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Instructions and information attached CHAPTER 1 3Managing Change: Stories and ParadoxesLearning ObjectivesBy the end of this chapter you should be able to:LO 1.1Understand how stories of change can contribute to our knowledge of theory and practice.LO 1.2Explain why managing organizational change is both a creative process and a rational process.LO 1.3Identify the main tensions and paradoxes in managing organizational change.LO 1.4Evaluate the strengths and limitations of our current understanding of this field.1 4Chapter 1 Managing Change: Stories and ParadoxesLO 1.1LO 1.2Stories about Change: What Can We Learn?Changing organizations is as exhilarating as it is messy, as satisfying as it is frustrating, as creative as it is rational. This book recognizes these tensions and how they affect those who are involved in managing change. Rather than pretend that these tensions do not exist or that they are unimportant, we confront them head-on, considering how they can be addressed and managed, recognizing the constraints that they can impose. We also want to demonstrate how the images that we have about the way in which change should be managed, and our image of the role of change agents, affect how we approach change and the outcomes that we think are possible.To begin this exploration, we present three stories of recent changes. The first con-cerns how Roz Brewer restored the “buzz” at Starbucks. The second concerns the orga-nizational model introduced at Sears Holdings in an unsuccessful attempt to restore falling sales and profits. The third describes how Mike Duggan, mayor of Detroit, trans-formed the city’s fortunes. These stories each address different problems: a coffeehouse chain, a retailer, and a city. But they illustrate common issues concerning the manage-ment of change. Each account opens with a set of assessment questions. We ask that you think through the answers for yourself. What can we learn about change management from stories like these? You will find our answers to these questions at the end of the chapter.Our aim is to demonstrate that stories about change can be a valuable source of prac-tical lessons, as well as help to contribute to our general understanding of change. This narrative perspective has a number of advantages. Stories are a familiar and popular medium. They give us rich information set in context. They enable us to put ourselves at the center of the action. They encourage us to consider how we could transfer the issues that we are reading about into our own experience.These stories are, of course, each distinctive, one-off. How can they contribute to knowledge and practice in general, in other sectors and organizations? Stories are one of our main ways of knowing, communicating, and making sense of the world (Dawson and Andriopoulos, 2017; Gabriel, 2019). Our stories have actors: change leaders, other man-agers, staff, customers, etc. They make decisions that lead to actions that trigger responses: acceptance, resistance, departure. There is a plot: a serious problem that could be solved by organizational change. There are consequences: To what extent did the change solve the problem, and were other problems created along the way? The sequence of events unfolds in a typical manner: . . . and then . . . and then. This tells us why the outcomes were reached. These narratives do not simply describe what happened with a change initiative. They also provide us with explanations. These are process narratives. Process narratives have advantages over more traditional (quantitative, statistical) research meth-ods (Mohr, 1982; Langley et al., 2013):•They tell us about the context, give us a sense of the whole, a broader frame of reference.•Complexity can be expressed within a coherent sequence of events.•The nature and significance of the causal factors acting on events are exposed.•The narrative patterns transcend individual cases. Chapter 1 Managing Change: Stories and Paradoxes 5This approach is based on what is called narrative knowing (Langley and Tsoukas, 2010; Vaara et al., 2016)—understanding events through the stories that are told about them. Because stories can reveal the mechanisms, or logics, behind a sequence of events, they are process theories. (We will explore process perspectives on change in chapter 10.) What combinations of factors drive, slow down, accelerate, or block the change process? The three stories that follow explain the relative success of the changes in Starbucks, Sears, and Detroit. We will ask you to consider the extent to which those explanations, each based on a single unique case narrative, can be applied to managing organizational change