Case Study Strategic change at FitCo

A key skill for the strategist is the ability to 'read' the organizational power landscape to assess the viability of a proposed strategic change. Another key skill is the ability to 'lead' others by selling them a compelling (and feasible) vision of what needs to change - and how the change will be accomplished. This case study describes a strategic change initiative that took place in FitCo UK (a pseudonym), the UK subsidiary of an American-owned multinational company in the sportswear industry. The initiative started when the company invited an external consultant, Barry, to help them figure out how to improve their relationship with the key account customers. The key account customers were the four major retailers they relied on to sell their products in the absence of their own stores. Barry was working on an unpaid basis in return for the opportunity to collect data for his own research project - his own study of strategic change. Barry started by conducting interviews and observations with all the senior management. He soon started to formulate his own view about what was going wrong with their key account strategies and how it should be changed. He believed that the company was not formulating their key account strategy in the right way. The strategy was supposed to be developed by the top management team - the board of directors - but politics, personality clashes and infighting meant this was just not happening. Moreover, he thought that the strategies that did get formulated were not developed in a sufficiently cross-functional way - drawing the expertise of all departments and functions to pool their knowledge and ensure consistency of approach. For example, sales would too readily discount products that marketing had attempted to position as high quality (and therefore with a bigger price tag). Salespeople for the apparel side of the business sometimes pitched their products in direct contradiction to the salespeople for the footwear side. Customer operations would spend a long time developing bespoke in-store displays for one brand, only to find that sales negotiated a better deal on another brand and the whole display was scrapped. The key account plans were cumbersome, far too long (often up to pages) and typically were left on the shelf gathering dust. Barry had a clear vision of what the key account strategy process should look like. He began by establishing a cross-functional team of middle managers (which he called the 'steering group') who were close enough to the 'coal face' to know the issues on the ground and with sufficient seniority to push through their changes but without the history of turf wars at the board level. The team would develop key account strategies for each of the four key accounts, influencing the account teams who would implement the strategies, while also influencing the board level to get buy-in for their proposed changes to the four strategies. The strategies themselves would be one A4 page each - summarized in an easy-to-read format and detailing the overall strategic position for each key account customer (pricing strategy, mix of products, target consumer market, exclusivity deals, relevant financial information, etc.). Each customer was to have a single-page key account plan (see Image 12.1). Image 12.1 Key account plan Barry had personal experience of developing similar cross-functional strategy teams in his previous career as a senior manager - a 'trick' he himself learnt from a strategy consultancy firm years ago - and with substantial success. The problem was this: how would he convince the board to let this team of middle managers take control away from them of the key account strategy trial? And how would he convince the middle managers to take on what was, arguably, a politically risky project? In short, there were both superordinate and subordinate politics to handle before he could get his strategic change up and running. Mueller et al. (2013) describe the discursive 'framing' undertaken by Barry in the first meeting of the new team. Barry tried to construct a 'definition of the situation' for the middle managers, one which sought to persuade them that the strategic change was necessary and that they were the only people who could lead the change. Through a series of accounts, Barry framed the change through a sensemaking process as follows (adapted from Mueller et al., 2013: 1186): There is a problem in this company, and that problem is that politics is stopping the firm from having a clear strategic direction with the key accounts. The board cannot sort out the problem because they are the source of the political problem. The steering group are best placed to sort out the problem because they are not embroiled in politics. To be successful, the steering group must be sensitive to the political implications of certain pieces of information, including discussion about politics itself. The board of directors already have at their disposal a ready-made political scapegoat, should they need one (i.e. the change agent): they can blame Barry if it all goes wrong. This should encourage the board to take a risk and back the initiative. The steering group also has a 'leader' (i.e. Barry) who, as an outsider, has no ulterior political motive or allegiances and will therefore support the steering group unconditionally. Below the board of directors level, the company is actually less political than many others, which should encourage them to embark upon a change initiative without fear of upsetting the politics of the organization. Barry's problem was clearly not just about persuading the board that strategic change was necessary; he also had to convince the