Managing Operations and Change - Change Management within 7 Eleven Company - Example

Name Course Coordinator Course Module Date Action Plan – Change Management within 7 Eleven Company 1. Introduction As components of business environment as customer needs, customer expectations and level and caliber of competitors are dynamic in nature and changes continuously, it is important that organisations too change their internal structure and process in line with the demanding conditions of the marketplace. Becoming an innovative firm that embrace continuous learning approach is the only way to succeed in the ever changing business world that has becoming ever more competitive. The core competencies and organisational strengths in today’s business are the ability to learn and innovate; a team of multi-skilled workforce; and entrepreneurial talent in the managerial team (Berman, 1986, p. 1). With these new demands organizations can no longer be fixed, functional and hierarchical in their approach and simply be reactive the changing conditions. They need to become organizations that support change as a way of life and search for excellence continuously. This action plan report takes in to account the change implementation within 7-Eleven, the world’s largest convenient store operator. 2. Introduction to the Organisation 7-Eleven which operates mainly as a chain of franchised outlets is the largest convenience store operator with over 39,000 outlets worldwide. The holding company of the chain is Severn-Eleven Japan Co Ltd. The company operates outlets in over 16 countries including Japan, the United States, Canada, the Philippines, Hong Kong, Taiwan, Malaysia, Thailand and Australia. Last summer, 7-Eleven surpass a milestone of opening the 500th outlet in Australia thanks to its accelerated growth since taking over the Mobil fuel stations and opening up on site convenience stores (7-Eleven Australia Reaches 500-Store Milestone, 2011).  . Since being founded in 1973, the 7-Eleven has successfully faced business challenges posed by the dynamic business and consumer environment. The company’s strong points have been the pioneering use of information technology in managing and driving strategy across all business areas, not only the logistics management. 3. Action Plan Objectives The objectives of this action plan are to understand the change management process and effective means of implementing change according to a proper change process. What caused the need for change in the case organization will be established and how the change has been implemented will be assessed prior to proposing best change management strategies. The need for organizational culture change to have a learning outlook and to innovation will be assessed within the action plan. 4. Review of Change Management Theory and models 4.1 Organisational Culture and learning to Change An organisational culture, simply put, is a way of doing things and this culture is shared by its members. There is a dual influence where culture influences its members and members too can influence the culture, especially at higher leadership levels (Schein 2004). The culture of an organisation is the driving force behind every action it performs and this includes how the organisation is able to change, to learn new things, to innovate etc. Garvin (1993) describes a learning organisation to be able to create, acquire and transfer knowledge and modify its behavior to reflect new knowledge (Garvin 1993). To create such a learning culture, an organization change should be planned, systematically implemented and sustained with support. This is where change management becomes a critical aspect for business organisations. 4.2 Change Management Models & Process There are various models for mapping and implementing change, identifiable within literature. When it comes to different types of change, Ackerman (1984) identified three types of changes which organisations face as developmental change, transitional change and transformational change (Akerman, 1984). The ADKAR model proposed by Jeff Hiatt (2006) outlines five key phases in the change management process . Applying ADKAR model involves becoming aware of the need to change first. Second step is to establish a desire to change and support the change. The provision of knowledge of the change plan must be done to implement it effectively. Finally, the ability to achieve and sustain the change should be ensured through retraining, new skill acquisition, and resource allocation. 4.3 Scales of change While change is important, the scale of change applicable for each business will differ, depending on both the internal and external factors. According to Buttery and Richter (2001) changes can be implemented in four different scales. Some changes are of monumental scale, totally reengineering an organisation, transforming it. Others can be incremental and implemented in stages. Buttery & Richter also suggest two other scales of change as E-change and O-change. E-Change focuses on changing the economic value structure of an organization through exercises such as downsizing and restructuring cost models. In contrast, O-Change’s focus on developing culture and human capability through individual and organisational learning. See Appendix A for a figure depicting change scales. 