in general, in other settings.LO 1.1The Starbucks StoryIssues to Consider as You Read This Story1.To what extent can management expertise in general, and change management exper-tise in particular, translate from one company and sector to another?2.What elements of Roz Brewer’s approach to change management would be appropriate for you to use in your organization?3.Do you think that senior executives should be closely involved with the frontline day-to-day operations of the business as Brewer was?The ContextFounded in 1971, based in Seattle, with over 30,000 locations, 330,000 employees, and annual revenues of around $25 billion, Starbucks is the largest seller of coffee in the world.The ProblemRoz Brewer joined Starbucks’ business in America as chief operating officer in 2017, the first woman and first African-American to hold such a senior position in the company. In her new role, she had a number of problems to deal with. The company’s iconic founder and executive chairman, Howard Schultz, had decided to leave the company after three decades. After five years of exceptional growth, sales had stalled. In 2018, the company was accused of racial bias after a manager called police to deal with two Black men who had been waiting for a friend in an outlet in Philadelphia; they had not bought drinks and refused to leave when asked. Some customers called for a Starbucks’ boycott after a social media video of the arrest went viral. When Brewer analyzed Starbucks’ business operations in detail in her first three months, she found that the company was “melting down behind the coffee bar.” Paradoxically, this was the result of the success of the mobile order and pay system; customers placed their orders through an app before coming to the store. But the stores were not ready for the sudden increase in orders. Crowds of customers jostled each other as they waited for their drinks, and stressed baristas struggled to keep up with the flow. She also found that 40 percent of employees’ time was spent on tasks away from the customers, such as counting milk jugs three times a day and unnecessarily restocking the floor with cups. And like many other organiza-tions, there were too many development and change initiatives being run by corporate headquarters. 6Chapter 1 Managing Change: Stories and ParadoxesThe SolutionBrewer was not an obvious choice for the role at Starbucks. Her previous position was as a senior executive at Walmart. Investors were skeptical that her experience with a big-box retailer could translate to a “high touch” coffee shop business. And she preferred green tea to coffee. However, one of Brewer’s colleagues at Walmart said, “Roz is a tough cookie. She’s into the details. She’s not a fluffy person. She gets things done.” Another colleague said, “She’s an operator. She’s not just a person with a point of view and vision. She can execute” (Kowitt, 2019, pp. 86 and 88).Schultz had managed the company by instinct and intuition. Brewer, who trained as a chemist, focused on the numbers and sought to bring some discipline and order to the stores. Brewer and her team simplified, eliminated, or automated tasks to allow store staff to spend more time with customers. Dedicated baristas were appointed to handle the mobile orders in stores where those were popular. Cleaning was carried out when the stores were closed. Two-thirds of the corporate projects were stopped. Only those relating to three priorities—beverage innovation, store experience, and the digital business—were allowed to continue. Brewer earned a reputation for making tough decisions. For example, she asked her team to assess the benefits and disadvantages of Mercato—Starbucks’ fresh food business that was introduced, with much publicity, to 1,500 stores in 2017. The assessment showed that Mercato did not fit the company’s priorities, so she killed it. She also cut specialist stand-alone, time-limited offers, like the Unicorn Frappucino. These were popular with only a small number of customers, and they complicated the baristas’ work. She had the development team work instead on simpler products that could be made with existing ingredients. Following analysis of the timing of customer visits to stores and focusing on converting occasional midday customers to “rewards” members (who account for 40 percent of sales), Brewer was able to grow the afternoon business, which was traditionally a slack period.Following what became known as “the Philadelphia incident,” Brewer flew to Philadel-phia to apologize in person to the two men, and she organized racial bias training for 175,000 employees. Brewer also spent a lot of her time visiting the stores, talking to employees, and assessing their pride in