, 2013)—that
is, top-level leaders are trapped into thinking in terms of the
status quo: “If it isn’t broken, don’t
fix it.” Moreover, leaders do not direct enough attention to
frontline managers, and they do not
focus these managers on specific actions needed to achieve
stated business outcomes.
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When incremental, piecemeal, or selected organizational targets
for limited change are
adopted in place of needed enterprise-wide and transformational
changes, the result is often
loss of resources, time, effort, and competitiveness. For

example, a department in a large uni-
versity organization needs laptops replaced every 4 years on a
revolving basis for eligible
members who sign up for the program well in advance. This is a
change that is not large in
scope and that does not need a complicated plan. At the entire
university level for all depart-
ments, a change plan may be needed.
An example of a successful organizational change that followed
a plan is the United Arab
Emirates’ du Telecom. The firm was started in 2006 and offers
mobile and fixed telephony,
broadband connectivity, and Internet Protocol television to
consumers and businesses. The
company acquired almost 40% of the region’s market share by
2010 and has sustained a 32%
growth rate since.
The company’s strategic capability, planning, and leadership are
factors that contribute to
its success. For example, the firm expanded by joining China’s
Huawei Technologies Co.
Ltd. in 2013. Huawei is a multinational networking and
telecommunications equipment
and services provider. This partnership and du Telecom’s
strategic and tactical expertise
and vigilance have enabled the firm to (a) reduce project
failures; (b) reduce the number
of employees needed per project; (c) lower costs and tighten up
time frames and projects,
which cost less than predicted; and (d) create a single point of
contact to manage projects
(Wang, 2015).
Failure to Systematically Implement Change

Failing to systematically lay out a complete change program and
implement that plan can lead
to catastrophe. Productivity and financial gains are more likely
to be obtained when imple-
mented with a systematic approach (Kaydos, 2015). Companies
that attempt to change one
system without coordinating and aligning complementary
related systems to facilitate the
change generally fail to achieve their original goals.
Examples abound and include airlines that attempt to improve
customer relations by training
flight attendants but not check-in agents; firms that attempt to
decrease time between point-
of-sale and collection of payment by improving sales
professionals’ strategies but do not
change the internal processing of payments; companies that
move marketing content online
to extend their product’s reach to potential customers but do not
create systems to process
online purchases; and so on. When organizations do not study
all the core processes in their
business from the perspective of their new vision and change
goals and do not decide on an
implementation plan that aligns all the major systems, failure is
on the horizon.
Short-Term Fixes
The American capitalist business and financial system is based
on short-term time horizons.
U.S. corporations operate on a quarterly basis and are valued on
both short- and long-term
information. Financial analysts evaluate, predict, and
recommend buys, holds, and sells on
stocks from quarterly reports using past and future trends.
Although speed, efficiency, and

innovation are hallmarks of the American capitalist business
system, the short-term perspec-
tive also can and does contribute to myopic decision making and
short-term fixes (Tanden &
Effron, 2015).
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CEOs and executive teams that rush environmental scanning,
planning, and problem/opportu-
nity diagnosis may run the risk of targeting the wrong problems
and opportunities. Then, the
rush to hasty implementation compounds problems that can
create further failure, including
being left with poorly coordinated and ill-prepared
implementation teams that sacrifice the
quality of implementation; suboptimizing goals (selecting less
than desirable goals so as to
meet time and task completion pressures); and preparing the
change effort for increased
costs, wasted effort, and lack of goal attainment.
Diagnoses and implementation plans that impose a short-term
fix mentality and framework
on a large-scale change program usually suffer the symptoms
described here, as well as other
unintentional consequences that eventually lead to unnecessary
costs and delays, if not failed
goals and wasted time and effort.

Structural Impediments
to Change
Large corporations’ bureaucratic struc-
tures and hierarchies have posed major
obstacles to implementing large-scale
change. In fact, the methods of business
process engineering and reengineering
were revolutionary in that they elimi-
nated unnecessary barriers in all busi-
ness processes and were designed to
decrease time, effort, and costs while
increasing speed and effectiveness in
moving a task from start to finish. Orga-
nizations that begin with structure over
strategy and purpose risk not being
able to transform a company’s vision to
a new state.
Corporations are generally moving toward less structure to
achieve more economies of scale
and effectiveness. As we will discuss in the following section,
alternative solutions to tradi-
tional vertical structures are being used as a result of change
initiatives. Among these alterna-
tive solutions are outsourcing, streamlining business processes,
and experimenting with new
forms of networked structures and communities of shared
competencies.
Cultural Impediments to Change
Resistance to change usually stems from an old culture in which
employees refuse to give up
leaders’ dominant values, assumptions, and norms. The previous
state of the organization may
have worked well in a past environment or era but is no longer

as efficient as it needs to be.
With a new vision and fresh values—and perhaps leaders—new
cultural meanings, lan-
guages, symbols, and experiences must be embedded. When the
change champions and lead-
ers do not pave the way for a shift in the alignment of the
organization’s dimensions and
systems, previous cultural values tend to prevail with some
groups and managers; the status
quo is often the default position, even if it is to the detriment of
the organization.
Jirsak/iStock/Thinkstock
The traditional business hierarchy holds many orga-
nizations back. Companies are beginning to move
away from this structure for greater efficiency.
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Failure to Sustain Change
It has been estimated that 70% of large-scale change initiatives
in companies fail (Colea &
Coltea, 2013). This is due to any one or a combination of the
factors discussed here.
Generally, people settle back into the status quo if they do not
have to change. Change cannot

be sustained if people in an organization maintain a
bureaucratic and functional mind-set
and refuse to adopt new attitudes, beliefs, and behaviors.
Sustaining change requires strong,
committed, and informed leaders who involve others in the
alignment of all an organization’s
systems around the new vision.
Organizing to Succeed at Change
Maintaining an organization’s alignment to a new vision and
future state requires leaders and
followers to keep the organization’s big picture in mind. The
model shown in Figure 4.1 and
discussed in Chapters 1 and 2 provides a useful reminder that
leaders are an integral force at
the outset in guiding the alignment of organizational dimensions
to the new vision and future
state.
Customer Partnership
Transformation
Current to Future State
Customer Satisfaction
Outputs
Customer Requirements
Inputs
Vision and
Strategy

Culture
Nature of
Work
Structure
Technology
People
• Leadership
• Environment
• History
• Resources
Organizational Level
• Competitiveness
• Market share
• Product and service
quality
• Responsibility
(environment and
community)
Group Level
• Synergy
• Performance
• Effectiveness
• Satisfaction
Individual Level
• Performance
• Satisfaction
• Development and

growth
Measurement
Systems
Customer Partnership
Transformation
Current to Future State
Customer Satisfaction
Outputs
Customer Requirements
Inputs
Vision and
Strategy
Culture
Nature of
Work
Structure
Technology
People
• Leadership
• Environment
• History

• Resources
Organizational Level
• Competitiveness
• Market share
• Product and service
quality
• Responsibility
(environment and
community)
Group Level
• Synergy
• Performance
• Effectiveness
• Satisfaction
Individual Level
• Performance
• Satisfaction
• Development and
growth
Measurement
Systems
Figure 4.1: Strategic alignment model
This model offers a way to understand organizational actions
through a process of taking resources into
a system, processing them, and producing outcomes.
Source: Based on Weisbord, M. (1987). Productive workplaces.
San Francisco: Jossey-Bass; and Burke in Howard, A. (Ed.).
(1994).
Diagnosis for organizational change. New York: Guilford Press.