4.4 Overcoming resistance to change An important aspect of managing change is the managing of resistance that the efforts to change will come across. Change is resisted by certain people for certain reasons and these vary from person to person and from situation to situation. According to Hodgson (1991), the change may be resisted for following reasons. Rigidity – dogmatic approach and attitudes where rigidity cause resistance over-reaction – May fear the outcomes and over react in advance “yes-but” – this sort of resistance is where blame passing comes in to. Suspicion – the intensions, motivations and possible outcomes are doubted or suspected. Action orientation – preoccupation in doing something an established way, preventing being open to change which may produce better results. Joint learning and making decisions with empowered authority to respond to change was proposed as a strategy to minimize change resistance (Senge 1993) 4.5 Managing Change resulting from Innovation The level of innovation and technology change in today’s world is very rapid and one product innovation is generally the death of another. Over reliance of one product or service is therefore very risky and the need for continuous innovation in the business domain in which an organisation operates in becomes a critical. There are various forces in the environment that are driving innovation by many folds and organisations would be geared and prepared to manage such change caused by innovation. By creating a culture that is disposed towards innovation and creativity, an organisation can surge forward ahead of competition as it provides an inimitable competitive advantage that is gained by tapping to work force creativity and tacit knowledge. Providing a workplace environment that promotes learning opportunities through innovation, creativity, participation and autonomy addresses the motivational needs of the employees as well (Weiss 2001, p ). 5. Situation Analysis Having reviewed the relevant literature with regards to managing change and creating an organisational culture that is prepared to innovate and learn, this section will now focus on the 7-Eleven’s actual organisational situation and then move on to discuss the key findings with regards to change management that was implemented within the company. 5.1 Identifying the Need for Change at 7- Eleven 7-Eleven’s rise to number one position in the convenience retail store segment is a one which is driven by lean, efficient internal structures and processes. The change that propelled this company to the current international standing took place over a number of decades. 7-Eleven company was initially established by Ito-Yokado Co., Ltd. with a collaborative management and technical support tie-up with Southland Inc. USA. With the success of 7-Eleven Japan within its very year of inception, 7-Eleven Japan Company managed to outperform both its parent companies. 7-Eleven then took over US parent company, Southland Inc, USA and its 7 – Eleven operations in Hawaii, USA and Canada. Thus it is right to say that 7- Eleven was able to replicate the managerial, cultural and organizational values, measures, process systems etc that helped 7-Eleven Japan to become a successful company in to its international operations (Success of Severn Eleven – Japan). 5.2 Impact of Environmental Forces on Need for Change The reason for 7-Eleven change process can be traced back to various environmental, social, competitive, and legislative forces at play during the 1980s. The prevailing business environment at that time was intense and large scale supermarkets were crowding out the small and medium scale retailers worldwide. Economically, the Japanese market was at a downturn juncture after the oil shock in 1973. The legislature at that time in Japan brought in “Large Scale Retail Store Law” restricting the setting up of large scale super market type stores with operating hour laws. The laws had a protective stance towards small business firms. The social conditions in Japan and also in many parts of the world changed to extremely busy life styles where convenience in shopping became a priority. Working women and men started to have little time to spend on shopping and was looking to pick up fresh, essentials on their way home or on their way to office (Success of Severn Eleven – Japan). Having identified these environmental conditions, 7-Eleven decided to expand rapidly, to capitalize on the opening for a well-managed, highly efficient convenient store chain that was accessible easily. This meant rapid expansion and the company chose a franchisee approach to achieve the desired number of outlets and then expanded out of Japan in to other countries. 5.3 Influences or Impacts of Innovation on the Change Situation However, these roots of change did not end in midstream when 7-Eleven achieved the set targets. The company continues its quest for innovation and learning with the rapid changes in technology and ITC. It recognized the needs for change with new developments in the environment, such as the cashless market place, need for managing supply chain, need for highest quality, real time management information to make the right decisions and efficiency driven by streamlined internal processes. What is more, 7-Eleven has also recognized the need for developing complex, augmented product and service offers that help achieve the consumer loyalty in the modern world. 6. Key Findings The analysis of a number of case studies on 7-Eleven and other material on the company as well as media releases by partnering vendors such as Maynard Corporation, E-wrap Technology and NEC Corporation, all yielded important insights and findings on various aspects of change that took place at 7-Eleven. This section outlines these findings. 