Change in Partnership Between Coles and Microsoft Assignment 2 Answer
Topic Research Essay
Organisational change is a process that can never be restricted or restrained for a longer period of time. Driven by changing market demands, new technological and operational trends, the business organisation often face the need to implement organisation-wide change because unless the organisations compete it, inevitably they will lose market shares to their key competitors. Especially in the retail industry where the business is driven highly by market competition, understanding the change needs and implement those appropriately is a necessity.
Organisational change can be defined as a process of changing organisational strategies, technologies, culture, and processes. The change process also has good and bad impact on these aspects of the organisation. To increase the positive impact and reduce the negative impact of change in the organisation, the company strategists need to develop and implement appropriate change management strategies following the various change management theories and models presented by experts.
This assignment is focused on the recent proposed change that is scheduled to be executed in 2019-2020. The change is under process. This change is a partnership between Coles and Microsoft. In this assignment, the change is described, and issues causing the change, the options for enacting sustainable change have been analysed followed by recommendations.
Description of organisation and change
Coles is an Australian Supermarket chain headquartered in Melbourne is one of the largest retail supermarket chains in Australia, having 27.6% market share in the grocery retail market. In FY 2018, the total revenue of the company was $35.0bn. The company has observed 47 quarters of astounding consecutive growth over the years. Previously the company was an independent subsidiary of Wesfarmers, but it has now separated. As a recent initiative to transform the way Coles runs its business, the new CEO Steven Cain has decided to partner with Microsoft. Under this partnership, a number of change initiatives have been planned (Barbaschow, 2019). The first initiative in the organisational change process is building an enterprise data platform in Azure. This initiative has the mission of strengthening the company’s data analytics capabilities as well as enabling the use of artificial intelligence for driving innovation through its superstores and supply chain. Thus the change process can be categorised as digital transformation. The second initiative is implementing Dynamics 365 to run some business units and implementing Office 365 as a part of the modern workplace program. The third initiative under the change process is digitally empowering its online sales platforms to improve its online sales which is causing more costs of doing business than the revenue generated (Barbaschow, 2019). The technical environment is influencing such change in the organisation, which is demanding more advanced techniques for understanding business analytics and ways of doing business. To understand the deep aspects of the change initiative, it is necessary to determine the type of change that is occurring in the organisation and the type of change management process the company was selected to manage the change.
As detailed by Lozano, Nummert and Ceulemans (2016), organisational change can be of different types such as operational change, technological change, strategic change, and so on. This change is focused mainly on changing the information technological aspects associated with the business leading to improvement of overall business operations. This change can be categorised as technological change. At the same time, as the organisation is implementing the change with the objective of improving the current ways of business operations and supply chain management, the change management process can be regarded as planned or developmental change. This change management initiative at Coles not only involves aspects of technological change for improving the process, but it also involves aspects to training employees (around 700 IT staff) in Microsoft's Azure Cloud platform. Further initiatives include employing a team of 35 data scientists for analysing a billion customer transaction data.
With respect to factors influencing the change process, the key drivers of organisational change are internal drivers and external drivers (Barbaschow, 2019). The internal drivers could involve key organisational strengths and weakness influencing the need for change while the external drivers of change could be political, economic, social, environmental, legal and technical influencers. With respect to the change occurring at Coles, the key internal drivers of change are an organisational limitation to processing huge of customer transaction data that needs to be analysed properly and increasing costs associated to online operations that need proper management. On the other hand, the major external drivers are economical and technical. The economic drivers are needed for increased market share, profitability and sales, competing with Woolworths, reducing operational costs and increasing profitability. Consequently, the technical drivers involve increased market demand for online sales options, need for AI implementation for improving organisational operations on a wide scale, improving paradigms of customer relationship management by investing in better software, and implementing software like Office 365 and Dynamics 365 for running business units and official functions.
Change management has two distinct images that can be used for understanding the change management process occurring at Coles. These are called management as control and management as shaping.