wei82650_04_c04_155-206.indd 164 12/15/15 9:44 AM
Section 4.2 Attracting Talent and Empowering Employees
We provide examples of how leaders in different organizations
and industries use interven-
tions to sustain change to compete in their external
environments while internally empower-
ing their organization’s people and culture.
Check Your Understanding
1. Of all the reasons why change programs fail, which do you
think is the most common? Explain
your reasoning.
2. Choose one of the reasons why change programs fail and
discuss how this knowledge can be
used to help sustain change.
4.2 Attracting Talent and Empowering Employees
A critical task of sustaining change involves continually
attracting, involving, and empowering
the right talent. Because people are an organization’s most
important asset, and leaders can
only get things done through people, revitalizing organizations
requires developing strategies
for leading and managing human capital. Human capital refers
to the skills, knowledge, and
experience of a workforce with regard to people’s value and

cost as invested in and incurred
by an organization (Fitz-enz, 2000). Managing human capital is
a process in which senior
executives spend as much time and energy on acquiring,
allocating, developing, and keeping
their employees (human capital) as they do on other types of
capital (Lawler & Worley, 2006).
Recruiting Talent
Contemporary organizations face a “new world of work” that
challenges and necessitates dra-
matic strategy changes for HR and company leaders (Deloitte
University Press, 2015). HR
departments are particularly challenged by how to recruit,
evaluate, and manage talent. They
must also determine how best to engage, develop, and retain
new professionals and teams,
which is not easy. HR groups are continually rethinking
methods for measuring and moni-
toring the larger organizational culture to attract and interest
professionals. Organizational
change in this regard has become an ongoing process.
Recruiting Through Branding
Hiring the right talent to fit the organization’s new vision,
strategy, and business process can
be challenging. Organizations generally use branding—their
image, reputation, and identity,
or what they are generally known for—to attract new hires.
Highly visible, successful organi-
zations like Google, Microsoft, and Facebook do not worry
about their branding as a recruit-
ing method because they are so well known.
However, smaller, less visible companies need to make more

deliberate attempts to promote
their brand to potential employees, yet few companies seem to
succeed at this strategy. Con-
sequently, it has been recommended that organizations view
their employees or potential
employees as customers. Companies should spend time
conducting marketing analyses to
identify which corporate attributes are most important to the
employees they wish to recruit
and how best to reach those recruits (Hieronimus, Schaefer, &
Schröder, 2005).
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Two McKinsey surveys showed that traditional recruiting
methods focused on job security,
opportunities for creativity and individual growth, and
compensation but that a hiring com-
pany’s intangible and emotional associations appeared to be
strong motivators for potential
recruits (Hieronimus et al., 2005). Whatever techniques are used
to attract and recruit prom-
ising new talent, the McKinsey study concluded that they should
be strongly aligned to the
company’s brand strategy (Hieronimus et al., 2005).
Recruiting Using Social Media
Another recent recruiting method is
to use social media. LinkedIn, Face-

book, Twitter, and YouTube are popu-
lar recruiting sources. For example,
the large online retailer Zappos uses
social media for branding and recruit-
ing. Talent acquisition experts observe
that large employers are using online
job boards and social media combined
with traditional recruiting methods to
post new listings (Drew, 2014).
Recruiting Using a Talent
Mind-Set
Organizations look for talent that can help them ramp up
operations quickly, start new busi-
ness models, and create new roles by acquiring and/or merging
with other companies.
Although companies like General Electric, PepsiCo, and
Colgate–Palmolive are renowned for
their ability to develop top-notch employees and emerging
leaders in their industries, they
are also dedicated to external recruiting (Beeson, 2011).
Part of these firms’ success at external recruiting is their ability
to integrate newcomers
into their established high-performing cultures. Firms that
combine external talent recruit-
ing with internal integration practices are called “talent mind-
set companies” (Beeson,
2011). These companies seamlessly combine talent acquisition
with talent development.
Firms that recruit individuals to fill job positions generally
focus on their job-specific expe-
rience. Talent mind-set companies also pay attention to
candidates’ leadership ability and
prospective career growth. These companies are particularly
interested in the following

characteristics:
• abstract, conceptual thinking ability and ease in handling
ambiguity, which are
needed in strategic thinking;
• risk taking and feeling comfortable taking independent
positions and not going
along with what everyone else in the company thinks; these are
building blocks of
innovation and leading change, even if these characteristics
mean moving an organi-
zation out of its comfort zone in order to implement effective
change;
• empathy and organization knowledge/savvy, which embody
the ability to read
people and situations and to influence peers and coworkers so
that projects and
initiatives can be implemented across organizational
boundaries; and
AP Images/Chris Radburn/Press Association
Social media sites such as LinkedIn are changing the
ways companies recruit new talent.
wei82650_04_c04_155-206.indd 166 12/15/15 9:44 AM

• the ability to set high standards, let go of certain detailed
work, and avoid getting
mired in too much detail or micromanaging, all of which are
important elements of
managing implementation (Beeson, 2011).
Organizational change is generally not an episodic event; it is a
process that involves manag-
ing change on an as-needed basis. Since talent and human
expertise is perhaps an organiza-
tion’s most valued asset, recruiting, engaging, and retaining the
right people is an intricate
part of change.
Empowering Employees for Change
Recruiting the right talent also involves integrating new
employees into the company by
providing opportunities for them to meaningfully participate in
achieving the organiza-
tion’s objectives. Cameron Kauffman (2010), a certified public
accountant, suggests five
areas of employee involvement that she used in her San
Francisco–based firm. We have
adapted these for general business: personal, organizational,
customer, professional, and
community.
Managing Change
Recruiting Talent in the 21st Century
Suppose you are the HR director at a growing e-commerce
company. The company must stay
dynamic to keep up with changing technology and evolving
social attitudes, as well as to be

agile so as to respond to customer demand. Your company has a
good reputation, but the
sales and marketing teams are working to spread the word about
your service.
Leaders can’t change and grow companies on their own—human
capital is among a
company’s most important assets. Organizations need talent to
rebound from a recession
and revamp productivity, start new lines of business, and
acquire or merge with other
companies. Your task is to make sure you have the right people
in place for the job. Your
department starts to look for those with e-commerce,
programming, and general Internet
experience. You need employees who can keep up with the pace
of technological change
and know what role the Internet plays in popular culture.
Naturally, your HR team turns to social media to find web-
savvy candidates. However, you
must pay attention to your company’s mission and values and
understand how they relate to
recruiting.
Discussion Questions
1. How do you stay on top of the hiring game in your industry?
2. How do you use social media to recruit talent?
3. What does it mean to have a talent mind-set?
4. What is a company with a talent mind-set looking for in its
new hires?
(See the end of the chapter for possible answers.)
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Personal employee involvement is achieved through training,
mentoring, and career-development
programs. Organizational involvement includes efforts that
enable employees to participate
in organization-wide visioning, planning, and addressing
generational differences. Employee
customer involvement will differ, depending on the type of
business, but may include meetings
or events with customers and direct interaction, such as having
employees sit in on planning
and focus groups.
Professional development refers to providing employees with
opportunities for personal and
professional growth. This may mean becoming involved with
professional organizations or
associations. Finally, community involvement is achieved by
providing volunteering oppor-
tunities and is often linked to the organization’s corporate
social responsibility initiative
(Kauffman, 2010), which is discussed later in this chapter.
Fortune magazine’s 100 Best Companies to Work For list
provides abundant examples of
personal and professional development available to employees.
The list is published annu-
ally and organizes companies by industry. Companies rigorously
compete for placement on

