{"id":948,"date":"2019-04-26T18:15:11","date_gmt":"2019-04-26T18:15:11","guid":{"rendered":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/?post_type=chapter&#038;p=948"},"modified":"2024-04-24T22:42:26","modified_gmt":"2024-04-24T22:42:26","slug":"internal-change-management","status":"publish","type":"chapter","link":"https:\/\/courses.lumenlearning.com\/wm-organizationalbehavior\/chapter\/internal-change-management\/","title":{"raw":"Internal Change Management","rendered":"Internal Change Management"},"content":{"raw":"<div class=\"textbox learning-objectives\">\r\n<h3>Learning Outcomes<\/h3>\r\n<ul>\r\n \t<li>Discuss internal change management and learning organizations<\/li>\r\n<\/ul>\r\n<\/div>\r\n<img class=\"alignright wp-image-1448\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4052\/2019\/04\/27222806\/800px-Amazon_logo.svg_.png\" alt=\"Amazon company logo \" width=\"302\" height=\"91\" \/>Amazon always seems to be among those companies that we talk about when we want to cite a good example of how to do business. But change looms like a threat in the background even when a company is setting standards for others, and Amazon is no exception.\r\n\r\nIn August of 2017, Amazon purchased Whole Foods Market, and it immediately became a player in the $840 billion grocery industry. Amazon made the move to compete with players like Walmart, who did business both in the ecommerce and brick-and-mortar space. Grocery and retail stocks saw a downward tumble as investors immediately saw Amazon becoming the big fish in this industry. But everyone was surprised, and now, more than a year later, we still don\u2019t hear anything worthwhile coming out of the merger.\r\n\r\n<img class=\"alignright wp-image-1449\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4052\/2019\/04\/27222932\/Whole_Foods_Market_2018_Logo.png\" alt=\"Whole Foods logo \" width=\"299\" height=\"299\" \/>What we do hear, however, are stories about Whole Foods employees crying in the aisles of their stores, responding emotionally and unfavorably to the new rules and regulations imposed upon them by the online giant. Scorecards are used to measure\u2014and even terminate\u2014employees and customers are screaming at the sight of their poorly stocked shelves. A merger that would allow Amazon to grow outside of the Ecommerce arena and create additional buying power (and selling power) for Whole Foods looks to be stumbling, if not faltering entirely. What\u2019s the issue?\r\n\r\nThe issue is culture\u2014or, more specifically, the lack of a successful blend of the cultures of two very different companies.\r\n\r\nAs we mentioned earlier, Whole Foods\u2019 organizational structure was team-based, with teams answering to themselves and to each other. Amazon, on the other hand, has a structure that\u2019s rooted in manufacturing bureaucracy, functioning with military-like precision and not leaving much room for autonomy. It should not have come as a surprise that the two cultures would clash.\r\n\r\nWhole Foods is a small part of Amazon\u2019s business but a large part of their future strategy and a lot is riding on their ability to make this merger work. Still, the odds are against them: between 70 and 90 percent of mergers fail and it\u2019s easy to see why considering amount of change has to be managed by the companies involved.\r\n\r\nIf Amazon were to adopt some of the habits of a learning organization and incorporate those behaviors into their change management strategy overall, some of these merger issues could have been avoided, or at least anticipated. Let\u2019s take a look at how learning organizations prepare themselves for change.\r\n<div class=\"textbox tryit\">\r\n<h3>Practice Question<\/h3>\r\nhttps:\/\/assess.lumenlearning.com\/practice\/f735f770-7e76-46bb-bf57-c8e12f374797\r\n\r\n<\/div>\r\n<h2>Learning Organizations<\/h2>\r\nLearning organizations are the result of looking for new ways to successfully respond to a world of interdependence and change, and the ideal learning organization has developed the continuous capacity to adapt and change. The characteristics of a learning organization:\r\n<ul>\r\n \t<li>There exists a shared vision which everyone agrees on<\/li>\r\n \t<li>People discard old ways of thinking and standard routines<\/li>\r\n \t<li>Members think of all organizational processes, activities, functions and interactions with the environment as part of a system with interrelationships<\/li>\r\n \t<li>People openly communicate with each other across vertical and horizontal boundaries without fear of criticism or punishment<\/li>\r\n \t<li>Personal self-interests and fragmented departmental interests are sublimated to the organization\u2019s shared vision<\/li>\r\n<\/ul>\r\nThis is easier to say than it is to do, but I think we can agree that most of these aspects of a learning organization are not in place where Amazon and Whole Foods are concerned.