The 3 Mistakes That Will Tank Your Business Pivot

by Dora Wang on Mar 6, 2015 11:00:00 AM

Don't Make These 3 Mistakes During Organizational ChangeThere’s a reason people in human resources talk about “change management.” Change is hard. Many of us are creatures of habit who don’t particularly welcome it. And if it affects your company, that can be especially scary because most of us depend on our jobs to earn a living. 

It’s ironic that while many employees will leave jobs in pursuit of development opportunities, just as many will fight like the dickens to maintain the status quo, even as the powers that be work strenuously to promote change.

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Of course, skittish employees aren’t the only reason organizational change fails. Other reasons are just as—or perhaps even more—significant. Here are three reasons (and three examples) from the big guys.

1. The change isn’t compatible with the brand: Let's start with Walmart. Nearly a decade ago, the “Everyday Low Prices” seller of food, home goods, electronics, music, clothing, and just about anything else you can think of looked to expand its market. They brought in higher-priced, upscale items like trendy fashion in order to attract new customers.

But the move never really took hold. Higher-end consumers were decidedly underwhelmed, and lower-end consumers started looking elsewhere for bargains. Walmart got a new advertising agency and forged on, but it was not to be. In 2012, they announced plans to refocus efforts on low prices.

(Recently, however, now that its traditional superstores are losing traffic, Walmart has begun experimenting with upscale goods in smaller stores. Will this strategy work better the second time around? We’ll see.)

2. The change is hampered by human psychology: Sometimes, no matter how good or sensible an idea, consumers aren’t having it.

The year was 2012, and rather than offer sales and coupons, JCPenney had a better idea: “month-long values” that would do away with the hype and drama of specials and so-called “reductions.” Instead, consumers could rest assured they were always getting the best price, period.

Unfortunately, customers hated the idea and criticized JCP’s implementation. The company suffered a 20% drop in profits in the first quarter of 2012, along with strong negative consumer feedback. JCP’s then-president, Michael Francis, announced his resignation soon thereafter.

Unfortunately for JCP, consumers want sales, and they want coupons even more. There's something about getting a deal, even a fake one, that feels good.

3. The change comes too late: The giant brick-and-mortar store used to be the mainstay of the book market. But with the rise of online sales, physical stores suffered, and by 2011, Borders announced that it was closing its 399 stores and laying off 11,000 workers. Borders’ main competitor, Barnes & Noble, was having a tough time as well, but B&N had one thing Borders didn’t—an e-reader already entrenched in the market. Borders’ e-reader was simply too little, too late to make a difference.

Change is stressful, but it’s exciting, too. More than that, change is absolutely necessary. Organizational change, with all its moving parts, is fraught with potential pitfalls, and some failure seems almost fated.

However, with a little luck and a judicious examination of where others have misstepped, your next great move could come off without a hitch!



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This post was written by Dora Wang

Dora is an employee engagement researcher for TINYpulse and managing editor of TINYinstitute. Having grown up in Texas, she is now firmly settled in Seattle, where she spends her free time reading comic books, wrangling her three cats, and (of course) rooting for the Seahawks.

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