the list because being selected improves their reputation and
makes their name more rec-
ognizable. There are also extensive marketing benefits for being
recognized for recruiting
top talent. Based on the Trust Index, organizations that submit
their proposals are metic-
ulously evaluated on criteria such as evidence of credibility,
respect, fairness, pride, and
camaraderie. Methods used to evaluate companies include
extensive surveys from employ-
ees and managers and analyses of employee engagement using
criteria from the Trust Index
(Zappe, 2011).
The North Carolina software giant SAS has been on the list for
14 years and was ranked num-
ber one in 2010 and 2011. The company provides many
employee benefits, including on-site
child care, health care, and an employee gym (Zappe, 2011).
SAS ranked number two on the
2014 Top 25 World’s Best Multinational Workplaces list from
the Great Place to Work Insti-
tute. It was also number two on Fortune’s 2014 Best Companies
list and number four on its
2015 list (SAS, 2015).
Finding and involving the right employees is only one aspect of
developing a workforce built
to change. Once the right employees are hired, management
must retain them by creating
an engaging and empowering environment in which to work
(Lawler & Worley, 2006). Right
Management Inc. publishes a global survey each year to
evaluate workplace engagement. A
2015 survey from Deloitte showed that organizational culture
and engagement is a top chal-

lenge for 87% of organizations surveyed, and 50% feel that this
issue is “very important”
(Deloitte University Press, 2015).
Surveys by Right Management, Deloitte, and others suggest that
empowerment (providing
employees with the necessary motivation and autonomy to
achieve great things toward the
organization’s objectives) is achieved through clear reporting
structures, meaningful oppor-
tunities for employees to share their opinions, clear and
understood career opportunities,
and autonomy (Deloitte University Press, 2015).
The purpose of empowerment is to reduce sources of
powerlessness (Styhre, 2004). Power-
lessness is often a trademark of continuous change if an
organization is not prepared. Good
structures for attracting, involving, and retaining the right talent
hedge against this power-
lessness and give an organization tools to sustain and even
shape change.
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Section 4.3 Revitalizing the Five Pillars: Leadership, Strategy,
Culture, Structure, and Systems
1. Explain why talent recruiting and management is an

important part of organizational change.
2. What do you look for in a company as a potential employee?
What qualities must it have to
make you stay long term? Explain your reasoning.
3. What are the similarities and differences in the way you
answered question 1 versus question 2?
4.3 Revitalizing the Five Pillars: Leadership, Strategy,
For a company to shape and sustain growth, it must continually
revitalize the principal ele-
ments that made it strong. Organizations that can survive,
innovate, and compete in changing
environments have leadership teams that must decide whether
and how to continuously
adapt, shape, deconstruct, and/or recreate strategies to match
structure, cultures, technolo-
gies, and the right people. The case study of Alibaba in Chapter
1 presents a road map for
many larger companies going forward.
This section focuses on five principal components that are
integral to any successful company:
leadership, strategy, culture, structure, and systems. What
appears to be changing with regard
to these basic organizational dimen-
sions is not the dimensions themselves
but the flexibility, speed, and continu-
ous improvements required by leaders
and teams to adjust to complex, unsta-
ble external environments. We discuss
these dynamics in this section.

Lessons From the Great
Companies
Although the next generation of
“great” companies may be Google,
Facebook, Amazon, Alibaba, and some
of the sharing economy companies like
Uber and Airbnb, it is still important to
understand lessons from the classic
firms that Jim Collins, author of the best-selling books Built to
Last (Collins & Porras, 1994)
and Good to Great (Collins, 2001), spent 5 years researching.
Collins studied companies that sustained market
competitiveness over 15-year periods. His
findings are relevant to our discussion of how organizations can
sustain change programs to
reach higher levels of competitiveness. Not all organizations
that pursue large-scale change
can or will become great. However, it is worth noting the
principles and practices that underlie
the number of companies that reached and maintained market
dominance for long periods.
The dominant messages regarding how good companies become
great are relevant to sus-
taining effective leadership, strategy, culture, structure, and
systems:
Alexander Hassenstein/DigitalVision/Thinkstock
The five pillars to sustain change—leadership, strat-
egy, culture, structure, and systems—should be at
the core of every successful company.

wei82650_04_c04_155-206.indd 169 12/15/15 9:44 AM
• Level 5 Leadership: The leaders led and worked not with
highly observable
charismatic, loud, or dramatic styles but calmly, quietly,
humbly—even shyly—in
strong-willed ways.
• First Who, Then What: The leaders found and placed the right
people in the
right places and let the wrong people go before setting a new
vision and strategy.
• Confronting Brutal Facts: The great companies and their
leaders confronted
harsh, unflattering truths about the organization, while never
losing faith that
they would prevail in the face of adversity.
• Hedgehog Concept: When a hedgehog faces a predator, it rolls
into a ball. Unlike
the clever fox, the hedgehog’s strategy is surprisingly easy,
repetitive, and effec-
tive. Great companies and their leaders learned and followed
their strengths by
understanding and implementing their (1) passion, (2) what they
could do best,
and (3) what drove their economic engine.

• Culture of Discipline: They developed a culture of discipline
that made hierar-
chies excessive and unnecessary.
• Technology Accelerators: They carefully applied selected
technologies to ignite
and accelerate their transformation—not to define their change.
• The Flywheel: They used the “flywheel” approach to change,
that is, not seeking
a grand, single defining moment or killer application but
relentlessly pushing a
large, heavy flywheel in one direction, turn after turn, until
momentum built to a
point of breakthrough after breakthrough. (Collins, 2001, pp.
13–14)
Although not all of the great companies Collins wrote about
represent exciting or glamorous
industries, their evolutionary journeys and transitions to
greatness are based on combina-
tions of these principles and practices.
Table 4.1 shows the good-to-great companies (which must be
placed in historical context)
along with their respective 15-year cumulative stock market
results. Data include the mul-
tiple times the companies beat the Dow Jones average for that
time period.
Table 4.1: Good-to-great companies in the stock market
Company Times the market Years
Abbott 3.98 1974–1989

Circuit City 18.50 1982–1997
Fannie Mae 7.56 1984–1999
Gillette 7.39 1980–1995
Kimberly–Clark 3.41 1972–1987
Kroger 4.17 1973–1988
Nucor 5.16 1975–1990
Philip Morris 7.06 1964–1979
Pitney Bowes 7.16 1973–1988
Walgreens 7.34 1975–1990
Wells Fargo 3.99 1983–1998
Source: Collins, J. Good to Great. New York: HarperBusiness,
p. 7. Copyright © 2001. Reprinted by permission of Curtis
Brown, Ltd.
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In Table 4.2 the comparison companies of each of the good-to-

great firms are shown in ital-
ics. They are interesting to note because these companies did
not make the leap to greatness.
You may not recognize the comparison firms or even some of
the historically great companies
unless you do a quick Internet search.
Table 4.2: Comparison companies
Good to great Comparison
Abbot Upjohn
Circuit City Silo
Fannie Mae Great Western
Gillette Warner–Lambert
Kimberly–Clark Scott Paper
Kroger A&P
Nucor Bethlehem Steel
Philip Morris R. J. Reynolds
Pitney Bowes Addressograph
Walgreens Eckerd
Wells Fargo Bank of America
Source: Collins, J. Good to Great. New York: HarperBusiness,
p. 8. Copyright © 2001. Reprinted by permission of Curtis
Brown, Ltd.