\r\n\r\nTypical organizations address problems with single-loop learning, where errors are corrected using past routines and present policies. Learning organizations, however, have adopted double-loop learning\u00b8 where errors are corrected by modifying the organization\u2019s objectives, policies, and standard routines.\r\n\r\nFurthermore, learning organizations are meant to be a remedy for three fundamental problems inherent in traditional organizations: fragmentation, competition, and reactiveness.\r\n\r\nFragmentation refers to the specialization within an organization that creates walls and silos. This fragmentation separates different functions into independent areas that often bicker with one another. Amazon is, in itself, a silo, with a rigid culture based on discipline and prescribed rules and regulations. Rather than reviewing and negotiating Whole Foods\u2019 culture, they went about operating the grocery chain with Amazon rules \u2013 including scorecards and regulations. Amazon has inadvertently created an \u201cus\u201d and \u201cthey\u201d with their actions.\r\n\r\nCompetition in an organization undermines collaboration. Managers compete to show who is right, who knows more, who is the most powerful. Whole Foods workers were used to having a lot of autonomy in their actions, negotiating face-to-face with customers and making educated decisions about how to go about their work. Amazon\u2019s new rules and regulations will spike competition by presenting these new measurements and regulations by which Whole Food employees are evaluated.\r\n\r\nFinally, reactiveness misdirects management\u2019s attention to problem solving rather than creation. It remains to be seen how Amazon will respond to their faltering relationship with their adopted child. Experts agree that performance in 2019 will be key to Amazon\u2019s future success in the grocery space, but will they be able to get this unstable ship moving in the right direction to do so? The managers of both companies have the opportunity to create something new, but if they\u2019re addressing problems at every turn rather than innovating, reactiveness will thwart their efforts.\r\n\r\nOrganizations can make an effort to become a learning organization. Changing an organization to be a continual learner includes:\r\n<ul>\r\n \t<li><strong>Establishing a strategy:<\/strong> a commitment to change, innovation and continuous improvement<\/li>\r\n \t<li><strong>Redesign the organization\u2019s structure:<\/strong> formal structures can impede learning, so flattening the structure and putting teams into place increase cross-functional communication and eliminate boundaries<\/li>\r\n \t<li><strong>Reshape the organization\u2019s culture:\u00a0<\/strong>management must change its behavior as well as its strategy to embrace risk and change<\/li>\r\n<\/ul>\r\nAmazon isn\u2019t going to wake up one morning, look at their faltering brick-and-mortar grocery sales, and say, \u201cHey, let\u2019s become a learning organization and make this work.\u201d Becoming a learning organization isn\u2019t the solution to their problem\u2014skillful change management is what\u2019s needed. But organizations have thought about how to avoid what\u2019s happening with the Amazon\/Whole Foods merger and concepts like learning organizations are what results from it.\r\n<h2>References<\/h2>\r\n<p class=\"hanging-indent\">Gelfand, Michele, Sarah Gordon, Chengguang Li, Virginia Choi, and Piotr Prokopowicz. \"One Reason Mergers Fail: The Two Cultures Aren't Compatible.\" Harvard Business Review. October 02, 2018. Accessed May 20, 2019. <a href=\"https:\/\/hbr.org\/2018\/10\/one-reason-mergers-fail-the-two-cultures-arent-compatible\" target=\"_blank\" rel=\"noopener\">https:\/\/hbr.org\/2018\/10\/one-reason-mergers-fail-the-two-cultures-arent-compatible<\/a>.<\/p>\r\n<p class=\"hanging-indent\">Henage, Michael. \"3 Reasons For Amazon To Reconsider Its Whole Foods Strategy.\" Seeking Alpha. February 26, 2019. Accessed May 20, 2019. <a href=\"https:\/\/seekingalpha.com\/article\/4244216-3-reasons-amazon-reconsider-whole-foods-strategy\" target=\"_blank\" rel=\"noopener\">https:\/\/seekingalpha.com\/article\/4244216-3-reasons-amazon-reconsider-whole-foods-strategy<\/a>.