Figure 1: Images of change management
Source: (Palmer et al. 2017)
With respect to “Management as control,” the change process is a top-down view managing change that motivates the Fayol theory of management. This image of change involves activities namely1. Planning, 2. Organising, 3. Commanding, 4. Coordinating, and 5. Controlling. With respect to “Management as shaping” the change process views managing as shaping an organisation, the activities that occur in it. One of the major aspects of this type of change image is improving the capabilities of people working in the organisation (Palmer et al. 2017). In this case, Coles has adapted the management as a control image of change management which can have three possible outcomes to this planned change process, namely intended, partially intended and unintended.
The identified issue leading to change
In most cases of organisational changes, the change process occurs as a result of the organisation either facing issues causing change or identifying opportunities leading to change. In this case of organisational change at Coles, many opportunities for improvement have led to the proposed and planned changes as detailed in the previous section. The first opportunity that has led to change is the need to manage a huge business transaction. The breadth of business for Coles include operating 2,450 stores, managing 115,000 staffs in order to generate AU$39 billion on an average annually. Around 21 million transactions occur per week across the 2450 stores of Coles thus generating a huge amount of data that must be analysed in order to optimise business needs and improving customer service provisions to give engaging customer experience. This much amount of data needs to be stored and processed for which the company is implementing the Azure Cloud Platform (Barbaschow, 2019).
Moreover, the complexity of business and simplify it so that staffs and team members can work as efficiently as possible. The partnership with Microsoft involves implementation of Office 360 and Dynamics 365 for simplifying office procedures and increasing the efficiencies of business with respect to running the business units. Moreover, modern cloud computing technologies means state of the art data platforms that infuses artificial intelligence and machine learning are required for resolving these needs, which require the implementation of this huge technological change.
With the increased popularity of AI and machine learning technologies that are being implemented across business sectors, the company also needs to implement such technologies if they want to remain competitive. For this reason, the company has decided to implement a range of Azure services for which Microsoft has also decided to invest in Cole’s innovation lab under the partnership. Through the partnership, Coles is expected to improve its IT capacities for running the business (Barbaschow, 2019).
Next, the huge internal business operations need to gather detail understanding of energy requirement and usage in its superstores for refrigeration running the ovens etc. Also, there are pressing needs for understanding the right time for such operations. In the older times, such decisions were heavily reliant on managerial gut feeling, which in all aspects had been an imperfect approach (Del Mar Alonso-Almeida et al. 2015). Now technology has the capacity of analysing data with the expertise of data scientists to accurately predict the needs and trends, thus helping in optimising the business. This is also relevant for Coles’ functions.
Another emerging business trend influencing this organisational change is online sales. According to a customer survey done by Coles in 2017, 800,000 Australians prefer buying groceries online. When the survey was repeated in the year 2018, results suggested that the number of customers preferring shopping online for their grocery shopping has increased to 5 million (Barbaschow, 2019). This clearly predicts the increasing trend for online sales preference which has impacted the operational costs to rise faster than the sales putting pressure on the business operational structures. This details the need for improving IT capabilities for supporting organisation-wide business functions deployed for managing online sales divisions.
Lastly, the operations of 2450 stores are spread across the continent, covering broad geography. Providing a better experience to customers to all the regions require extensive monitoring which is not possible unless Enterprise Data Platform is implemented.
The way organisational management handling the change at Coles, the multiple images approach by Palmer et al. (2017). As discussed earlier change management has two distinct images, namely management as control and management as shaping. On the other hand, Change outcomes can be divided into three images, namely intended, partially intended and unintended change. The six image framework by Palmer the combination of these five images results in six images of change management (figure 2).
Figure 2: Six Image change management framework
Source: (Palmer et al. 2017)
With respect to Coles change management, the identified change is intended change and the management approach is management as control. Therefore, the director image has been adopted for managing the intended change where the change implementation manager has the responsibility of directing the driving forces and organisational assets in a manner that can help in achieving the intended outcomes. Thus, the forces, which are causing the change namely the need for analysing data gathered from 21 million transactions per week, implementation of Office 360 and Dynamics 365 for simplifying office procedures and increasing the efficiencies of business with respect to running the business units, increased popularity of AI and machine learning technologies. The business operations need to gather detail understanding of energy requirement and usage in its superstores for refrigeration running the ovens etc., online sales trend impacting the operational costs to rise faster than the sales putting pressure on the business operational structures. This provides better experience to customers to all the regions have been resolved through introducing various measures of change (Barbaschow, 2019).