Interestingly, Wells Fargo survived the financial meltdown in
2008 and its aftermath and is
prospering. Although great firms cannot maintain superior stock
market returns indefinitely,
there is an important and interesting set of leadership and
management principles relevant
to sustaining best practices and change mandates across
industries (Gandel, 2015).
There are other important elements that great companies employ
during times of nearly
unprecedented global economic and political turmoil (Collins,
2001). Their response is rel-
evant to leadership and management seeking to identify and
sustain organizational change
in real time. In uncertain times it is crucial that companies have
core values, which need to be
timeless and consistently preserved to retain their meaning. The
more challenges a company
faces, the more important it is to rely on core values—the
reasons the company exists.
Companies like Proctor & Gamble (P&G), GE, Johnson &
Johnson, and IBM have strong core
values. In addition, these organizations understand that the
caliber of their employees can get
them through any challenge, including the Great Recession.
They know that when problems
arise, people are more important than the plan (Rheingold,
1993).
Revitalizing Leadership
We have seen that leaders must first guide the design and
diagnosis and then implement

change within their organizations. Then they must sustain it. As
integrators, orchestrators,
wei82650_04_c04_155-206.indd 171 12/15/15 9:44 AM
and strategists, leaders have a primary role in keeping the
strategy, culture, structure, and
systems of the organization in alignment. As Porter (1996)
writes, a leader is primarily a
strategist who must choose which customer demands and
industry shifts the company
responds to, while simultaneously maintaining the company’s
unique traits and avoiding any
organizational distractions. The leader is responsible for
teaching those in the organization
about strategy and for setting limits (Porter, 1996).
Leaders as Change Integrators and Orchestrators
Leaders are not only strategists but integrators. They integrate
the organization’s new vision,
mission, and values with its changed strategy, culture, structure,
and systems. A 2010 IBM lead-
ership report acknowledged that leaders should remove the silos
within their organization and
replace them with integrated, cross-functional capabilities (IBM
Global Business Services, 2010).
Take Shelley Nandkeolyar, for example. Nandkeolyar was an e-

commerce group manager at
the kitchen retailer Williams–Sonoma who brought
technological savvy and organizational
integrative understanding to his role. He created a new position
within the company specifi-
cally to improve connections and communication among
operations groups. This change and
others that he led were intended to enhance the speed and
content between groups, which
was achieved.
With continuous change a reality in the current marketplace,
leaders must carefully and cre-
atively orchestrate the facets of the organization, which
includes different cultures, intergen-
erational dynamics, and communication styles (IBM Global
Business Services, 2010). The kind
of creative leadership needed today is not a one-person show. It
requires collective input and
output across the organization. The leader must integrate the
organization to create collec-
tivity through frequent, clear, consistent communication and
then orchestrate its functionality
around the organization’s vision, mission, and values.
Leadership requires the ability to set lim-
its (Porter, 1996), which should be informed by the
organization’s vision, mission, and values.
Take Seagate Technology as an exam-
ple. Seagate is a large manufacturer of
hard drives and other storage solutions
for personal computers. In the 1990s
the lack of integration from Seagate’s
leadership created a fragmented orga-
nization, and communication was poor.
This led to seven separate research and

development (R&D) groups and a lot of
internal competition. Seagate employ-
ees did not communicate or exercise
any common vision or mission.
Then, in 1998 new management
was brought in. CEO Steve Luczo and
COO Bill Watkins worked as part-
ners and integrators. They brought
Seagate together under one vision.
They defined expected performance
AP Images/Paul Sakuma
COO Bill Watkins is pictured with a Seagate product.
Together with CEO Steve Luczo, he worked to trans-
form Seagate Technology from a fragmented organi-
zation to one that was united under one vision.
wei82650_04_c04_155-206.indd 172 12/15/15 9:44 AM
behaviors and integrated organizational goals. They formed
cross-functional teams and led
training that was the same for all employees across the
organization. This integrated approach
allowed Seagate to become a market leader equipped for change
(Clark, 2009).

Leaders of especially large global companies must also decide
how to create a strategy for
their firms (Reeves, Love, & Tillmanns, 2012). A Boston
Consulting Group survey of 120 inter-
national companies across 10 major industry sectors found that
executives knew they needed
to match their strategic processes to the demands of their
competitive environments, but
many still relied on strategic methods that fit more predictable,
stable environments, even
though their environments were highly unstable (Reeves et al.,
2012).
There are calculated decisions executives can make to create
strategies that match their external
environments: These strategies include classical, adaptive,
shaping, and visioning (Reeves et al.,
2012). The shaping type of strategy is more adapted to volatile
environments than the other
three, since shaping strategies embrace shorter planning cycles.
Being flexible is of the utmost
importance, since the strategy is often implemented as a series
of experiments, with few predic-
tors used. Leaders must explore different strategies that match
their competitive environments.
Leaders as Interpersonal Communicators and Motivators
As we consider the difficulty many leaders have with change,
Gilley, McMillan, and Gilley
(2009) suggest a model based on interpersonal skills. They
suggest that a leader’s success
with change may be improved through his or her ability to build
teams, motivate, and com-
municate within the organization.
The Gilley et al. (2009) study noted that leaders’ ability to

communicate, motivate, coach,
build teams, reward, and involve others has been associated
with the successful implemen-
tation of change. The skills of motivation, effective
communication, and team building are
ranked by the study as most important to the rate of success
(Burke & Litwin, 1992; Conner,
1992; Sims, 2002).
More recently, studies show that design-oriented approaches
may be more motivating than top-
down prescribed changes. Companies such IDEO, Innova, and
Intercorp in Peru exemplify this
contemporary thinking in change management. For example,
Brown and Martin (2015) discuss
the logic and process of design thinking and organizational
change. They state that constant
interaction and discussion with the decision maker is more
effective than top-down decisions.
In this type of interaction, the individuals interested in making
a change would approach
the responsible executive early on, stating that they believe
there is a problem that must be
solved. They would ask whether their viewpoint matches that of
the executive (Brown &
Martin, 2015). Following this conversation, strategy designers
would return to present the
possibilities that could be explored, given the definition of the
problem that was previously
discussed with the executive. They would ask to what extent the
possibilities match what the
executive imagined and if any are missing or are nonstarters.
Finally, designers would approach the executive again with a
plan for analyses to be con-

ducted on the possibilities on which they all agreed. They would
ask if the executive would
like to see the analyses run and if any are missing. IDEO uses
this process for product innova-
tion and other organizational changes.
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Leaders as Resource and Change Support Champions
Leaders must provide resources, build a support system for
change agents, reinforce the
development of new skills and behaviors, and stay on course to
sustain implemented changes
(Cummings & Worley, 2015). Financial support for large-scale
change must be administered and
approved from the top, otherwise potential feuds over who gets
which resources can occur at
lower levels. For example, a company that changes its vision by
adding an e-business dimension
to its marketing and product operations must ensure that clear
communication and structural
and skill changes are sustained and supported with adequate
budgets. When such a dramatic
change occurs without the required investment, conflict and
confusion are likely to ensue.
Similarly, sustaining organizational changes also requires
leaders to help key managers build

a support system. Such a system would help followers learn and
develop new skills and
behaviors to keep the changes on course. As with the example
of an organization starting a
new e-business, leaders and managers must ensure that some
employees are trained and
skilled in e-commerce tools and business practices to succeed
both in the e-market and to
integrate the new business with the existing one.
Managing Change
The Qualities of a Change Leader
Suppose you are leading a pet food company that has made
major transformational changes.
You have paid attention to building capability and made sure
the right leaders are in place
to support the change. The infrastructure and processes have
been altered to execute the
change. Company values include a commitment to quality,
which means better scrutiny of
the suppliers and supply chain management. The strategy
includes a modernized rebranding
and a focus on organic ingredients to support company values.
Financial backing has been secured to see the organization
through the new changes.
Feedback and input from staff and stakeholders has been sought
and incorporated into the
plan. The organization’s culture and the functions of its various
units have been aligned to
the common goal. There are open lines of communication, and
as a leader at the top-tier
management level, you have strong relationships with your
management team and new

vendors.
It may seem like everything has been covered, but organizations
must continue to evolve
and adapt to the business environment. Profits are up, but
change is an ongoing process. It is
important to recognize business achievements and reward those
who contributed to them.
The leader’s task at this point is to sustain the positive change.
Discussion Questions
1. Identify a few key roles a leader must take, specifically, in
sustaining change.
2. What must the leader integrate to successfully implement
change?
3. What kinds of capabilities should a leader possess to increase
the likelihood of
success?
4. What additional responsibilities, in general, does the leader
have?
(See the end of the chapter for possible answers.)
wei82650_04_c04_155-206.indd 174 12/15/15 9:44 AM
Revitalizing Strategy