<\/p>\r\n<p class=\"hanging-indent\">Ladd, Brittain. \"Was Acquiring Whole Foods Amazon's 'Bridge Too Far'?\" Forbes. December 20, 2018. Accessed May 20, 2019. <a href=\"https:\/\/www.forbes.com\/sites\/brittainladd\/2018\/12\/20\/was-acquiring-whole-foods-amazons-bridge-too-far\/#59306e801638\" target=\"_blank\" rel=\"noopener\">https:\/\/www.forbes.com\/sites\/brittainladd\/2018\/12\/20\/was-acquiring-whole-foods-amazons-bridge-too-far\/#59306e801638<\/a>.<\/p>\r\n<p class=\"hanging-indent\">Meyer, Pauline. \"Amazon.com Inc.'s Organizational Structure Characteristics (An Analysis).\" Panmore Institute. February 16, 2019. Accessed May 20, 2019. <a href=\"http:\/\/panmore.com\/amazon-com-inc-organizational-structure-characteristics-analysis\" target=\"_blank\" rel=\"noopener\">http:\/\/panmore.com\/amazon-com-inc-organizational-structure-characteristics-analysis<\/a>.<\/p>","rendered":"<div class=\"textbox learning-objectives\">\n<h3>Learning Outcomes<\/h3>\n<ul>\n<li>Discuss internal change management and learning organizations<\/li>\n<\/ul>\n<\/div>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-1448\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4052\/2019\/04\/27222806\/800px-Amazon_logo.svg_.png\" alt=\"Amazon company logo\" width=\"302\" height=\"91\" \/>Amazon always seems to be among those companies that we talk about when we want to cite a good example of how to do business. But change looms like a threat in the background even when a company is setting standards for others, and Amazon is no exception.<\/p>\n<p>In August of 2017, Amazon purchased Whole Foods Market, and it immediately became a player in the $840 billion grocery industry. Amazon made the move to compete with players like Walmart, who did business both in the ecommerce and brick-and-mortar space. Grocery and retail stocks saw a downward tumble as investors immediately saw Amazon becoming the big fish in this industry. But everyone was surprised, and now, more than a year later, we still don\u2019t hear anything worthwhile coming out of the merger.<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignright wp-image-1449\" src=\"https:\/\/s3-us-west-2.amazonaws.com\/courses-images\/wp-content\/uploads\/sites\/4052\/2019\/04\/27222932\/Whole_Foods_Market_2018_Logo.png\" alt=\"Whole Foods logo\" width=\"299\" height=\"299\" \/>What we do hear, however, are stories about Whole Foods employees crying in the aisles of their stores, responding emotionally and unfavorably to the new rules and regulations imposed upon them by the online giant. Scorecards are used to measure\u2014and even terminate\u2014employees and customers are screaming at the sight of their poorly stocked shelves. A merger that would allow Amazon to grow outside of the Ecommerce arena and create additional buying power (and selling power) for Whole Foods looks to be stumbling, if not faltering entirely. What\u2019s the issue?<\/p>\n<p>The issue is culture\u2014or, more specifically, the lack of a successful blend of the cultures of two very different companies.<\/p>\n<p>As we mentioned earlier, Whole Foods\u2019 organizational structure was team-based, with teams answering to themselves and to each other. Amazon, on the other hand, has a structure that\u2019s rooted in manufacturing bureaucracy, functioning with military-like precision and not leaving much room for autonomy. It should not have come as a surprise that the two cultures would clash.<\/p>\n<p>Whole Foods is a small part of Amazon\u2019s business but a large part of their future strategy and a lot is riding on their ability to make this merger work. Still, the odds are against them: between 70 and 90 percent of mergers fail and it\u2019s easy to see why considering amount of change has to be managed by the companies involved.<\/p>\n<p>If Amazon were to adopt some of the habits of a learning organization and incorporate those behaviors into their change management strategy overall, some of these merger issues could have been avoided, or at least anticipated. Let\u2019s take a look at how learning organizations prepare themselves for change.