Analysis of management decisions in handling the change process
In order to understand if the change management decisions that have been implemented by the organisation have been successful or could be successful or not these decisions need to be analysed in light of change management theories and models.
Implementation of the Azure Cloud platform
The implementation of Azure Cloud platform requires implementing a change management model inspired by a theoretical framework that focuses on the strategy, structures, and systems. In this aspect, the McKinsey 7 S Model is the most appropriate model of change management. The company has implemented this model for developing appropriate strategies for implementing the platform. Then developing structures for implementation followed by arranging necessary systems. Style and shared values prepare staffs for change and developing appropriate skills for change implementation (Shaqrah, 2018). This decision for handling this change helps in achieving various benefits. This management decision is likely to provide the key benefit of managing the huge data gathered through the 21 million transactions that occur per week. The perceived benefits of this management decision involve optimising business needs and improving customer service provisions to give engaging customer experience.
Implementation of Office 360 and Dynamics 365
The implementation process of Office 360 and Dynamics 365 can be explained by the Lewin’s change management model. It is a three-stage process of managing change having stages like unfreeze, change and refreeze. Thus, with respect to this change, the management decisions involved preparing the organisation for change which involves the decision of partnering with Microsoft. This required the managers explaining the people and the stakeholders regarding why this particular change is needed and what benefits are expected from implementing this change (Cummings et al. 2016). The second stage, which is the change stage, involves implementation of the change process, i.e. implementing the Office 360 and Dynamics 365 across business units and organisational process. Lastly, the third stage is refreeze meaning solidifying the implemented change as a long-term initiative. As the change process is still ongoing, this stage has not occurred yet. The perceived benefits of this change are improved efficiencies for running the business. Furthermore, implementation of modern cloud computing technologies would ensure state of the art data platforms that infuses artificial intelligence and machine learning are required for resolving these need which requires the implementation of this huge technological change.
Microsoft’s investments on Cole’s innovation lab
Microsoft’s investments on Coles’ innovation lab likely to follow the ADKAR model. This change decision is still at the very initial stage and far away from the implementation. Under this model, change is a goal-oriented tool where the key goal is empowering Coles’ innovation lab, to sustain the various IT process implementation. The model involves elements such as Awareness entailing the need and requirement for change, Desire of bringing change and participate in it, Knowledge of how change could be brought on, Ability to incorporate the change as a regular activity and Reinforcement for implementing the change and reinforcing those later on as well (Cummings et al. 2016). The likely benefits of this management decision are to improve the IT capacities for running the business. Coles through this initiative can integrate AI and data analytics thus improving overall organisational capacities which are likely to deliver AU$1 billion in savings by 2023, which is a huge benefit for the company. Implementation of enterprise data planning
The implementation of enterprise data planning across organisational functions requires developing a multistage process. The best model for this is the Kotter’s 8 step change process inspired by the change management theory developed by John P. Kotter. The stages are 1. Increase urgency; 2. Build the team; 3. Get the vision correct, 4. Communicate; 5. Get things moving, 6. Focus on short term goals: 7. Don’t give up and 8. Incorporate change. Although the process is highly time-consuming, it has various benefits (Pollack and Pollack, 2015). The benefits of this change would involve improved informed decision making regarding predicting the needs and trends of energy requirement for refrigeration and usage in its superstores for refrigeration running the ovens. Moreover, improved IT capacities will benefit the online shopping business unit by optimising it, thus delivering improved customer satisfaction level. Lastly, the Enterprise Data Platform would enable better monitoring of all stores across the continent.
Options for enacting sustainable change
Enacting sustainable and effecting change in the retail sector involves various principles following which any organisation, including Coles, can manage sustainable change. Sustainable change management not brought upon by profiting the organisation but also requires profiting the larger business landscape and society. It requires profiting the whole industrial sector. Thus, sustainable change management at Coles would likely to drive not only organisational change but would also drive industrial change for benefits.