Enterprise or corporate strategies define a purpose and mission
for an organization to sat-
isfy stockholder and stakeholder expectations. They also set a
course to meet the demands of
rapidly changing external environments while accommodating
the needs of internal systems
(Johnson & Scholes, 1993; Reeves et al., 2012). Business-level
strategies define the reasons
why organizations take certain actions to gain a competitive
advantage using their competen-
cies in a specific business.
Operational and functional-level strategies define ways each
part of the business or func-
tional area (marketing, production, sales, R&D) is organized to
deliver corporate and business
unit–level strategic direction (Johnson & Scholes, 1993).
Strategies for continuous change
may also differ from those employed in traditional and other
types of environments.
Different functions within a company may operate in
environments that require various
approaches to their planning (Reeves et al., 2012). For example,
in some functions, optimiz-
ing production might work for that unit, but not for a marketing
and sales department where
digital analytics may be needed to shape strategy to meet those
environmental requirements.
Enterprise strategists, then, would need to manage different
strategic styles and strategies
within the organization.
Kanter (2006) observed several mistakes made in relation to
implementing strategy, espe-

cially at the corporate and/or business levels:
• Rejecting what appear to be small innovations to go after a
“blockbuster”
• Focusing only on new product development, rather than on
new services or
improved processes
• Confusing customers and increasing “internal complexity”
with too many minor
product changes. (pp. 76, 79)
With effective leaders as head strategists, organizations should
broaden their scope and
widen their search when it comes to strategy (Kanter, 2006). An
innovation pyramid approach
would be best; that is, a few large strategies at the top with
clear direction and investment,
many midrange ideas with promise in test stages, and a large
foundation of ideas in develop-
mental stages (Kanter, 2006).
Another important consideration with regard to strategy and
sustaining change is strategic
positioning, or the way in which the organization’s vision and
values align with the strategy.
A company using strategic positioning should gain a
competitive advantage by focusing on its
unique qualities. It should engage in different activities than its
rivals, or if similar activities
must be used, the way of going about them should be different
(Porter, 1996). Porter (1996),
a strategy expert, describes three different sources of strategic
position:

• Variety-based positioning: This type of positioning provides a
small number and
specific type of product or service to a large number of
customers. The strategy
is chosen based on the product or service, rather than by a
customer group. For
example, Jiffy Lube International offers oil changes and other
automotive services.
Before it began providing repair services, the company was a
perfect example of
variety-based positioning as it specialized in one thing: oil
changes. The company
based its strategy on this single service.
wei82650_04_c04_155-206.indd 175 12/15/15 9:44 AM
• Needs-based positioning: This type of positioning fulfills a
large number of
needs for a small number of customers. The strategy is chosen
based on the
demographics of customers rather than the type of product or
service offered. For
instance, IKEA based its strategy on its target customers and
offers them a large
number of home décor products around a certain price point that
meet all of their
needs, including furniture, kitchenware, decorations, and more.

• Access-based positioning: Finally, this type of positioning
fulfills many needs of
many customers in a narrow market. The strategy is based on
customer accessi-
bility. For example, Carmike Cinemas, based in Georgia, only
focuses on small- to
mid-size markets when finding locations for their theaters. The
company bases its
strategy on small-town populations.
Kanter (2006) warns against adopting a strategic focus based
solely on new product devel-
opment. Good ideas may come from any level of the
organization, which is why it is critical
for the leader, as integrator and strategist, to create a fruitful
environment for these ideas to
flourish (Kanter, 2006). One motivation underlying market
positioning is to gain customers’
attention and make emotional contact with them.
A classic example was Avis Rent a Car’s proud claim: “We’re
No. 2, We Try Harder.” It caught
the attention of customers and hurt Hertz’s position as first in
the industry at that time. Avis
was near bankruptcy when the company came up with this
strategy. It succeeded not as a
gimmick or slick marketing slogan, but rather allowed Avis to
shift time, interactions, per-
ceptions, and structures to generate new possibilities with
customers, transform the nature
of the competitive game with Hertz, and even change
consumers’ behavior toward Avis
(Monger, 2012). The strategy led the way for the company to
change its way of doing busi-
ness; Avis did in fact try harder, and it paid off.

Revitalizing Culture
Deloitte research has found that more than half of all business
leaders view culture, engage-
ment, and employee retention as their most urgent challenges
(Bersin, 2015). Culture
counts if an organization is to retain high-quality talent. For
example, Zappos has one of
the most desired value- and innovation-focused cultures in the
online retail industry. The
company has 10 core values, including “embrace and drive
change” and “create fun and a
little weirdness” (Zappos, n.d.). Netflix has a manifesto,
“freedom with responsibility” (as
cited in Zandlicious, 2015). Quicken Loans employs colorful
ideals to guide values (such as
calling back every client the same day). Google uses its 10
things that outline what it believes
(including focusing on users and the idea that great isn’t good
enough). Salesforce promotes
community.
These are not just clichés. Talented employees who have
options in a rising economy do not
stay with companies where the culture does not match their
needs and aspirations.
Organizational cultures may be the most critical yet challenging
factor in successfully navigat-
ing change. Cultures need to accommodate and match the
strategies of the organization and
at the departmental levels. Strong cultures exist when there is
unified understanding and
perspective on what the organization is, what it stands for, and
how it functions. Changing it
is often easier said than done. There are numerous aspects of

culture that can affect an orga-
nization’s ability to handle change, as Senior and Fleming
(2006b) show in Figure 4.2.
Figure 4.2: Capacities for change and culture
The interrelation of organizational leadership, strategy, culture,
structure, and systems must be
managed when revitalizing transformational changes.
Source: Senior, B., & J. Fleming, J. (2006b). Organizational
change (3rd ed.). Essex, UK: Prentice Hall, Figure 4.9, p. 173.
Reprinted by
permission of Pearson Education, Inc., New York, New York.
ORGANIZATION’S
CAPACITY
TO CHANGE
Degree of management’s
openness to new ideas—
especially from below
Degree of willingness to
discuss sensitive
issues openly
Attitudes to
conflict
give people authority and

support them in their actions
Degree to which the
organization’s structure
facilitates change
Attitudes to
experimentation in
processes and products
Attitudes to
sharing information
Attitudes to
criticism
wei82650_04_c04_155-206.indd 176 12/15/15 9:44 AM
ORGANIZATION’S
CAPACITY
TO CHANGE

discuss sensitive
issues openly
Attitudes to
conflict
Degree to which the
facilitates change
Attitudes to
experimentation in
Attitudes to
sharing information
Attitudes to
criticism
• Needs-based positioning: This type of positioning fulfills a
large number of
needs for a small number of customers. The strategy is chosen
based on the
demographics of customers rather than the type of product or