the business. Do employees who recognize her look her in the eye? Brewer says, “If they look down at their feet, they’re not proud about the store. Ninety-nine percent of the time I’m right about that” (Kowitt, 2019, p. 91). Brewer sees Starbucks’ stores as more than coffee shops; they are also public spaces, like libraries, serving the needs of employees and communities. In some shops, if they think that safety will be increased, managers have been allowed to install needle boxes in restrooms, for the disposal of drug users’ syringes. “Brewer wants baristas to make the perfect flat white or pour-over. But she also wants them trained in how to deal with the hardest social situations they could possibly encounter so that everyone feels like they belong in Starbucks” (Kowitt, 2019, p. 92).The OutcomeStarbucks’ sales growth recovered, proving Brewer’s critics wrong. By 2018, there were 15 million rewards members, who spend three times as much as nonmembers. Afternoon customers started to generate 50 percent of beverage sales, and in 2019 Starbucks saw its best sales growth in three years. Starbucks’ stock price rose 70 percent between 2017 and 2019 Chapter 1 Managing Change: Stories and Paradoxes 7LO 1.1The Sears StoryIssues to Consider as You Read This Story1. HowwouldyoudescribeEddieLampert’sleadershipstyle?2. Howwouldyouassesshisapproachtoimplementingmajororganizationalchange—inthiscaserestructuringthewholecompanywithaneworganizationalmodel?3. Onbalance,howwouldyouassesshisneworganizationalmodel?4. Whatlessonsaboutmanagingorganizationalchangecanwetakefromthisexperienceandapplytootherorganizations,inthisorothersectors?The SettingAhouseholdnameinAmerica,Searswasoncetheworld’slargestretailer.InOctober2018,thecompanyfiledforChapter11bankruptcy,anditsremainingassetsweresoldtoahedgefund,ESLInvestments,ownedbyEddieLampert.Whathappened?SearsHoldingsCorporationwasaspecialtyretailer,formedin2005bythemergerofKmartandSearsRoebuck.ThemergerwastheideaofEddieLampert,abillionairehedgefundmanagerwhoowned55percentofthenewcompanyandwhobecamechairman.BasedinIllinois,thecompanyoperatedintheUnitedStatesandCanada,with274,000employees,4,000retailstores,andannualrevenues(2013)of$40billion.SearsandKmartstoressoldhomemerchandise,clothing,andautomotiveproductsandservices.Themergedcompanywassuccessfulatfirst,duetoaggressivecostcutting.The ProblemBy2007,twoyearsafterthemerger,profitsweredownby45percent.The Chairman’s SolutionLampertdecidedtorestructurethecompany.Searswasorganizedlikeaclassicretailer.Departmentheadsrantheirownproductlines,buttheyallworkedforthesamemerchan-disingandmarketingleaders,withthesamefinancialgoals.ThenewmodelranSearslikeahedgefundportfoliowithautonomousbusinessescompetingforresources.This“internalmarket”wouldpromoteefficiencyandimprovecorporateperformance.Atfirst,thenewstructurehadaround30businessunits,includingproductdivisions,supportfunctions,andbrands,alongwithunitsfocusingone-commerceandrealestate.By2009,therewereover40divisions.Eachdivisionhaditsownpresident,chiefmarketingofficer,boardofdirectors,profitandlossstatement,andstrategythathadtobeagreedonbyLampert’sexecutivecommittee.Withallthosepositionstofillattheheadofeachunit,executivescompetedfortheroles,eacheagertorunhisorherownmultibillion-dollarbusiness.ThenewmodelwascalledSOAR:SearsHoldingsOrganization,Actions,andResponsibilities When the reorganization was announced in January 2008, the company’s share price rose 12 percent. Most retail companies prefer integrated structures, in which different divisions can be compelled to make sacrifices, such as discounting goods, to attract more shoppers. Lampert’s colleagues argued that his new approach would create rival factions. Lampert disagreed. He believed that decentralized structures, although they might appear “messy,” were more effective and they produced better information. This would give him access to better data, enabling him to assess more effectively the individual components of the company and its assets. Lampert also argued that SOAR made it easier to divest businesses and open new ones, such as the online “Shop Your Way” division.Sears was an early adopter of online shopping. Lampert (who allegedly did all his own shopping online, but had no previous experience in retailing) wanted to grow this side of the business, and investment in the stores was cut back. He had innovative ideas: smart-phone apps, netbooks in stores, and a multiplayer game for employees. He set up a company social network called Pebble, which he joined under the pseudonym Eli Wexler, so that he could engage with employees. However, he criticized other people’s posts and argued with store associates. When staff worked out that Wexler was Lampert, unit man-agers began tracking