6.1 How was Change Managed and in What Scale The changes at 7-Eleven can be considered a combination of incremental changes that in ongoing over a continued period coupled by a number of reformation change programs. These reformation programs put in to motion certain key changes and cultural and business process reengineering objectives into action. The company has managed to harness the creativity and innovative ideas of its work force as well as the franchisees, thereby being able to overtake McDonalds, which was the number one convenience retailer in the world by over 1000 outlets since of last year. The adoption of innovative management information systems, efficient internal processes streamlined through unique and pioneering logistic solutions, and continued desire to find new and improved ways of doing things is at the core of 7-Eleven’s success. The changes that took place in 7-Eleven included the following: The “retailer initiative” concept of 7-Eleven instilling a culture seeking continued innovation to spearhead its position in retail industry. Reengineering the internal processes to maximize their effectiveness. Reengineering programs that integrated consumer information, internal process information, vendor and franchisees and all other aspects of business in to one single source of managerial information support system (Global Partnership with Retail Solutions 2012). 6.2 How Did 7-Eleven Adopt Innovation within the Change Situation? It is right to say that 7-Eleven became an “information industry” in the process of utilizing innovative IT solutions to maximize retailing operations. It was able to convert new information technology into an immediate business expansion by way of offering utility payments, money transfer services etc. (Success of Severn Eleven – Japan). Influence and impact of innovation is at the core of 7-Eleven’s supremacy in the retail industry. Following are some of the examples of how 7-Eleven’s changes were influenced and impacted by innovation: Installing interactive POS systems that captured highly targeted customer information. Process improvements in CDC (Combined Distribution Centers) with new layouts and procedures that cut down working hours by 10-15% and increased efficiency of stores and distribution staff. Optimizing the product lines and shelf space with “item-by-item management” supported by the POS system technology. This is by far one of the greatest revamps in retailing industry itself and in the company’s history. Heavy investments into “4th & 5th integrated information systems” which connected the entire network of stores using ISDN lines. This created a portal of fast transmission of high volumes of data and information which opened up opportunities to offer new services such as that of acting as the intermediary for payment acceptance (Lavedera et al 2010). 6.3 Organizational culture and structure The culture of 7-Eleven was a one that encompassed its franchisee base. By offering the franchisee option to small retail competitors, 7-Eleven created a structure with high gains. 7-Eleven, including its franchise outlets were managed with a very lean workforce. However, hierarchy being a Japanese cultural norm, 7-Eleven is a formally structured company. The need for more loosely structured, autonomous work team configurations are not observed within 7-Eleven. 6.4 Attitudes & Resistance towards Organisational Learning and Development Attitudes of a workforce depend on both their national culture and organisational culture (Tayeb 2002). Japanese culture is known to be highly uncertainty avoiding. Hence, any decisions or change plans that are implemented are well thought through with well supported facts. This is one key reason why information technology is given such a prominent role in driving change within the company. The fact that the changes were decided with collaborative planning and discussions made the subsequent “selling” of the concept much easier, reducing the resistance levels towards innovation. 7-Eleven also invested in side technologies that made the implementation of various software developments which took place on a continuous basis to be easy and less taxing on the work force (7-Eleven Implements Novadigm Solution, 2008). Such actions make sure that change and innovation does not render many employees incapable or needing retraining, which can delay or increase resistance to change. 6.5 Who were the Change agents 7-Eleven change was spearheaded by the 7-Eleven Japan CEO, Toshifumi Suzuki, who positioned the company as a company “that responds to change” (Message from 7 Eleven Chairman, 2010). However, in line with Japanese managerial styles, the effort was consultative and empowerment to various change leaders made sure that the process had worldwide impact. For instance, the Vice President of Information Systems at 7-Eleven was quoted stating “change is a way of life in convenience retailing and our success depends upon it” (7-Eleven Implements Novadigm Solution, 2008). This goes to show that managers at strategic positions are acting as change agents, believing in its need and inspiring the others to embrace and adopt the same attitudes towards learning and innovation. 7. Recommendations for Improvement While 7-Eleven case study shows a success story in change management, there is still scope for improvement, as continuous improvement is in fact the basis of change and learning concept. Following change strategies are proposed for improving on organisational culture change, innovation and learning management. 