Business Policy | April 12
2013
| Shauna Lennon, Denise Mc Gahan, Jessica Byrne, Elizabeth Mc Entee, Siobhan Kearney, Sandra Sharpe | How can Tesco manage effectively strategic change? |

How can we manage effective strategic change?
According to Eric Douglas ‘The process of strategic change management involves developing an innovative vision for where the company needs to be, and then developing and equally innovative path for achieving the goal.’ (Douglas E, 2010) Many different theories have been developed in order to give a greater understanding of strategic change and how to manage it. These include Force Field Analysis theory, the Change Kaleidoscope approach and the Cultural Web approach. These theories help to give an understanding of the link between strategy, dimensions of corporate culture and managerial action.
‘Force Field Analysis provides an initial view of change problems that need to be tackled by identifying forces for and against change’ (Johnson G, 2011, p. 469) Kurt Lewin created this analysis in the 1940’s as a tool for his social psychologist work however it is now used within businesses as a method for making and communicating decisions. (Force Field Analysis , 2013)
You use the tool by listing all of the factors (forces) for and against your decision or change. You then score each factor based on its influence, and add up the scores for and against change to find out which of these wins. (Force Field Analysis , 2013)
This is carried out by starting and completing a diagram relevant to your business and the decision that needs to be made. (Refer to appendix 1 [on page 11]) The advantages of the proposed decision go on the left of the diagram, while the disadvantages are placed on the right, giving management or the leadership of the business a clear indication of which decision will be best for the business as a whole. Before this can be done a list of all factors (advantages and disadvantages) that may influence the decision must be listed by the leader/s of the business while seeking any recommendations from members within the organisation. Once completed and placed in the appropriate position factors should be scored, from 1-5, 1 being weak and 5 being strong and finally totalled to show which decision is the best one to undertake. (Force Field Analysis , 2013) It can also be used to ‘To think about how you can strengthen the forces that support the change and weaken the forces opposing it, so that the change is more successful.’ (Force Field Analysis , 2013)
If Force Field Analysis identifies a new decision or change within an organisation there may be some hostility towards these changes from members within the organisation. Management must be versatile enough to deal with this and perhaps realise that the force field analysis brought around a quite subjective decision that may not have the desired effect on the organisation.

