What is organizational change?
Organisational change is defined as the methods and manners in which a company describes and implements change within both its internal and external processes. This includes preparing and supporting employees, establishing the necessary steps for change, and monitoring pre- and post-change activities to ensure successful implementation.
Related: Organisational Change: Ultimate Guide
Organizational change examples
Microsoft’s organizational transformation and new purpose
Microsoft’s corporate structure was causing major internal issues. It wasn’t until the new CEO, Satya Nadella assumed control that this enormous firm began to undergo some significant restructuring. Looking at Microsoft’s stock price allows us to observe some of the results of Nadella’s proposals at a very high level.
A divided business cannot expand
Even after the remarkable and sustained success of Windows and Office, Microsoft still found it difficult to compete with other businesses, particularly as Google grew to be the market leader in search and software and Apple the market leader in smartphones.
The software powerhouse was stagnating and riddled with internal conflicts between significant departments, which frequently saw one another more as rivals than as allies inside the same business.
The upshot was a toxic environment that kept the business dependent on Windows and Office while stifling innovation. Even though both products are extremely popular, the company’s stagnation put it in a risky “comfort” zone.
How Microsoft streamlined its procedures and brought its teams together
The software behemoth underwent a significant restructuring when Satya Nadella was appointed CEO in February 2014 to eliminate its damaging internal competition.
Microsoft platforms and products would cease to exist as separate entities. Instead, all staff members would begin concentrating on a small number of shared objectives and bringing them all together. Their newly shared capabilities consist of:
- Improving output and operational procedures
- Constructing a smart cloud platform
- Expanding personal computing
By combining their initial research team with the Bing, Cortana, and Information Platform teams in September 2016, Nadella established a new AI and Research Group. About 5,000 engineers and computer scientists came together as a result of this change to concentrate on artificial innovation across all Microsoft product lines.
A fresh, important mission
Nadella gave his staff a fresh feeling of purpose right away: “To empower every individual and every business on the earth to achieve more.”
Also in his reflections, he said, “Over the past year, we’ve challenged ourselves to think about our essential goal, our essence – what would be lost if we disappeared… What kind of culture do we want to promote to attain these objectives, we also asked ourselves.
Employees had low morale and weaker engagement levels before the restructuring because they lacked a strong sense of purpose. And because of Nadella’s plan, all of Microsoft’s employees are working toward a shared objective that gives their work genuine meaning.
Microsoft is still in the process of reorganization as of right now. Its new, well-established mission, however, makes it appear as though the future is still brighter than ever.
Google splits up under the Alphabet umbrella
Think about how much you would need to grow before you could work more effectively. Do you find that to be unbelievable? When Google changed its name to Alphabet, it did just that.
Google co-founder Larry Page believed it was time for him to once again reorganize the entire corporation after dominating a variety of high-tech projects.
A “big” firm is not always a good thing
Early in the new millennium, Google was already a titan, controlling internet searches and becoming a necessity in our daily lives with services like Gmail and Google Maps.
In search of what co-founder Larry Page referred to as “moonshot” projects—projects that were apparently beyond the capabilities of Google engineers—its R&D teams appeared to be interested in everything. However, the business urged them to give it a shot.
Google developed to be very diversified as a result. The business began working on a variety of initiatives, including those involving wearable technology, smart homes, smart cars, and more.
In a certain way, everything was related. Yet it wasn’t at the same time. Google was getting more and more difficult to control. So Page decided it was time to disassemble the entire conglomerate to prevent major problems in the future.
How Google merged with another business
Google was divided up by Page into various businesses, each of which is now a part of the new holding company Alphabet.
Alphabet is led by Page as CEO, with Sergey Brin serving as president and longtime Google executive Eric Schmidt serving as chairman (who left Alphabet in 2020). Each of Alphabet’s businesses has a CEO who is entirely focused on achieving those objectives.
Fundamentally, we think this gives us more management scalability since we can manage things independently that aren’t closely related, Page stated in a blog post. The premise of Alphabet is that successful companies have independent, capable executives.
According to the post, Larry was inspired to make the following changes:
- Completing more ambitious tasks
- Considering the long term
- Enabling successful businesses and entrepreneurs to thrive
- Investing in the magnitude of the resources and possibilities we perceive
- Increasing the accountability and openness of our actions
- Focusing more to make Google even better
- And maybe as a result of all this, we can improve the lives of as many people as possible.
Google sought to divide each big initiative into different entities with their objectives. It would be simpler to expand and manage in this manner.
Accountability for employees results in a 10x increase in business growth
When Alphabet was launched, Larry Page made it obvious what he was thinking, saying that the reorganization would allow the staff to focus more effectively and joyfully on their individual goals without having to worry about Google as a whole.
This implies that each Alphabet company is now in charge of its expenses and earnings. However, the additional accountability may also give innovation greater significance.
In the end, Page’s long-term vision for the business—which inspired him to spearhead a change management project for the benefit of his organization—was what paid off for Google (now Alphabet).
British Airways restructures its entire organization
After combining with four other airlines, British Airways has become the biggest airline in the United Kingdom. The company had a difficult time managing itself and providing a respectable service in the immediate aftermath of this significant merger.
The company didn’t begin to see positive momentum until after its privatization and the inclusion of the new chairman, Lord King, leading to a rise in profits.
After the new chairperson takes the helm, standardize customer service
In 1974, BEA, BOAC, Northeast Airlines, and Cambrian Airlines merged to form a new company. This new company had 215 aircraft and 50,000 people.
Even back then, this amount of staffing was thought to be dangerously excessive. The airline’s customer base was further reduced by the oil crisis of the 1970s, which combined with its enormous staff to cause significant financial losses.