how often their employees were “Pebbling.” One group organized Pebble conversations about random topics just so they would appear to be active users.The ChairmanAt the time of the merger, investors were confident that Lampert could turn the two companies around. One analyst described him as “lightning fast, razor-sharp smart, very direct.” Many of those who worked for him described him as brilliant (although he could overestimate his abilities). The son of a lawyer, it was rumored that he read corporate reports and finance textbooks in high school, before going to Yale University. He hated focus groups and was sensitive to jargon such as “vendor.” His brands chief once used the word consumer in a presentation. Lampert interrupted, with a lecture on why he should have used the word customer instead. He often argued with experienced retailers, but he had good relationships with managers who had finance and technology backgrounds.From 2008, Sears’ business unit heads had an annual personal videoconference with the chairman. They went to a conference room at the headquarters in Illinois, with some of Lampert’s senior aides, and waited while an assistant turned on the screen on the wall opposite the U-shaped table and Lampert appeared. Lampert ran these meetings from his homes in Greenwich, Connecticut; Aspen Colorado; and subsequently Florida, earning him the nickname, “The Wizard of Oz.” He only visited headquarters in person twice a year because he hated flying. While the unit head worked through the PowerPoint presentation, Lampert didn’t look up, but dealt with his emails or studied a spreadsheet until he heard something that he didn’t like—which would then lead to lengthy questioning.In 2012, he bought a family home in Miami Beach for $38 million and moved his hedge fund to Florida. Some industry analysts felt that Sears’ problems were exacerbated by Lampert’s penny-pinching cost savings, which stifled investment in its stores. Instead of store improvements, Sears bought back stock and increased its online presence. In 2013, Lampert became chairman and chief executive, the company having gone through four other chief executives since the merger. The OutcomesInstead of improving performance, the new model encouraged the divisions to turn against each other. Lampert evaluated the divisions and calculated executives’ bonuses, using a measure called “business operating profit” (BOP). The result was that individual business units focused exclusively on their own profitability, rather than on the welfare of the company. For example, the clothing division cut labor to save money, knowing that floor salespeople in other units would have to pick up the slack. Nobody wanted to sacrifice business operating profits to increase shopping traffic. The business was ravaged by infighting as the divisions—behaving in the words of one executive like “warring tribes”—battled for resources. Executives brought laptops with screen protectors to meetings so that their colleagues couldn’t see what they were doing. There was no collaboration and no cooperation. The Sears and Kmart brands suffered. Employees gave the new organi-zational model a new name: SORE.The reorganization also meant that Sears had to hire and promote dozens of expensive chief financial officers and chief marketing officers. Many unit heads underpaid middle man-agers to compensate. As each division had its own board of directors, some presidents sat on five or six boards, which each met monthly. Top executives were constantly in meetings.The company had not been profitable since 2010 and posted a net loss of $170 million for the first quarter in 2011. In November that year, Sears discovered that rivals planned to open on Thanksgiving at midnight, and Sears’ executives knew that they should also open early. However, it wasn’t possible to get all the business unit heads to agree, and the stores opened as usual, the following morning. One vice president drove to the mall that evening and watched families flocking into rival stores. When Sears opened the next day, cars were already leaving the parking lot. That December, Sears announced the closure of over 100 stores. In February 2012, Sears announced the closure of its nine “The Great Indoors” stores.From 2005 to 2013, Sears’ sales fell from $49.1 billion to £39.9 billion, the stock value fell by 64 percent, and cash holdings hit a 10-year low. In May 2013, at the annual share-holders’ meeting, Lampert pointed to the growth in online sales and described a new app called “Member Assist” that customers could use to send messages to store associates. The aim was “to bring online capabilities into the stores.” Three weeks later, Sears reported a first-quarter