<\/p>\n<div class=\"textbox tryit\">\n<h3>Practice Question<\/h3>\n<p>\t<iframe id=\"assessment_practice_f735f770-7e76-46bb-bf57-c8e12f374797\" class=\"resizable\" src=\"https:\/\/assess.lumenlearning.com\/practice\/f735f770-7e76-46bb-bf57-c8e12f374797?iframe_resize_id=assessment_practice_id_f735f770-7e76-46bb-bf57-c8e12f374797\" frameborder=\"0\" style=\"border:none;width:100%;height:100%;min-height:300px;\"><br \/>\n\t<\/iframe><\/p>\n<\/div>\n<h2>Learning Organizations<\/h2>\n<p>Learning organizations are the result of looking for new ways to successfully respond to a world of interdependence and change, and the ideal learning organization has developed the continuous capacity to adapt and change. The characteristics of a learning organization:<\/p>\n<ul>\n<li>There exists a shared vision which everyone agrees on<\/li>\n<li>People discard old ways of thinking and standard routines<\/li>\n<li>Members think of all organizational processes, activities, functions and interactions with the environment as part of a system with interrelationships<\/li>\n<li>People openly communicate with each other across vertical and horizontal boundaries without fear of criticism or punishment<\/li>\n<li>Personal self-interests and fragmented departmental interests are sublimated to the organization\u2019s shared vision<\/li>\n<\/ul>\n<p>This is easier to say than it is to do, but I think we can agree that most of these aspects of a learning organization are not in place where Amazon and Whole Foods are concerned.<\/p>\n<p>Typical organizations address problems with single-loop learning, where errors are corrected using past routines and present policies. Learning organizations, however, have adopted double-loop learning\u00b8 where errors are corrected by modifying the organization\u2019s objectives, policies, and standard routines.<\/p>\n<p>Furthermore, learning organizations are meant to be a remedy for three fundamental problems inherent in traditional organizations: fragmentation, competition, and reactiveness.<\/p>\n<p>Fragmentation refers to the specialization within an organization that creates walls and silos. This fragmentation separates different functions into independent areas that often bicker with one another. Amazon is, in itself, a silo, with a rigid culture based on discipline and prescribed rules and regulations. Rather than reviewing and negotiating Whole Foods\u2019 culture, they went about operating the grocery chain with Amazon rules \u2013 including scorecards and regulations. Amazon has inadvertently created an \u201cus\u201d and \u201cthey\u201d with their actions.<\/p>\n<p>Competition in an organization undermines collaboration. Managers compete to show who is right, who knows more, who is the most powerful. Whole Foods workers were used to having a lot of autonomy in their actions, negotiating face-to-face with customers and making educated decisions about how to go about their work. Amazon\u2019s new rules and regulations will spike competition by presenting these new measurements and regulations by which Whole Food employees are evaluated.<\/p>\n<p>Finally, reactiveness misdirects management\u2019s attention to problem solving rather than creation. It remains to be seen how Amazon will respond to their faltering relationship with their adopted child. Experts agree that performance in 2019 will be key to Amazon\u2019s future success in the grocery space, but will they be able to get this unstable ship moving in the right direction to do so? The managers of both companies have the opportunity to create something new, but if they\u2019re addressing problems at every turn rather than innovating, reactiveness will thwart their efforts.<\/p>\n<p>Organizations can make an effort to become a learning organization. Changing an organization to be a continual learner includes:<\/p>\n<ul>\n<li><strong>Establishing a strategy:<\/strong> a commitment to change, innovation and continuous improvement<\/li>\n<li><strong>Redesign the organization\u2019s structure:<\/strong> formal structures can impede learning, so flattening the structure and putting teams into place increase cross-functional communication and eliminate boundaries<\/li>\n<li><strong>Reshape the organization\u2019s culture:\u00a0<\/strong>management must change its behavior as well as its strategy to embrace risk and change<\/li>\n<\/ul>\n<p>Amazon isn\u2019t going to wake up one morning, look at their faltering brick-and-mortar grocery sales, and say, \u201cHey, let\u2019s become a learning organization and make this work.\u201d Becoming a learning organization isn\u2019t the solution to their problem\u2014skillful change management is what\u2019s needed. But organizations have thought about how to avoid what\u2019s happening with the Amazon\/Whole Foods merger and concepts like learning organizations are what results from it.