For change to be successful, implementation efforts need to fit the organisational context. There is no simple 'off the shelf' approach that will work for all organisations. (Strategy into action, 2013)
Change Kaleidoscope was developed by Hope Hailey & Balogun (2002) to be a way of pulling together and codifying the wide range of contextual features and implementation options that require consideration during change. (Change Kaleidoscope, 2009)
The kaleidoscope helps managers design such a 'context sensitive' approach to change. (Strategy into action, 2013) There are three rings that make up the kaleidoscope model. (Refer to appendix 2 [on page 12]) These include; * The outer ring relates to the wider strategic change context. (Strategy into action, 2013) * The middle ring relates to specific contextual factors that need to be considered when formulating a change plan. (Strategy into action, 2013) * The inner circle gives a menu of choices and interventions ('design choices') available to change agents. (Strategy into action, 2013)
‘Understanding of the contextual features enables change agents to judge the appropriateness of any approach for their particular context. (Hope Hailey & Balogun 2002)’ (Change Kaleidoscope, 2009) There are eight contextual factors with relation to the change of kaleidoscope. According to (Strategy into action, 2013) they are; * Time - is there time for longer term strategic development or does the firm have to react quickly to a crisis? * Scope - how much of the organisation will be affected? Is the change best described as realignment or transformation? * Preservation - which aspects of working, culture, competences and people need to be retained? * Diversity - the need to recognise that different departments (e.g., marketing and R&D) may have different sub-cultures. * Capability - whether abilities exist to cope with the change. These can be on an individual, managerial or organisational level. * Capacity - are resources (e.g. money, managerial time) available to invest in the change process? * Readiness - are staff aware of the need for change and are they committed to that change? * Power - how much authority and autonomy do change agents have to make proposed changes?
It is important for management to be aware that these factors may change when circumstances change within the inner and the outer rings of the kaleidoscope.
The inner ring consists of 6 design choices. According to (Balthu K, 2012, p. 4) they are,
1. Change Path – nature of change and the desired end result e.g. evolution, adaptation, revolution.
2. Change Start-point – the way change is initiated and developed e.g. top down, bottom up.
3. Change Style – the way change process is managed e.g. directive, collaborative
4. Change Target – what is to be changed e.g. staff behaviour, values, performance objectives.
5. Change Levers – mechanisms to be deployed for enabling change e.g. technical, political, cultural and interpersonal.
6. Change Roles – the different roles which can facilitate change e.g. internal change champion, external facilitation, functional delegation and action team.
In order for change to be implemented it is important that these aspects are considered firstly and foremost. ‘Hope & Balogun (2002) suggest that the kaleidoscope is primarily a mechanism for dealing with planned change.’ (Strategy into action, 2013) In essence the ‘change kaleidoscope suits best when change is transitional in its nature.’ (Strategy into action, 2013) Along with this it is suggested that the change kaleidoscope is used in conjunction with another change theory to strengthen its outcome. An example of a theory which would strengthen and enhance the change kaleidoscope would be the culture web. (Strategy into action, 2013)
‘The cultural web shows the behavioural, physical and symbolical manifestation of a culture that inform and are informed by the taken-for-granted assumptions, or paradigm, of an organisation.’ (Johnson G, 2011, p. 176)
Culture often becomes the focus of attention during periods of organizational change – when companies merge and their cultures clash, for example, or when growth and other strategic change mean that the existing culture becomes inappropriate, and hinders rather than supports progress. In more static environments, cultural issues may be responsible for low morale, absenteeism or high staff turnover, with all of the adverse effects those can have on productivity. (The Cultural Web, 2013)
‘The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992’, (The Cultural Web, 2013) helps management identify what actually makes an effective culture, one in which should in reality increase productivity, efficiency, motivation and effectiveness. ‘The Cultural Web identifies six interrelated elements that help to make up what Johnson and Scholes call the "paradigm’… (The Cultural Web, 2013) The paradigm can be defined as ‘the set of assumptions held in common and taken for granted in an organisation…’ (Johnson G, 2011, p. 176) The six integrated elements are stories, symbols, power structures, organisational structures, control systems, rituals and routines.
Stories – The past events and people talked about inside and outside the company. Who and what the company chooses to immortalize says a great deal about what it values, and perceives as great behavior. (The Cultural Web, 2013)
‘Symbols are objects, events, acts or people that convey, maintain or create meaning over and above their functional purpose.’ (Johnson G, 2011, p. 177) Power structures can be defined as ‘the ability of individuals or groups to persuade, induce or coerce others into following certain courses of action’ (Johnson G, 2011, p. 177) ‘Organisational structures are the roles, responsibilities and reporting relationships in organisations. These are likely to reflect power structures …’ (Johnson G, 2011, p. 178) Controls systems are the formal and informal ways of monitoring and supporting people within and around an organisation and tend to emphasise what is seen to be important in the organisation.’ (Johnson G, 2011, p. 178) ‘Rituals and Routines – The daily behavior and actions of people that signal acceptable behavior. This determines what is expected to happen in given situations, and what is valued by management.’ (The Cultural Web, 2013) All six elements are represented in a graph in a six circles which overlap each other. (Refer to appendix 3 [on page 13])
According to (The Cultural Web, 2013) in order for the culture web to be beneficial management must undertake four steps once these elements are identified within their organisational structure. 1. Analyse culture as it is now. 2. Analyse culture as they want it to be. 3. Map the differences between the two. 4. Prioritize Changes, and Develop a Plan to Address Them.
Using the cultural web ‘can create a cultural environment that encourages success, supports the organization's objectives and, all-in-all, makes for a better place to work.’ (The Cultural Web, 2013)
It appears to be seen that Philip Clarke CEO of Tesco at present incorporated the use of the cultural web in taking over from Sir Terry Leahy in 2011.
Tesco is currently faced with organisational change resulting from the announcement on the 8th of June 2010 that Sir Terry Leahy, the company’s outgoing CEO and the person largely responsible for the transformational leadership that has greeted Tesco since he became its CEO in 1997, will be resigning. Leahy’s departure will potentially mark a watershed in the company’s organisational culture, leadership model, entrepreneurial yield, level of productivity and above all change management occasioned by the transfer of leadership from Terry Leahy to Philip Clarke, who becomes Tesco’s CEO in March 2011. (Nwagbara U, 2011, p. 57)