The business quickly earned a bad reputation for its lousy service. As a result, British Airways hired Lord King as its new chairperson in 1981 after he saw how inefficiently and wastefully the corporation was running.
How BA increased earnings by cutting staff and modernizing its fleet
King decided to restructure the entire company to boost earnings. To do this, the company cut its personnel from 59,000 to 39,000, got rid of all of its underperforming routes, and updated its fleet. In two years, Lord King had replaced more than half of the company’s board.
In 1983, he restored the airline’s reputation by appointing Colin Marshall as the new CEO and bringing in a new marketing specialist. Within ten years, the airline reported $284 million in profits, the most in its sector.
Greater earnings result from open communication and efficient change management
King gave a presentation to the entire organization outlining the rationale for the restructuring before starting to make layoff announcements. His communication strategy instilled a sense of urgency in the organization and got everyone ready to accept change.
Without his openness, British Airways may have faced employee resentment and unfavorable headlines due to the mass layoffs. But to handle the shift, the chairwoman constantly maintained open lines of communication.
du Telecom and Huawei Technologies
Consumers and organizations can use du Telecom’s mobile and fixed telephony, broadband access, and IPTV services. In a market with intense competition, the company first started operating in 2006. By 2010, du had about 40% of the market share in the area and was able to keep up a growth rate of over 32%.
But the company’s top executives weren’t content to sit back and enjoy their success. A Memorandum of Understanding (MoU) was signed by du Telecom and Huawei Technologies Co. Ltd. in 2013. A global supplier of networking and telecommunications products and services, Huawei. The leaders of du understood that Huawei had the skills to assist the UAE telecom company in enhancing its project management capabilities.
Du Telecom has achieved the following since signing the MoU with Huawei:
- Decreased project failure
- A decrease in the number of workers required for each project
- Thanks to a single point of contact who oversees the project, lower prices, more constrained time constraints, and projects that come in under budget are all possible.
What lessons may other businesses draw from this collaboration? Sometimes having a companion to support you through change is better. Never hesitate to seek assistance. Your company may receive the boost it needs to become even more prosperous from outside support.
The Children’s Hospital of Eastern Ontario’s Shift to Electronic Medical Records
The integration of electronic medical records for patients was a top priority for the Canadian government (EMRs). It promoted the use of EMRs by healthcare professionals. The change was made by the Children’s Hospital of Eastern Ontario (CHEO). To assist them in becoming paperless, CHEO selected Epic, a provider of ambulatory medical care software.
The project team had every CHEO patient listed in Epic’s software by October 2014. In addition, 75% of CHEO’s outpatient clinics have medical professionals on staff who can request tests and track patients’ progress.
How did CHEO succeed in achieving these objectives?
- The project team had a thorough, practical plan in place to implement the move.
- There was a team whose responsibility was to instruct and aid medical practitioners in using electronic medical records.
- Practice sessions could be attended by end users to learn how to use EMRs.
- After the EMRs went live, the team proceeded to teach medical professionals, so end users felt comfortable using the new software.
Even if your company isn’t a hospital in Canada, there are still business lessons to be learned from this. Have a plan that involves training your end customers both before and after the commencement of a big project before you launch it.
Nokia . . . Transforms Again
Nokia a Finnish corporation, controlled the industry as mobile phones gained popularity. However, because it was no longer profitable, the company left the market in 2014. Although this isn’t the first time Nokia has remade itself, it was nevertheless a significant choice for the company.
Executives at Nokia decided to sell Microsoft the device division. Networking equipment is now Nokia’s primary industry. Executives didn’t take this decision lightly; Siemens, a provider of networking equipment, already had a connection with Nokia. The company’s management understood that investing in networking equipment was a superior business decision. To achieve this, they acquired Siemens and established a new management group, corporate structure, business plan, capital structure, and portfolio strategy.
Nokia has accomplished the following since switching from a maker of mobile handsets to one of networking equipment:
- Had a consistently rising share price, a 12-fold increase in enterprise value since July 2012, billions of dollars in cash repatriated to shareholders, and once again was the most valuable company in Finland.
- You don’t need to run a company the size of Nokia to successfully transform it. To make the restructuring work, you need a thorough plan that takes into account as many parts of the change as you can, as well as the appropriate individuals. Additionally, keep track of the market’s direction; Nokia’s move was successful because management understood the direction of the wind.
The Pacific Surf School
Even though surfers are known for their carefree demeanor, the teachers at the Pacific Surf School (PSS) in San Diego weren’t benefiting from it. Students weren’t getting anything out of the lessons because of their poor practices, which included not categorizing wetsuits by size.
The proprietors of PSS sought assistance from the Lean Enterprise Institute (LEI). An organization called LEI is devoted to imparting lean ideas. According to lean principles, waste should be reduced while customer value is increased. Lean principles can be used in any business, even though they first became popular in the manufacturing industry. The trainer from LEI showed the PSS staff how to implement more effective procedures, such as taping surfboards so that pupils could quickly find their feet.
The advantages become apparent right away:
- Students were surfing more.
- PSS was able to double the size of each class by 50%.
- During daylight hours, instructors had more time to fix surfboards.
A valuable lesson to learn from this is that even little adjustments can improve the efficiency and profitability of your business. Again, don’t be too embarrassed to ask for assistance; efficiency specialists are willing to offer their knowledge to help you grow your main line of business.
Because these four organizations were prepared to advance, organizational change was successful there. Executives and front-line employees alike were all on board. Success didn’t come immediately; it took meticulous preparation and following through on the plans. If you’re prepared to put in the time and effort, you can implement effective change efforts.
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