service offered. For
instance, IKEA based its strategy on its target customers and
offers them a large
number of home décor products around a certain price point that
meet all of their
needs, including furniture, kitchenware, decorations, and more.
• Access-based positioning: Finally, this type of positioning
fulfills many needs of
many customers in a narrow market. The strategy is based on
customer accessi-
bility. For example, Carmike Cinemas, based in Georgia, only
focuses on small- to
mid-size markets when finding locations for their theaters. The
company bases its
strategy on small-town populations.
Kanter (2006) warns against adopting a strategic focus based
solely on new product devel-
opment. Good ideas may come from any level of the
organization, which is why it is critical
for the leader, as integrator and strategist, to create a fruitful
environment for these ideas to
flourish (Kanter, 2006). One motivation underlying market
positioning is to gain customers’
attention and make emotional contact with them.
A classic example was Avis Rent a Car’s proud claim: “We’re
No. 2, We Try Harder.” It caught
the attention of customers and hurt Hertz’s position as first in
the industry at that time. Avis
was near bankruptcy when the company came up with this
strategy. It succeeded not as a
gimmick or slick marketing slogan, but rather allowed Avis to
shift time, interactions, per-
ceptions, and structures to generate new possibilities with

customers, transform the nature
of the competitive game with Hertz, and even change
consumers’ behavior toward Avis
(Monger, 2012). The strategy led the way for the company to
change its way of doing busi-
ness; Avis did in fact try harder, and it paid off.
Revitalizing Culture
Deloitte research has found that more than half of all business
leaders view culture, engage-
ment, and employee retention as their most urgent challenges
(Bersin, 2015). Culture
counts if an organization is to retain high-quality talent. For
example, Zappos has one of
the most desired value- and innovation-focused cultures in the
online retail industry. The
company has 10 core values, including “embrace and drive
change” and “create fun and a
little weirdness” (Zappos, n.d.). Netflix has a manifesto,
“freedom with responsibility” (as
cited in Zandlicious, 2015). Quicken Loans employs colorful
ideals to guide values (such as
calling back every client the same day). Google uses its 10
things that outline what it believes
(including focusing on users and the idea that great isn’t good
enough). Salesforce promotes
community.
These are not just clichés. Talented employees who have
options in a rising economy do not
stay with companies where the culture does not match their
needs and aspirations.
Organizational cultures may be the most critical yet challenging
factor in successfully navigat-

ing change. Cultures need to accommodate and match the
strategies of the organization and
at the departmental levels. Strong cultures exist when there is
unified understanding and
perspective on what the organization is, what it stands for, and
how it functions. Changing it
is often easier said than done. There are numerous aspects of
culture that can affect an orga-
nization’s ability to handle change, as Senior and Fleming
(2006b) show in Figure 4.2.
Figure 4.2: Capacities for change and culture
The interrelation of organizational leadership, strategy, culture,
structure, and systems must be
managed when revitalizing transformational changes.
Source: Senior, B., & J. Fleming, J. (2006b). Organizational
change (3rd ed.). Essex, UK: Prentice Hall, Figure 4.9, p. 173.
Reprinted by
permission of Pearson Education, Inc., New York, New York.
ORGANIZATION’S
CAPACITY
TO CHANGE
discuss sensitive
issues openly

Attitudes to
conflict
Degree to which the
facilitates change
Attitudes to
experimentation in
Attitudes to
sharing information
Attitudes to
criticism
Attitude, willingness, and communication are key factors in
successfully navigating change.
Figure 4.2 shows that attitudes toward experimentation and the
willingness to provide auton-
omy and support are most related to the organization’s ability to
change. When information
sharing is encouraged and experimentation is rewarded (even if
it leads to failure), the organiza-
tion will be more flexible and innovative in dealing with
change. Good communication among all
levels of the organization is also a critical success factor.

Employees at all levels should be willing
to discuss sensitive issues without fearing negative
repercussions. Management must be open to
new ideas, and all employees must adopt a positive attitude
toward conflict and criticism.
In the case of a change organization, conflict and criticism are
fruitful tools that help con-
tinuously mold the organization. The attitudes, willingness, and
communication within the
organization work together to facilitate—or resist—change. An
organization seeking to suc-
cessfully navigate change should be careful to evaluate these
factors internally. Take Google,
for example, whose bottom-up culture is one of open
communication and collaboration.
“Googlers” (Google employees) take part in Thank Goodness
It’s Friday forums nearly every
wei82650_04_c04_155-206.indd 177 12/15/15 9:44 AM
week to ask company founders questions and keep an open
dialogue. Google also holds Fixit
forums to discuss company challenges and potential solutions.
This perpetuates a culture of
communication, collaboration, and openness to change.
Attitudes at all levels of the organiza-
tion are receptive, rather than resistant (Corporate Executive

Board, 2009).
A collaborative effort from top to bottom is needed to create a
culture conducive to change.
Organizations that support change, creativity, and innovation
are more natural and integra-
tive and are perpetually forward looking and competitive
(Senior & Fleming, 2006a). Kanter
(2006) suggests that innovations succeed in collaborative
cultures because of connectors, or
individuals who know how to find partners and work effectively
with others.
As in any business function, risk assessment is a valuable tool
to increase efficiency and
improve operations. Cultural risk is the idea that strategy and
culture will be incompatible,
creating a resistance to change. Management should assess
cultural risk to determine the
specific areas of incompatibility and articulate the best course
of action. In some cases culture
may be changed to fit the new strategy, whereas in other cases
the strategy should be changed
to fit the culture (Senior & Fleming, 2006a).
Organizations like IBM and P&G handle change well because
they have created change cul-
tures. Both companies have high levels of employee autonomy
but strong, open channels of
communication. Good ideas are rewarded, whether successfully
implemented or not. IBM, for
example, creates intercontinental teams as needed to address
problems or new opportuni-
ties. These teams are often temporary and make use of virtual
communication technologies.

Change is considered normal and is encouraged in the attitudes
and communication from
both the top down and the bottom up. Collaborative efforts and
openness to new ideas, cou-
pled with a flatter, more responsive structure, allow these
organizations to maintain a com-
petitive advantage and respond quickly and smoothly to change.
Revitalizing Structure
IBM’s top leaders have stated that sharing organizational
knowledge and experience is vital
to a workforce that is open and responsive to change. All
employees should be self-reliant and
equipped to solve problems across the
company, and leaders must know how
to apply employees’ talent and ideas.
However, many companies do not have
the structures or resources to create
an environment conducive to knowl-
edge sharing and collaboration. As
such, they remain in cultural and orga-
nizational silos (IBM Global Business
Services, 2010), a term that describes
specific processes or departments that
work independently of each other with-
out strong communication between or
among them.
Integrated structure and communi-
cation are key. Organizations must
Rawpixel Ltd/iStock/Thinkstock
It is important to create an environment conducive
to openness and collaboration to stimulate growth.