Terry Leahy left a legacy that would be extremely hard to follow but this was the challenge that Philip Clarke had to face. He needed to prove himself very quickly in terms of showing effective management and leadership, the same as Sir Leahy had.
The way the power transition is handled, as well as Philip Clarke’s leadership/management style will go a long way in bringing confidence back into the minds of customers, employees, shareholders and other stakeholders of Tesco plc in the wake of the leadership change. This will also define to a large extent Tesco’s future organisational structure. (Nwagbara U, 2011, p. 57)
As part of the cultural web the first thing that Clarke carried out was an analysis of the culture that was already in existence within Tesco and that Leahy had helped to create, i.e. stories, symbols, power structures, organisational structures, control systems and routines and rituals. In reality these link to Tesco’s core purpose and values and were already in existence when Clarke took over as CEO. Clarke states that
The core purpose of Tesco is to create value for customers to earn their lifetime loyalty, and I want Tesco to put that at the heart of everything that it does…So, our core purpose and our Values, they stay the same, but I do have a new vision for Tesco. (Clarke P, 2011, p. 1)
The next step which Clarke undertook as part of the theory of the culture web was to analyse the culture of Tesco as he himself envisioned it to be. This again involved research of how he wanted the six interrelated elements of the paradigm to appear. Due to the impact of Leahy’s success however, there not much needed to be altered from the first culture web. This is not to say that Clarke did not want to put his own mark of leadership on Tesco. ‘Now that I’m the chief executive, there won’t be any changes of direction, but there will be a slight change of emphasis.’ (Clarke P, 2011, p. 1)
In order for any change to be implemented it was necessary for Clarke to step up as a leader, prioritize the changes that he wanted to make and develop a plan or strategy to overcome and aid these changes. Clarke states, I want Tesco to be the most highly valued company, valued by our customers, valued by our staff, by the communities in which we work and by our shareholders. Our focus is on remaining a growth company. (Clarke P, 2011, p. 1)
This is how he envisaged developing and retaining a good culture within Tesco. He also developed a seven part strategy ‘to reflect changing consumer trends, and the increasingly global nature of Tesco.’ (Clarke P, 2011, p. 1)
According to Clarke (Clarke P, 2011, pp. 1-2) the seven point plan that he developed is as follows; 1. …to grow the UK core. 2. …to be an outstanding international retailer, both in stores and online. 3. …be as strong in everything it sells as we are in food. 4. …retailing services. 5. …have a responsibility to the local community… 6. …be a creator of highly valued brands. 7. …to build our team so it can create more value...
This is how Clarke led Tesco forward after a period of uncertainty due to the fact that the prestigious Sir Leahy was resigning. He stepped up and put his mark on the company while reinforcing confidence back into the company and its members as a whole by developing this strategy and by not formulating too much change. The cultural web as a theory was an extremely important tool for Clarke as if he did not utilize this tool he may not have identified the fact that so little change did in fact need to be implemented.
Clarke portrayed great leadership characteristics throughout his takeover from Sir Leahy. ‘Leadership is the process of influencing an organisation (or group within an organisation) in its efforts towards achieving an aim or goal…. Strategic leadership is therefore central to strategic change.’ (Johnson G, 2011, p. 471)
‘leaders have a critical role to play in making cultural change successful. Leaders need to epitomise the culture they wish the organisation to espouse.’ (Cook S, 2013) Clarke may not have created the initial culture within Tesco but he certainly helps to improve and retain it. He done this by having many positive characteristics associated with strategic change leadership.
One of the most important characteristics of any managers is to lead by example. Clarke did this well since taking over from Leahy. Clarke was an employee of Tesco’s where he stacked shelves from the age of fourteen. When he became the CEO of Tesco he returned to the shop floor in order to get sales back on track, thus showing that he does not see himself as the top player in the company. He is not afraid to get into the mix of the business. This shows how he leads by example and in turn would influence and motivate staff to work to the best of their ability. ‘Clarke is going back into the aisles, where he started his career, in a bid to reinvigorate the supermarket,…’ (Wood Z, 2012) Another way in which he led by example and helped the business was by refusing to accept his bonus. This in turn encouraged other executives within Tesco not to accept a bonus as well. ‘Philip Clarke, the chief executive of Tesco, has declined his annual bonus after the company posted its first drop in UK profits for at least 30 years.’ (Wallop H, 2012) if Clarke had not done so Tesco may have been in trouble financially, however he portrayed great leadership qualities in what he done.
Clarke also upheld another important characteristic of strategic leadership in that he felt it necessary to have an open communication policy in place within the organisation. Sarah Cook states that one of points for successful culture change that lead to good leadership is to
Communicate regularly: first, the need for change and its benefits for employees, then progress in implementation. Also remember communication is a two-way process, so listen out for concerns and comments. (Cook S, 2013)
Clarke does this by communicating with top managers and staff alike and encourages executives to do the same. ‘He engages in regular dialogue with them, and encourages other senior leaders to do the same.’ (Little N, 2012) According to Nicky Little Clarke has done the following;
Clarke has taken a positive approach to leading change and engaging others with a new vision. He has communicated openly and honestly, acknowledging where things need to change and highlighting the many positive factors Tesco can build on. He is not trying to be a 'hero' leader with all the answers. He is aiming to be a collaborative leader, working in partnership with colleagues - not only on the executive team, but across all levels of the business - to co-create solutions. He is providing resources, such as additional staff and development opportunities, to help colleagues achieve Tesco's ambitious goals. (Little N, 2012)
To conclude Clarke deals with the role of leadership optimistically and successfully. He portrays characteristics that a leader should have to deal with change and to reinforce success. He leads Tesco with pride, emotion and most importantly by example.

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Appendices 1
(Force Field Analysis , 2013)

Appendices 2
(Toolan T, 2012)

Appendices 3
(The Cultural Web, 2013)