INTRODUCTION

Asda had its modest beginnings in 1920 by a group of dairy farmers in Yorkshire County for a means to sell milk. Before going public in 1949 Asda expanded by acquiring and diversifying into bakeries, meat processing plans, and non-food businesses.

Asda Stores Ltd. business philosophy was to always have the customer in mind and therefore have low prices goods. With this notion Asda started setting stores in suburbs and targeted value-conscious customers.
In 1981, Asda wanted to increase profits by reducing costs and offering higher-priced products. With this change, Asda lost the price-leadership position and started to lose its customers.

In 1991, the £4.5 billion organization had a debt over £1 billion and Asda’s stock price had crashed from over 100 pence to below 30 and had become highly bureaucratic and hierarchical. Archie Norman was offered the position as the chief executive who hired Allan Leighton shortly after. During 1991 – 1997 they turned an organization nearing bankruptcy into a profitable one. In 1999 Walmart bought over Asda for 8 times the price at 1991.

How did Norman and Leighton do this? This was achieved by simultaneously integrating Theories E and O effectively they were able to implement a successful approach to the organizational change.

Listed below are changes that were made to the respective dimensions using the integration of the Theories O and E to improve both Economic Value and Organizational Development.

GOALS
Theory E – Increase Share Holder Value
Norman’s number one objective was to secure value for the shareholders and on his first day he fired the CFO who was a contributor to ASDA’s disastrous financial policies, he then hired a new CFO to oversee the sale of business that were not the core of ASDA. The spending was halted by imposing a wage freeze on Management and workers. Excess staff was laid off.
Theory O - Development of Organizational Capability
Simultaneously Norman wanted to create a culture around common ideas, listen and learning from the stores upwards. The implementation of the store renewal program – a low performing store, later followed by 2 other stores, was used for experimenting. A functional task group was appointed to redesign its approach to managing people and help its current staff perform better.
Norman also made the company more flatter, removing the strong hierarchical structure and creating a more ‘equal’ atmosphere amongst management and workers.
LEADERSHIP
Theory E- Managing Change from top Down
A top to bottom approach was still in place with clear instructions communicated, however the difference was that the people below were expected to participate with their views.
Theory O - Encouraging participation from bottom up
Employees were involved from all levels to identify problems and craft solutions. Norman also made unannounced visits to stores to obtain opinions of store managers which were ignored before. Quarterly regional meetings were held to hear ideas from Store Managers. The ‘Tell Archie’ program was introduced where employees can directly address ideas and concerns to Norman.
FOCUS
Theory E - Change in organizational structure and systems
Norman focused on restructuring the hard side of the organization by way of de-layering the hierarchy. The layers were reduced to three from five. This change was first practiced in the experimental stores and then adapted across the others as well.
Theory O - Build up co-operate culture
Norman spent 75% of his early years creating a work environment in which his people would love to work. He infused new values and passion to emotionally motivate and change attitudes.
Leighton started brining senior executive and key players into discussion and debates thereby building relationships with the employees.
PROCESS
Theory E - Plan and establish process
Norman demanded that lower level leaders are to innovate and manage changes at their level, with the view that top to bottom decisions that may not work. Employees were encouraged to use the experimentation stores to practice.
Theory O - Experiment and evolve
Through the renewal program, managers capable of leading and adapting to the fast changing world were created. These stores were a place that employees can fail and learn with penalization.

FINANCIAL REWARD SYSTEM
Theory E – Motivation through financial incentives
This powerful tool was implemented to motivate employees to partake in the development of ASDA, to attract and keep employees.
Theory O – Motivate through commitment.
The performance is not to be motivated through the incentive but through commitment and involvement. The reward was a variable compensation and stock ownership.

USE OF CONSULTANTS
Theory E – Analyze problems
Outside Consultants were being hired for their expertise in analyzing and assessing.
Theory O – Consultants support management.
The consultants are on a support role and not to define problems and change programs, this was done by the management itself.

Work Citation 1. ‘Cracking the Code of Change’ Harvard Business Review 2001 http://hbr.org/products/651X/651Xp4.pdf

2. ‘Turnaround team that spawned kings of Britain's high streets’ The Sunday Times (UK) December 02 2005 http://business.timesonline.co.uk/tol/business/columnists/article598820.ece?token=null&offset=0&page=1

3. Changing and Sustaining Performance: A Paradoxical Approach http://www.truepoint.com/our_research/theory_e_and_theory_o.html

4. ‘Breaking the code of change’ by Micheal Beer & Nitin Nohria – Resolving Tensions between Theories O and E