Organizational Change Done Right: Examples from the Giants of the Industry

 

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Every company needs to embrace organizational change if they want to stay at the top of their game.

But organizational change is tough. It requires vision, big budgets, and special talents in order to deliver successful results.

In fact, 70% of change initiatives fail as a result of bad management, poor implementation, or even bad luck.

The most tricky part is that every company is in a different place when it comes to their position, their market, and their current needs. So there’s no fixed, magic way that every company can use to implement change successfully.

What does help, however, is to see how big companies managed to implement organizational change successfully and study how they did it and why it worked.

Effective Organizational Change Leads to More Engaged Workforce 

Organizational change happens when a company decides to change its structure, strategies, culture, policies, technology, or even its core values in order to improve performance and business growth.

Reasons to implement change include: 

  • Adapting to market changes
  • Digital transformation and technology upgrades
  • Solving internal problems with organizational structure and bureaucracy
  • Improving processes and procedures
  • Expanding the company to reach new audiences
  • Launching a rebranding campaign

Every company is unique, so the reasons to enact organizational change are essentially endless.

Organizations can’t skip organizational change, either, as change is essential to survive.

According to recent research, two out of every three organizations have to change at least four times every five years. In other words, if you want to remain competitive, you need to embrace change sooner or later. Otherwise, your competitors will leave you behind.

When done correctly, organizational change can turn your company into a more competitive and effective business — and a better place to work.

But enacting change is easier said than done. By looking at examples of other companies that have successfully enacted organizational change initiatives, you can get a better idea of what successful change management looks like — and use that information to inform your own internal initiatives.

Organizational Change

What Does Successful Organizational Change Look Like? 

Let’s dive into some examples of organizational change to uncover what organizations did and how they did it successfully.

01. Microsoft's organizational transformation and new purpose

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SOURCE: Manu Cornet
 

Microsoft was running into serious internal problems with its organizational structure.

It wasn’t until the new CEO Satya Nadella took charge and started to undertake some major restructuring for this massive company. At a very high level, we can see some of the fruits of Nadella’s ideas by looking at Microsoft’s stock price.

Microsoft stock price

A split company can’t grow

Even after the phenomenal and long-lived success of Windows and Office products, Microsoft was struggling to keep up with other companies — specifically, with Google becoming dominant in the search and software market and Apple owning the phone market. 

The tech giant was stagnant and rife with internal wars between major departments that often viewed each other more as competitors than partners within the same company.

As a result, innovation was being thwarted by a toxic environment that kept the company increasingly dependent on Windows and Office. While both products are very successful, the stagnation put the company in a dangerous “comfort” zone.

How Microsoft optimized its processes and unified its teams

After being named CEO in February 2014, Satya Nadella undertook a major restructuring of the tech giant to eliminate its destructive internal competition. 

Microsoft products and platforms would no longer exist as separate groups. Instead, all employees would start focusing on a limited set of common goals — and bringing them all together. Their new common functions include:

  • Reinventing productivity and business processes
  • Building an intelligent cloud platform
  • Creating more personal computing

In September 2016, Nadella created a new AI and Research Group by merging their original research group with the Bing, Cortana, and Information Platform teams. This move brought roughly 5,000 engineers and computer scientists together to focus on artificial innovation across all Microsoft product lines. 

A new, meaningful mission

Right at the beginning, Nadella shared a new sense of mission with his employees: “To empower every person and every organization on the planet to achieve more.” 

He also recalled his thought process: “Over the past year, we’ve challenged ourselves to think about our core mission, our soul — what would be lost if we disappeared... We also asked ourselves, what culture do we want to foster that will enable us to achieve these goals?” 

Prior to the restructuring, employees had been lacking a positive sense of purpose, with the result being low morale and weakened employee engagement

And thanks to Nadella’s initiative, all Microsoft’s employees are following a common goal that brings real meaning to their work.

As of today, Microsoft’s restructuring is still in progress. But its future still looks brighter — perhaps even brighter than ever — as a result of its new, well-established mission.

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02. Google splits up under the Alphabet umbrella

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Imagine growing so much that you need to break yourself apart to work better?

Think that sounds unbelievable? Well, that’s exactly what Google did when it became Alphabet.

After dominating a plethora of hi-tech projects, Google co-founder Larry Page thought it was time for him to reorganize the entire company again.

Being a “giant” company isn’t always good

Back in the early 2000s, Google was already a monster, dominating internet search and making itself indispensable in our lives with products like Google Maps and Gmail. 

Its R&D teams were seemingly interested in everything, searching for what co-founder Larry Page termed “moonshot” projects, which were supposedly impossible for Google engineers to make real. But the company wanted them to try anyway.

As a result, Google grew extremely diverse. The company started tackling all kinds of projects, including ones relating to human longevity, smart vehicles, wearable tech, smart homes, and more. 

It was all connected, to an extent. But at the same time, it wasn’t. Google was becoming an increasingly impossible entity to manage. So, in order to save serious troubles in the future, Page decided it was time to deconstruct the entire conglomerate. 

How Google became a part of another company

Page broke up Google into different companies, all of them owned by a new umbrella corporation called Alphabet. 