loss of $279 million, and the share price fell sharply. The online business contributed 3 percent of total sales. Online sales were growing, however, through the “Shop Your Way” website. Lampert argued that this was the future of Sears, and he wanted to develop “Shop Your Way” into a hybrid of Amazon and Facebook. The company’s stock market valuation fell from $30 billion in 2007 to $69 million in October 2018, while car-rying $5 billion in debt. Revenues in 2018 were $16.7 billion, down from $50.7 billion in 2007. Sears had around 3,500 stores in America in 2007, and young shoppers rarely visited the 866 stores that remained in August 2018. Sears filed for Chapter 11 bankruptcy in 2018, and Lampert resigned as chief executive, but stayed on as chairman.Case SourcesKimes, M. 2013. At Sears, Eddie Lampert’s warring divisions model adds to the troubles. Bloomberg Businessweek, July 11. http://www.businessweek.com/articles/2013-07-11/at-sears-eddie-lamperts-warring-divisions-model-adds-to-the-troubles.Forbes (n.d.), #2057 Edward Lampert, http://www.forbes.com/profile/edward-lampert. Sears Holdings, http://www.searsholdings.com.Sears holdings, Wikipedia, http://en.wikipedia.org/wiki/Sears_Holdings.Shop Your Way, http://www.shopyourway.com.The Economist. 2018. The collapse of an American retail giant. October 20. https://www.economist.com/business/2018/10/20/the-collapse-of-an-american-retail-giant.LO 1.1The Detroit StoryIssues to Consider as You Read This Story1.Mike Duggan transformed Detroit without a “management textbook” plan for change. Why do you think he was successful?2.What aspects of Duggan’s change management style would be appropriate for you to use in your organization?3.To what extent can we generalize from managing change in a Midwestern American city to managing change in commercial organizations?The ContextDetroit, Michigan, has a population of over 4 million people. It was once the fourth largest city in America. In the early twentieth century, Henry Ford and other motorcar manufacturers made Detroit famous as the automotive capital of the world; Detroit is also known as the Motor City and Motown. But decades of decline, starting in the 1970s, made Detroit famous as America’s worst urban disaster story, as an iconic city in America’s Midwestern rust belt.The ProblemOil crises in the 1970s meant that customers wanted smaller, fuel-efficient vehicles, not the “gas guzzlers” that Detroit made. In the late twentieth century, with falling employment in the motor industry and other businesses leaving, Detroit’s population fell. As skilled workers found employment elsewhere, the proportion of poor people in the city’s population increased. These factors led to a smaller tax base, lower property prices, abandoned homes, and higher crime rates. The city administration was corrupt, and several officials (including the mayor) were imprisoned. In 2011, half of Detroit’s property owners failed to pay their taxes.By 2013, Detroit was bankrupt, and $18.5 billion in debt. When the current mayor, Mike Duggan, was elected in 2013, 40 percent of the city’s streetlights and 25 percent of the fire hydrants were not working and 40,000 properties were vacant. The city had stark racial, economic, and social divisions. In the run-up to his election, Duggan organized house parties with small groups of residents across Detroit. In total, 8,000 people turned up to these meetings, and Duggan described this experience as powerful: You go to a house party at Mack and Beals, where the people had an abandoned house on each side of their property, and their streetlights were out, they have one perspective on the city of Detroit. And then you go to Indian Village and they have a different perspec-tive. And East English Village has a different perspective. But the aspirations of the people of the city are really the same. They want their neighborhoods back. They want the police to show up. They want the abandoned buildings dealt with. And they want to be able to stay in their neighborhood and not leave. They did teach me about the different issues in those neighborhoods. They were enormously educational. Anyone can come up to me from any neighborhood in this city, and I’m able to have a conversation about their problems and what we’re going to do about them. The SolutionDuggan’s past experience involved turning around the Detroit Medical Center, which had lost $500 million over the six years, before he was appointed chief executive in 2004. The Center generated over $57 million net income in 2012. Duggan’s priority as mayor of Detroit was once again to reverse the decline. He describes his strategy as “focusing on the boring.”Get the boring stuff right—streetlights, fire