wei82650_04_c04_155-206.indd 178 12/15/15 9:45 AM
avoid the temptation to work in silos. Instead, companies should
encourage mutual learning
through frequent communication and strong interpersonal
connections (Kanter, 2006).
When a company’s departments are too isolated from each
other, they risk losing valuable
opportunities. In the 1990s, for example, while personal care
giant Gillette had success with
the Oral B toothbrush, its appliance unit Braun, and its Duracell
battery unit, it was slow
to introduce a battery-powered toothbrush (Kanter, 2006). In
environments of continuous
change, organizations cannot afford to have segregated
operations. Integrated communica-
tion and shared knowledge within the structure increases
operational efficiencies and helps
the organization manage change.
Processes and systems also need to be flexible and integrated.
Budgets, planning, reviews,
and other processes should be adaptable. Tight processes
discourage and often punish flex-
ibility. BBC, a television network in the United Kingdom,
implemented greater flexibility in

its processes and systems by creating a special reserve fund for
new business ideas. A new
recruit used funds that were designated for a new training film
to create a pilot episode for
a new series, The Office. The show was a phenomenal hit and
was the inspiration for NBC’s
The Office, which premiered in the United States in 2005. The
flexibility of BBC’s processes
allowed new ideas from any level of the organization to be
implemented (Kanter, 2006).
Revitalizing Systems and Processes
The availability of accurate, timely data often makes or breaks
an organization’s capacity for
change. Organizations use IT to assist strategic and operational
decision making to support
and sustain organizational changes. Increasingly large amounts
of complex data are analyzed
for reporting and decision making. Data warehousing and
business intelligence software pro-
vide solutions to the evolving need not only to locate and store
data but also to strategically
apply it to marketing, sales, and competitive analysis
opportunities and issues in the market-
place, especially in support of new organizational changes.
Data warehousing refers to the use of databases that store all
company data, which users
access to create reports and generate answers to what-if
questions (Daft, 2013). Business
intelligence, or data mining, is the process of analyzing data to
make sound strategic deci-
sions (Daft, 2013).
Systems that allow for data warehousing and data mining help

organizations manage large
amounts of data and facilitate both horizontal and vertical
communication. For example,
organizational restructuring uses IT systems to integrate
departments within and across
other functional and expertise areas (like production, R&D,
marketing, and sales). Because
each expertise area can easily share data, the quality and
efficiency of decision making
increases. This is particularly important when an organization is
facing continually changing
environments.
Systems should be designed to facilitate effective control and
decision making. Several types
of systems have been developed for this purpose. For example, a
management informa-
tion system is a computer-based system that provides
information and support for man-
agerial decision making. An executive information system is a
higher level application
that facilitates decision making at upper levels of management
using software. It provides
wei82650_04_c04_155-206.indd 179 12/15/15 9:45 AM
Section 4.4 Sustaining Change: Built-to-Change Organizations
tailored, automatically updated signals and performance
information to management
through executive dashboards, which are easy-to-read digital

information system user
interfaces. The system displays like an automobile’s dashboard
and continuously updates
information about key organizational processes (Sorenson,
2002). With many industries
continually changing, these software and systems capabilities
provide management the
information that is needed to make informed, timely decisions.
Many companies also practice knowledge management, and
some even dedicate whole
departments to this task. Knowledge management refers to
efforts to obtain, categorize,
and make intellectual capital available within a company. It also
describes attempts to cre-
ate a culture that promotes continuous learning and knowledge
sharing. This information
then becomes a foundation that organizational activities can
build on (Holzer & Seok-Hwan,
2004). (For further reference, also see Data, 1999, pp. 46–52;
Mayo, 1998, pp. 34–38; and
Miller, 1999, pp. 42–45.)
1. Which dimensions do you think are more difficult to
revitalize in organizations that need large-
scale change: leadership, strategy, culture, structure, or
systems? Explain your reasoning.
2. Identify an organization recently in the media or business
news that is failing to revitalize the
dimensions listed in question 1. What issues prevent the
organization from doing so?
4.4 Sustaining Change: Built-to-Change Organizations

As we’ve discussed, change is a continuous reality that
successful organizations learn to sus-
tain. In 1942 economist Joseph Schumpeter coined the term
creative destruction, which
describes the industrial transformation that accompanies radical
innovations introduced by
entrepreneurs. These forces sustain long-term economic growth,
even if they destroy estab-
lished companies that had monopoly power (Hughes, 1986).
Richard Foster and Sarah Kaplan (2001) extended this argument
in their book on organiza-
tions, Creative Destruction, Why Companies That Are Built to
Last Underperform the Market—
and How to Successfully Transform Them. They studied more
than 1,000 corporations in
15 industries over 36 years. The companies included old-
economy industries, such as paper
and chemicals, and new-economy industries, like
semiconductors and software. They found
that old-school corporations used management philosophies
rooted in the assumption of
continuity—which meant that they could not change or create
value at the speed and scale
of markets. The technology and processes that enabled their
long-term survival endangered
them in the new economy’s constant need for change. Foster
and Kaplan argued that restruc-
turing corporations to change at the speed and scale of capital
markets, rather than focusing
on changing controls, required more than simple adjustments.
The authors claimed that companies like Johnson & Johnson,
Corning, and GE prevailed over
cultural lock-in (becoming insular and closed) by transforming
their companies, not just slowly

improving them. They argue for radical change strategies such
as creating new businesses;
wei82650_04_c04_155-206.indd 180 12/15/15 9:45 AM
selling, spinning off, or closing businesses and divisions with
slow growth; shutting down out-
dated, ingrown structures and procedures; and creating new
processes, controls, and ways of
thinking. Foster and Kaplan (2001) state that organizations must
be as dynamic and respon-
sive as the markets in order to sustain superior performance and
long-term success.
Less sweeping in their analysis and views on organizational
change, authors Edward E. Lawler
III and Christopher G. Worley (2006) also evaluated
contemporary organizational effective-
ness and developed key practices for creating organizations that
are self-sustaining change.
In their book, Built to Change: How to Achieve Sustained
Organizational Effectiveness, they
define b2change organizations as those that are built with
practices in place to encourage
change, rather than obstruct it. Here we explore several of those
practices in order to iden-
tify ways to sustain and invigorate organizations undergoing
change. Those practices include
seeking competitive advantages by embracing continuous,

sustainable change—based in part
on Fowler’s (2000) concept of a virtuous spiral—as well as
creating structures without jobs,
implementing downward decision making, and leading as a
team.
Seeking Temporary Competitive Advantages
Historically, best practices mandated that in order to be
successful, organizations had to
exhibit stability through strong values, structures, and strategies
(Lawler & Worley, 2006).
Organizations were encouraged to endure and were designed for
alignment and equilibrium
rather than alteration and uncertainty. This led to clearly
defined but inflexible organizations.
They were not equipped to navigate change, let alone grow in
the process.
Stability has a place, and it is useful in developing long-term
competitive advantages (unique
products, ideas, and/or practices that distinguish the
organization within the market). Lawler
and Worley (2006), however, suggest that organizations should
continuously review the short
term and implement temporary competitive advantages one after
another. The basic assump-
tion here is that if change is to be expected, stability will
always be disrupted, so organizations
should focus on short-term strategies. This requires a unique
support system. Human capital,
knowledge, and organization are critical to the success of
temporary competitive advantages
Human and social capital have become critical sources of

competitive advantage as intangible
assets (nonphysical assets that are often not found in the
organization’s accounting records, such
as goodwill, patents, and a skilled workforce) and now make up
more of a firm’s market value. In
1982 tangible assets, like the facility and equipment,
represented 62% of the value of a typical
New York Stock Exchange company, but in 2000 tangible assets
represented only 15% of a com-
pany’s value (Lawler & Worley, 2006). Knowledge and
technology are growing rapidly, increasing
the need for human capital and knowledge within organizations.
Moreover, the very nature of work is being redefined.
Individual work is now primarily
knowledge-oriented and is no longer task-oriented, as the
founder of modern management,
Peter Drucker (1999), stated in the late 1950s. Consider the
significant outsourcing that
takes place today. Many outsourced jobs require advanced
technical knowledge and exper-
tise. Many manual jobs are now performed by machines, which
require human capital to
wei82650_04_c04_155-206.indd 181 12/15/15 9:45 AM
develop and maintain. As our knowledge grows, it must be used
differently by organizations
to develop new competitive advantages (Lawler & Worley,

2006).
Organizational structure itself can
now be a competitive advantage.
Traditional departments—sales,
accounting, and others—are no lon-
ger sufficient. New departments like
total quality management, knowledge
management, and talent management
play a significant role in differentiat-
ing an organization and sustaining
change (Lawler, Mohrman, & Benson,
2001; Lawler & Worley, 2006). Many
of these new departments seem to
focus on the importance of human
capital within the organization—
managing talent and knowledge,
engaging employees, and improving
the workplace environment.
Organizations with these structures understand that the ability
to sustain change starts with
its human capital. Knowledgeable employees must be engaged,
well-managed, and rewarded
properly if the organization is to retain them. Organizations
compete through involving peo-
ple as well as products. Think about the computer technology
industry. Most people would
say that Apple has a competitive advantage over Microsoft—but
why is this the case? Apple’s
human capital has for many years been a significant factor in its
success. Former CEO Steve
Jobs was instrumental in developing new products, strategies,
and vision, often creating the
change in the market (Lawler & Worley, 2006).