<\/p>\n<h2>References<\/h2>\n<p class=\"hanging-indent\">Gelfand, Michele, Sarah Gordon, Chengguang Li, Virginia Choi, and Piotr Prokopowicz. &#8220;One Reason Mergers Fail: The Two Cultures Aren&#8217;t Compatible.&#8221; Harvard Business Review. October 02, 2018. Accessed May 20, 2019. <a href=\"https:\/\/hbr.org\/2018\/10\/one-reason-mergers-fail-the-two-cultures-arent-compatible\" target=\"_blank\" rel=\"noopener\">https:\/\/hbr.org\/2018\/10\/one-reason-mergers-fail-the-two-cultures-arent-compatible<\/a>.<\/p>\n<p class=\"hanging-indent\">Henage, Michael. &#8220;3 Reasons For Amazon To Reconsider Its Whole Foods Strategy.&#8221; Seeking Alpha. February 26, 2019. Accessed May 20, 2019. <a href=\"https:\/\/seekingalpha.com\/article\/4244216-3-reasons-amazon-reconsider-whole-foods-strategy\" target=\"_blank\" rel=\"noopener\">https:\/\/seekingalpha.com\/article\/4244216-3-reasons-amazon-reconsider-whole-foods-strategy<\/a>.<\/p>\n<p class=\"hanging-indent\">Ladd, Brittain. &#8220;Was Acquiring Whole Foods Amazon&#8217;s &#8216;Bridge Too Far&#8217;?&#8221; Forbes. December 20, 2018. Accessed May 20, 2019. <a href=\"https:\/\/www.forbes.com\/sites\/brittainladd\/2018\/12\/20\/was-acquiring-whole-foods-amazons-bridge-too-far\/#59306e801638\" target=\"_blank\" rel=\"noopener\">https:\/\/www.forbes.com\/sites\/brittainladd\/2018\/12\/20\/was-acquiring-whole-foods-amazons-bridge-too-far\/#59306e801638<\/a>.<\/p>\n<p class=\"hanging-indent\">Meyer, Pauline. &#8220;Amazon.com Inc.&#8217;s Organizational Structure Characteristics (An Analysis).&#8221; Panmore Institute. February 16, 2019. Accessed May 20, 2019. <a href=\"http:\/\/panmore.com\/amazon-com-inc-organizational-structure-characteristics-analysis\" target=\"_blank\" rel=\"noopener\">http:\/\/panmore.com\/amazon-com-inc-organizational-structure-characteristics-analysis<\/a>.<\/p>\n\n\t\t\t <section class=\"citations-section\" role=\"contentinfo\">\n\t\t\t <h3>Candela Citations<\/h3>\n\t\t\t\t\t <div>\n\t\t\t\t\t\t <div id=\"citation-list-948\">\n\t\t\t\t\t\t\t <div class=\"licensing\"><div class=\"license-attribution-dropdown-subheading\">CC licensed content, Original<\/div><ul class=\"citation-list\"><li>Internal Change Management. <strong>Authored by<\/strong>: Freedom Learning Group. <strong>Provided by<\/strong>: Lumen Learning. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/licenses\/by\/4.0\/\">CC BY: Attribution<\/a><\/em><\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">All rights reserved content<\/div><ul class=\"citation-list\"><li>Whole Foods Market 2018 Logo. <strong>Provided by<\/strong>: Whole Foods Market. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/en.wikipedia.org\/wiki\/File:Whole_Foods_Market_2018_Logo.png\">https:\/\/en.wikipedia.org\/wiki\/File:Whole_Foods_Market_2018_Logo.png<\/a>. <strong>License<\/strong>: <em>All Rights Reserved<\/em>. <strong>License Terms<\/strong>: Fair Use<\/li><\/ul><div class=\"license-attribution-dropdown-subheading\">Public domain content<\/div><ul class=\"citation-list\"><li>Amazon.com logo. <strong>Provided by<\/strong>: Amazon.com, Inc. <strong>Located at<\/strong>: <a target=\"_blank\" href=\"https:\/\/commons.wikimedia.org\/wiki\/File:Amazon_logo.svg\">https:\/\/commons.wikimedia.org\/wiki\/File:Amazon_logo.svg<\/a>. <strong>License<\/strong>: <em><a target=\"_blank\" rel=\"license\" href=\"https:\/\/creativecommons.org\/about\/pdm\">Public Domain: No Known Copyright<\/a><\/em><\/li><\/ul><\/div>\n\t\t\t\t\t\t <\/div>\n\t\t\t\t\t <\/div>\n\t\t\t <\/section>","protected":false},"author":17,"menu_order":10,"template":"","meta":{"_candela_citation":"[{\"type\":\"original\",\"description\":\"Internal Change Management\",\"author\":\"Freedom Learning Group\",\"organization\":\"Lumen Learning\",\"url\":\"\",\"project\":\"\",\"license\":\"cc-by\",\"license_terms\":\"\"},{\"type\":\"pd\",\"description\":\"Amazon.com logo\",\"author\":\"\",\"organization\":\"Amazon.com, Inc\",\"url\":\"https:\/\/commons.wikimedia.org\/wiki\/File:Amazon_logo.svg\",\"project\":\"\",\"license\":\"pd\",\"license_terms\":\"\"},{\"type\":\"copyrighted_video\",\"description\":\"Whole Foods Market 2018 Logo\",\"author\":\"\",\"organization\":\"Whole Foods Market\",\"url\":\"https:\/\/en.wikipedia.org\/wiki\/File:Whole_Foods_Market_2018_Logo.png\",\"project\":\"\",\"license\":\"arr\",\"license_terms\":\"Fair Use\"}]","CANDELA_OUTCOMES_GUID":"26312277-e19e-4208-9087-b82b241c75bb, 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