hydrants, ambulance response times—and the rest falls into place. If each individual person says, OK my job is to get the grass cut in the parks; my job is to get the tractors repaired 20 percent faster to get the grass cut in the parks, turnaround occurs. People get into public service because something in their heart wants them to help people, and over time the bureaucracy beats that idealism out of them. We are trying to bring idealism back. Duggan continued to hold weekly meetings with residents, in their homes, where he asked them what he could fix next.The OutcomesBankruptcy brought some debt relief. Wealthy Detroit families invested in redevelopment, which brought sports teams and businesses back to the city. Entrepreneurial start-ups came to Detroit for its low costs and light traffic and because “rust belt” became trendy. Now the streetlights work, the fire hydrants have been repaired, and the city’s population is growing again. In 2018, Duggan bid to host the new U.S. headquarters for Amazon (subsequently awarded to northern Virginia). “Mike Duggan is an unremarkable guy who has done unremarkable things to achieve extraordinary results.”Case SourcesHagen, N. 2018. Halting Detroit’s decline. Financial Times, January 8, p. 24. https://www.crainsdetroit.com/awards/mike-duggan-making-improbable-inevitable.On YouTube, find ‘The revitalization of Detroit — Talks at GS’, (2016, 15 minutes).LO 1.3LO 1.4Tension and Paradox: The State of the Arttensionwhen two or more ideas are in opposition to each otherparadoxwhen two or more apparently correct ideas contradict each otherFrom a management perspective, organizational change is seen as problematic. How do we persuade people to accept new technologies that will make their skills, knowledge, and working practices obsolete? How quickly can people who find themselves with new roles, and new relationships, learn to operate effectively after a major reorganization? How about this new system for capturing and processing customer information? We prefer the old system because it works just fine. Change can be difficult. Change that is not well man-aged, however, can generate frustration and anger.Most estimates put the failure rate of planned changes at around 60 to 70 percent (Bucy et al., 2017; Stouten et al., 2018; Keller and Schaninger, 2019). There is, therefore, no short-age of advice. However, that advice is both extensive and fragmented. The literature—research and other commentary—can be difficult to access, and to absorb, for several reasons:many perspectivesThere are contributions from different academic disciplines and theoretical perspectives—there are several literatures.rich historyWork dating from the 1940s is still interesting and useful; recent research has not necessarily made previous commentary irrelevant.range … Change Stories In a three to four page paper (excluding the title and reference pages), reflect on an important professional change that you have experienced. Compare your change story to one of the stories from the beginning of Chapter 1 of the text. Answer the following questions and support your thoughts with at least two scholarly sources. In your paper you must: · Describe your change story and the one selected from Chapter 1 of the text. · Discuss the common issues and lessons present in both stories. · Identify and discuss the embedded lesson found in the three change stories of Chapter 1. · The stories must include The Starbucks Story, The Sears Story and The Detroit Story. · Describe how you might use the lessons as a solutions template during future change strategies. Your paper should include in-text citations and references for at least two scholarly sources, in addition to the course text, and it should be formatted according to APA style as outlined in the Writing Center. Required Resources  Text Palmer, I., Dunford, R., & Buchanan, D. (2022).  Managing organizational change: A multiple perspectives approach  (4th ed.) . McGraw-Hill Education. · Chapter 1: Managing Change Stories and Paradoxes · Chapter 2: Images of Change Management   Recommended Resources Article Kotter, J. P. (2012, November).  Accelerate! How the most innovative companies capitalize on todays rapid-fire strategic challenges - and still make their numbers.  Harvard Business Review, 90(11), 43-58. Retrieved from the EBSCOhost database. · This article takes a critical look at strategic management and the impact on organizations. The content reviews the dynamic of stale versus aggressive change management strategies. Multimedia TED. (Producer). (2017).   The inner side of organizational change: | Thijs Homan | TEDxAmsterdamED  [Video file]. Retrieved from https://www.youtube.com/watch?v=3n-c6iAKFgg