7.1 Focus on people While it was quite evident that 7-Eleven has places much importance on the logistic and internal process developments and innovation and learning with regards to technology and logistics, there is little evidence on people playing a crucial role in reaching success. While 7-Eleven has achieved success in convenience retailing through these current changes, the scope open for more growth and performance should be explored. For instance, retail chains of the nature of Star bucks and Tesco focus on their differentiation strategy based on people. People are one of the most difficult competitive advantages for competitors to replicate. Hence, investments in to developing a culture that is more human oriented than mechanical oriented is recommended. While it is true that process competencies are a key pillar in success, it should not be the only focus. A more balance approach is desired which as proposed in Balance Score Card strategy (Kaplan & Norton, 2006). 7.2 Organizational Structures It is also observed that the 7-Eleven is still a mechanistic structure with hierarchy and structures operations. While it is justified to some extent in managing such a wide network of activities, the company should still consider changes in this area by creating empowered teams that operate autonomously with their own entrepreneurial skills (Cloke and Goldsmith (2002). This will help the firm move from a Mechanistic structures, to an organic structure that has many competencies and competitive advantages. See figure 1 Figure 2 – Organic and Mechanistic Structures 7.3 Implementing Employee / Franchisee Targeted Innovation Promotion While we can see much of Innovation and change taking place in 7-Eleven through engagement of specialists and outside consultancy or solution firms, there is no evidence of innovation promotion within the company itself. The innovation is managed through top-down push through approach. It is proposed that the company set up programs that encourage innovation from within, especially from employees and franchisees. Such internal innovation promotion in companies such as 3M, HP, Dupont have taken these firms to high standing, proving the usefulness of such strategies. 8. Conclusion Change is a critical part of surviving in the business world and to be able to effectively change in response to demands from the environment. This change cannot take place ad-hoc and hence must be managed properly. Applying various change management models and being guided by a systematic process will help implement change that lasts and face less resistance in the process. By developing an organizational culture that thrives on change, and continually seek innovation and engage in collective learning will be the best environment that is conducive for change. The case analysis of 7 –Eleven illustrated how change takes place, the phases, scale, process and the pitfalls. The recommendations provided are derived from this analysis and the knowledge gained from the review of literature that discusses change management techniques. The analysis in this action plan lacks comprehensiveness in terms of sufficient data and inability to provide a total snapshot view of the change process which spreads across many decades. The time line data are also lacking, due to the consolidation of data from various sources. Work Cited “7-Eleven Implements Novadigm Solution” Business & Money Trail. 02.01.2008. Web. 05.01.2012. 7-Eleven Australia Reaches 500-Store Milestone” NACSOnline. 15.08.2011. Web. 18.12.2011 Akerman, Linda. “Being First” OD Practitioner, Vol. 18 No 4. 1984. Berman, M. A. (Ed.). (1986). Corporate change and culture. New York: The Conference Board Inc. Buttery, Alan., & Richter, Eva Maria. Strategic management in times of change. Richmond NSW: In-Focus Publishing. 2001. Drucker, P. F. (2002). The discipline of innovation. Harvard Business Review, 80(8), 95-100. “Global Partnership with Retail Solutions” NEC. 2012. Web. 04.01.2012. Edgar, Wille. & Hodgson, P. Making change work. Mercury Books. (1991). Garvin, David. “Building A Learning Organisation,” Harvard Business Review, July - Aug 1991, pp. 78 -91. Hiatt, Jeffry. ADKAR: a Model for Change in Business, Government and our Community: How to Implement Successful Change in our Personal Lives and Professional Careers, Colarado: Prosci Research; 1st edition (August 1, 2006) Ishikawa, Akira & Nejo, Tai. The Success Of 7-Eleven Japan - Discovering the Secrets of the World's Best-Run Convenience Chain Stores. World Scientific Publishing Co. Pte. Ltd. 2002. Web. 03.01.2012 Kaplan, Robert, & Norton, David. Alignment: Using the Balanced Scorecard to create corporate synergies. Boston: Harvard University Press. (2006) Labadera, Andrew; Williams, Meghan; and Kotter, Rory. 7-Eleven Case Study:7-Eleven Case Study. 2010. Web. 02.01.2012 “Pure Convenience: Maynard Helps 7-Eleven Improve Efficiency, Reduce Costs” Maynard. 2004. Web. 04.01.2012.  “Message from Chairman and President - Seven-Eleven Japan.” Seven-Eleven Co., Ltd. Web. 3 Mar. 2010. . Senge, Peter. “Leaders New Work: Building Learning Organisations,” Sloan Management Review, Fall, 1990. Schein, Edgar. Organisational culture and leadership (3rd ed., pp. 393-419). San Francisco: Jossey Bass. (2004). Tayeb, Monior. Organizations and National Culture a Comparative Analysis. London: Sage Publications. 1988. Weiss, James. Organisational Behavior & Change, 2nd ed., Ohio: South-Western, 2001. Print. Appendix - A Three Perspectives on Change Read More