The first principle is addressing the human side of change systematically. For most change processes, some human issue occurs most common of which resistance to change faced by employees. As per this principle of change management, employees are asked to step up and lead the change. Leading the change requires informing all the stakeholders and people associated to the organisation regarding why the change is required, what involves in the process, what are the expectations from the employees and stakeholders and what are the perceived benefits (Doppelt, 2017). This requires developing a formal approach through major data collection and analysis, planning and implementing disciplines and redesigning strategies, procedures and systems.
The second principle is starting the change process at the top organisational level. Even though change is difficult to accept at all organisational levels, the organisational leaders must embrace the change first in order to both challenges and motivate the rest of the organisational structural levels. This is because employees residing at all other levels looks up to the leaders for guidance and leadership, and the leaders must speak with an appropriate voice, desired behaviours and models. This will likely result in executive teams working together, and such teams, when work together leads to best-positioned success in retail organisations (Ceulemans et al. 2015).
The third principle suggests that change should cascade throughout the organisation. Thus change-related decision-making and activities must involve all organisational layers. Therefore, the activities for initiating, planning and implementing change must include includes plans for identification if leaders and enforcing the responsibilities associated with design and implementation. Under the cascading leadership methodology, each stage of change manage under any of the popular change management models involves training and supporting the teams (Brones et al. 2017). The added benefit of this method is that it helps in identifying the next generation of leadership for leading any other anticipated changes.
With respect to any change proposal, many questions arise regarding the change, such as whether the change is necessary or not and if yes to what extent. These questions result in a resisting mindset among organisational employees. The fourth principle entails making a formal case for change implementation. Thus creating a written vision statement ensures articulation of formal change case. The statement of vision conveys the purpose of implementing the change, and this vision should be spread using formal and internal communication channels first. Company employees should be given the news and associated information using internal communication channels such as emails, prior to making any public announcement through media channels (Elsmore, 2017). This helps in reducing barriers to change.
The fifth principle of sustainable change management for retail sector entails the necessity of creating ownership. Large changes require more than half-hearted agreements to change but require devotion and invested energy towards accepting and implementing change from the organisational employees and stakeholder. The leaders must create ownership by involving people at all staff and managerial levels in identifying the problems and crafting the solutions. Reinforcements can be offered through rewards and recognition, which can be tangible or intangible in nature (Al-Haddad and Kotnour, 2015). Also, it requires assessing the cultural landscape of the organisation, followed by addressing the organisational explicitly to solidify the change for the long-term.
Change is the only constant that should always be considered when running a business successfully. Huge market competition inspires large organisations such as Coles to drive organisational innovation and business transformation for driving profitability and business success. The new CEO Steven Cain of Coles has inspired the business transformation change through enacting the Coles-Microsoft technology partnership. From the analysis, it can be concluded that the various change initiatives such as Implementation of the Azure Cloud platform, Implementation of Office 360 and Dynamics 365, Microsoft’s investments on Cole’s innovation lab and Implementation of enterprise data planning will likely to serve huge benefits. These benefits ranges from resolving the issues and utilising major opportunities such as need for analysing data gathered from 21 million transactions per week, implementation of Office 360 and Dynamics 365 for simplifying office procedures and increasing the efficiencies of business with respect to running the business units, increased popularity of AI and machine learning technologies, business operations needing to gather detail understanding of energy requirement and usage in its superstores for refrigeration running the ovens etc., online sales trend impacting the operational costs to rise faster than the sales putting pressure on the business operational structures and providing better experience to customers to all the regions. Moreover, it can be further concluded that multiple images approach by Palmer et al. (2017) had been very helpful in analysing the change management process and understanding how the proposed changes can benefit the said organisation.
From the above analysis of the organisational change case for Coles, the following recommendations can be made.
- Change management process should always focus on effective and sustainable change management as it not only benefits one particular organisation but also benefits the wider business landscape, the industry and the society,
- The six image framework should be used for analysing the management decisions associated with the proposed change process in order to forecast the benefits that can be achieved through the change initiatives. This framework can view change from multiple aspects forecasting the intended, partially intended and unintended outcomes of the proposed changes.
- Thirdly, it is recommended that prior to implementing any change and even planning for a change, organisational leaders must focus on understanding the change theories and models so that they can develop appropriate change strategies that bring most profit and ensure sustainable change.