team that strategic change was both desirable and possible for them as middle managers. Whittle et al. (2015) show how Barry used his knowledge of the categories of people who had a stake in the change - and the types of rights, roles, responsibilities, obligations, motives, etc. associated with those people (the 'category predicates') to persuade the team to participate in the strategic change project. For example, he reassured the team that their jobs would not be at risk because they were 'stepping on the toes' of the board - the people typically associated with the role of strategy formulation. He did this by appealing to the idea that the board had a motive for wanting change. Also, he tried to persuade the team that they could shift the power balance between the levels of management, thus having the middle managers 'write the agenda' for the board based on their vision of the key account strategies. A radical shift in power relations was being proposed - strategy formulation was going to be moved from top management to middle management level - something the team partially attempted as the project progressed, with some limited successes. Barry also used his political skill to judge the timing of the change. He told the team that now was an ideal time to make the change because the current UK sales director was away in Australia on a business assignment. Everyone knew why this was a good thing politically: sales directors would be expected to be resistant to any attempt to take control of key account strategy away from them because their own bonus pay typically is tied to sales figures. Now was the ideal time to 'make the move', Barry suggested, given the person who would be most likely to resist the proposal had his 'eye off the ball'. According to Whittle et al. (2015) strategic change relies on discursive leadership - defined as the process through which leaders, in interaction with followers, use language in interaction in order to manage meaning and influence sensemaking in order to accomplish organizational goals. A crucial part of this discursive leadership, then, is using knowledge of categories of people and their associated predicates to frame the strategic change process to provide a compelling but also realistic vision of the future - what Whittle et al. (2015) call category predication work. Power and politics relating to the subsidiary-headquarters relationship were also important to the success or failure of the strategic change project. Whittle et al. (2016) showed how the group's shared understanding about the power and politics between the UK subsidiary and US parent, an understanding developed during the conversations in their strategy meetings, altered and tempered their strategic plans. Through accounts, stories and metaphors, the team built up a picture of the subsidiary-headquarters relationship as one that was heavily power imbalanced and deeply political. The group used metaphors of warfare (fighting, standing ground), machinery (steamrollers), social movements (rebellions, alliances) and the animal kingdom (an elephant standing on an ant) to reinforce their existing ideas that any major strategic challenge to the preferred strategy of the US headquarters was politically risky and liable to retaliation from those in power. In particular, the re-telling of the story of a previous manager who, they believed, got sacked for 'standing up to' the headquarters served to further reinforce their sense-making that the headquarters was a powerful and political adversary to their attempts at strategy-making. This was not 'just talk' - this definition of the situation led them to fundamentally alter their plans for the key account strategies and engage in all sorts of other strategic behaviours, including: deliberately removing information from documents for fear of being perceived as 'critical' of the headquarters, meaning local knowledge was not shared more widely failing to voice their opinions when they saw flaws or problems in centrally determined policies and initiatives scaling back the ambition of their strategic change for fear of political retaliation, including fear of losing their jobs failing to request resources that they felt were needed. Whittle et al. (2016) described these processes as one of 'sense-censoring': a situation where actors consciously 'censor' their sensemaking accounts, due to anticipated reactions or counter-actions by those with power, even in the absence of any official attempts to edit or silence them. This research finding shows how the dominant 'framing' of the headquarters as a powerful and politically hostile 'enemy' led the managers in the subsidiary to hide, dilute or restrict their local sensemaking from the global headquarters through 'sense-censoring', thereby transforming potential strategic change into strategic inaction. This had consequences not only for the team of middle managers in the UK, leading them to change their plans, but also for the whole company, which failed to learn about the concerns of the UK subsidiary and failed to share the local knowledge they held.

Questions

• How did the consultant, Barry, 'frame' the change to attempt to persuade the managers at FitCo to 'buy in' to his idea? What role did forms of symbolism and discourse play in this process - in particular stories, categories and metaphors?
• How did the change teams sense-making about power and politics in the company affect the strategic change initiative? In particular, identify the role that power and politics played in shaping the strategic change initiative in the relationship between:
  • Functional departments,
  • The middle managers and board directors
  • The subsidiary and parent headquarters