Sustaining organizational change was traditionally determined
by a company’s ability to
unfreeze, freeze, and refreeze (Lawler & Worley, 2006; Lewin,
1997). Unfreezing dissolves the
normalcy of the organization, allowing it to then refreeze new
structures and practices. It dis-
rupts one period of stability so the organization can create a
different one. It is a singular event,
which is not the practice of built-to-change organizations
(Lawler & Worley, 2006). These orga-
nizations are successful at sustaining change because they are
designed for continuous change—
by seeking temporary competitive advantages through
structures, strategies, and leadership.
Continuous Change and the Virtuous Spiral
An organization’s ability to strategize well and sustain change
depends on its identity. As the
continuous change model in Figure 4.3 illustrates, a company’s
identity functions as the core,
providing a platform for designing, strategizing, and creating
value.
Identity—or who the organization is and what it stands for—is
traditionally viewed as being
very stable. Here stability is not a hindrance to change, but
rather a prerequisite. An orga-
nization cannot sustain change without first establishing a
strong identity. Identity is most
clearly seen in the organization’s culture and how it is viewed
by the outside world (Hatch
& Schultz, 2002; Lawler & Worley, 2006). Just as your peers,
coworkers, friends, and family
Kuzihar/iStock/Thinkstock

As manual labor becomes more automated, the
workplace’s human element is becoming more
knowledge-based.
Formulating Strategies
Organizational
Identity Adding ValueCreating Design
Figure 4.3: Continuous change model
An organization’s identity is interrelated to its ability to add
value
by creating designs and formulating effective strategies that
lead
to desired change.
Source: Adapted from Worley, C. G., & Lawler, E. E., III.
(2010). Agility and organization
design: A diagnostic framework. Organizational Dynamics,
39(2), 194–204.
Organizational
wei82650_04_c04_155-206.indd 182 12/15/15 9:45 AM

develop and maintain. As our knowledge grows, it must be used
differently by organizations
to develop new competitive advantages (Lawler & Worley,
2006).
Organizational structure itself can
now be a competitive advantage.
Traditional departments—sales,
accounting, and others—are no lon-
ger sufficient. New departments like
total quality management, knowledge
management, and talent management
play a significant role in differentiat-
ing an organization and sustaining
change (Lawler, Mohrman, & Benson,
2001; Lawler & Worley, 2006). Many
of these new departments seem to
focus on the importance of human
capital within the organization—
managing talent and knowledge,
engaging employees, and improving
the workplace environment.
Organizations with these structures understand that the ability
to sustain change starts with
its human capital. Knowledgeable employees must be engaged,
well-managed, and rewarded
properly if the organization is to retain them. Organizations
compete through involving peo-
ple as well as products. Think about the computer technology
industry. Most people would
say that Apple has a competitive advantage over Microsoft—but
why is this the case? Apple’s
human capital has for many years been a significant factor in its
success. Former CEO Steve

Jobs was instrumental in developing new products, strategies,
and vision, often creating the
change in the market (Lawler & Worley, 2006).
Sustaining organizational change was traditionally determined
by a company’s ability to
unfreeze, freeze, and refreeze (Lawler & Worley, 2006; Lewin,
1997). Unfreezing dissolves the
normalcy of the organization, allowing it to then refreeze new
structures and practices. It dis-
rupts one period of stability so the organization can create a
different one. It is a singular event,
which is not the practice of built-to-change organizations
(Lawler & Worley, 2006). These orga-
nizations are successful at sustaining change because they are
designed for continuous change—
by seeking temporary competitive advantages through
structures, strategies, and leadership.
Continuous Change and the Virtuous Spiral
An organization’s ability to strategize well and sustain change
depends on its identity. As the
continuous change model in Figure 4.3 illustrates, a company’s
identity functions as the core,
providing a platform for designing, strategizing, and creating
value.
Identity—or who the organization is and what it stands for—is
traditionally viewed as being
very stable. Here stability is not a hindrance to change, but
rather a prerequisite. An orga-
nization cannot sustain change without first establishing a
strong identity. Identity is most
clearly seen in the organization’s culture and how it is viewed
by the outside world (Hatch

& Schultz, 2002; Lawler & Worley, 2006). Just as your peers,
coworkers, friends, and family
Kuzihar/iStock/Thinkstock
As manual labor becomes more automated, the
workplace’s human element is becoming more
knowledge-based.
Organizational
Figure 4.3: Continuous change model
An organization’s identity is interrelated to its ability to add
value
by creating designs and formulating effective strategies that
lead
to desired change.
Source: Adapted from Worley, C. G., & Lawler, E. E., III.
(2010). Agility and organization
design: A diagnostic framework. Organizational Dynamics,
39(2), 194–204.
Organizational
can distinguish your identity
based on your priorities and
choices, an organization’s
identity can be gleaned by how

it manages conflict and pri-
oritizes its stakeholders and
environment. Organizations
that make their external envi-
ronment and ability to make
strategic adjustments part of
their identity will be able to
sustain change (Lawler & Wor-
ley, 2006).
Once identity is established
and communicated, strategic
intent is the next step in man-
aging continuous change. Stra-
tegic intent refers to the ways
in which the organization
develops its temporary com-
petitive advantages. Good stra-
tegic intent is characterized by
five elements: breadth, aggres-
siveness, differentiation, logic,
and orchestration.
Breadth refers to the broadness of a strategy. For example, P&G
has a broad, global strategy
involving multiple markets and consumer products. The WD-40
company, on the other hand,
has a very narrow strategy and makes only a single type of
lubricant. Aggressiveness is how
an organization grows, interacts with competitors, and creates
new products. Consider the
Coca-Cola versus Pepsi feud for market share, or Apple versus
Microsoft. The Mac versus
PC commercials struck such a chord in highlighting these
products’ consumer rivalries that
many are posted online and are watched by hundreds of

thousands of viewers from around
the world.
Differentiation is the degree to which an organization’s
products and services vary from the
competition. We see this daily in the automotive industry. Each
manufacturer offers unique
vehicle features in an attempt to capture more of the market and
distinguish itself from com-
petitors. Logic refers to the core business model behind the
organization’s revenue, costs,
and profits. Some companies, like Walmart, choose a high-
volume, low-cost model. Others,
like Ferrari, choose a low-volume, high-cost model. Logic
affects the way a company markets
its products and how it interacts with the consumer.
Finally, orchestration is the process of planning and sequencing
different strategies. It is the
way in which the organization predicts and responds to
environmental changes through the
breadth, aggressiveness, and differentiation of its strategies
For example, Southwest Airlines has long relied on a keep-it-
simple strategy: it keeps costs
low, bags fly free, and it has a well-known corporate culture—
promulgated by legendary CEO
wei82650_04_c04_155-206.indd 183 12/15/15 9:45 AM

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