Page sits at the top as CEO of Alphabet, with Google co-founder Sergey Brin as president, and long-time Google exec Eric Schmidt as chairman (who left Alphabet in 2020). Each of Alphabet’s companies has its own goals and a CEO focused solely on those goals. 

In a blog post, Page wrote this: “Fundamentally, we believe this allows us more management scale, as we can run things independently that aren’t very related. Alphabet is about businesses prospering through strong leaders and independence.”

And as the post goes, Larry’s motivators to make this change included:

  • Getting more ambitious things done 
  • Taking the long-term view
  • Empowering great entrepreneurs and companies to flourish
  • Investing at the scale of the opportunities and resources we see
  • Improving the transparency and oversight of what we’re doing
  • Making Google even better through greater focus 
  • And hopefully...as a result of all this, improving the lives of as many people as we can

Essentially, Google wanted to separate every major project into independent organizations with unique goals and ambitions. That way, it would be easier to manage and scale.

Giving employees accountability leads to 10x company growth 

Larry Page made clear his thinking when the launch of Alphabet was announced, explaining that the reorganization would free the employees to concentrate more productively and happily on their own mission without having to be concerned about Google overall. 

This means that every Alphabet’s company is now responsible for its own expenditures and income. But at the same time, the increased responsibility could make innovation more meaningful. 

In the end, what truly paid off for Google (now Alphabet) was the long-term vision Page had for the company, which drove him to lead a change management initiative for the good of his organization.

03. British Airways restructures its entire organization

British Airways

British Airways is the largest airline in the U.K. as a result of merging with four other companies.

Due to this massive merger, the organization faced huge problems to manage itself and bring a decent service in the immediate aftermath.

It wasn’t until its privatization and the incorporation of the new chairperson, Lord King, that the company started to enjoy positive momentum — and increase their profits accordingly.

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Standardize customer service after new chairperson taking charge 

Created in 1974 from four other companies — BEA, BOAC, Northeast Airlines, and Cambrian Airlines — they formed a business with 215 aircraft supported by 50,000 employees.

This level of staffing was — even then — viewed as precariously oversized. And on top of that, the oil crises of the 1970s shrunk the airline’s customer base, which, in tandem with its huge staff, resulted in massive financial losses. 

The company soon developed a reputation for its terrible service. So, in 1981, British Airways brought on a new chairperson, Lord King, who noticed that the company was operating very inefficiently and wasting valuable resources.

How BA boosted its profits by reducing personnel and upgrading its fleet

To increase profits, King decided to restructure the entire organization by reducing its workforce from 59,000 to 39,000, eliminating unprofitable routes, and modernizing the fleet. Over the course of two years, Lord King had replaced over half of the company’s board.

He repaired the airline’s image by bringing in a new marketing expert and hiring Colin Marshall as the new CEO in 1983.

Within 10 years, the airline reported the highest profits in its industry: $284 million. 

Transparent communication and effective change management leads to greater profits

Before King began announcing layoffs, he explained his reasons for the restructuring to the entire company to prepare them for the upcoming change.

His communication effort arose a sense of urgency within the company and prepared them to embrace change.

Without his transparency, British Airways could have experienced employee backlash and negative press around all the layoffs. But the chairperson always communicated honestly and frequently to manage the change.

A Step-by-Step Guide to Implementing Organizational Change

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Implementing change in your organization can easily become an overwhelming challenge — especially if your company doesn’t have Google’s deep pockets.

So, if you want to increase your chances to enact change successfully — and transform your company’s life forever — following these best practices will help you manage organizational change smoothly and with less resistance: 

  • Getting a tangible, realistic vision. Determining what you want your organization to look like in the future is critical to success. This allows you to trace the roadmap that will guide you to reach your goals.
  • Embracing change management. The most difficult part of change is overcoming people’s natural resistance to switching things up. For this reason, you need to implement the right change management model for your business and get ready to deal with your team’s dissatisfaction.
  • Getting constant feedback from your team and employees. You need to find ways to get real feedback directly from your team so you can constantly improve the process. A great way to do this is through regular pulse surveys. That way, every employee can know that they’re being heard, which improves employee engagement.
  • Using the right tools. Make sure you’re getting tools that are helping you to keep track of your project and improve your communication. Otherwise, you may find yourself having to deal with some unnecessary problems.
  • Leading the project with top leadership skills. Your company needs strong thought leadership if you want to move your current organization to a better state. Ensure that you’re sharpening your leadership skills frequently if you want to lead a change management initiative properly.
  • Communicating as effectively as possible. Communication can mean the difference between success and failure. If you find that your company is having communications problems, it’s time to address this issue as soon as possible. Failure to do so could very well mean you’ll face some hard times.

Following these practices will help you approach organizational change properly.

But it doesn’t end there. Organizational change is a long journey, one that doesn’t really ever end, and there’s a lot you still need to learn.

The Final Takeaway

If there’s something these three examples have in common, it’s that they all show how important it is to think out of the box and be willing to take any action to succeed.

Now that you know how the giants of the industry approach change, it’s your turn to prove yourself and take action!

So go on and start brainstorming some great ideas for the future! We’re rooting for you.

"I would say that 70-80% of our leadership strategy comes from ideas that are solicited through TINYpulse."

 
-- Nick Smarrelli, CEO at Gadellnet Consulting Services
 

 

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Lori Li

Lori Li

June 16, 2020

 

 

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