Case-1: A Hundred-Year War: Coke vs. Pepsi, 1890s-1990s

Introduction

For decades, Competition between Coca-Cola and Pepsi Cola has been labeled “the Cola

Wars” the most intense battles were fought over the $56 billion industry in the United

States, Where the average American consumed 55 gallons of soft drinks per year. As the

U.S. soft drink industry matured, however, the cola wars were moving increasingly to

international markets. Coke, the world’s largest soft drink company with a 51% share of

the world wide soft drink market, earned 75% of its 1998 profits outside the United

States. Pepsi, with only 15% of its beverage operating profits coming from overseas,

continued to challenge coke in international markets. According to Roger Enrico, CEO of

Pepsi-Cola:

The warfare must be perceived as a continuing battle without blood. Without Coke, Pepsi

would have a though time being original and lively competitor. The more successful they

are, the sharper we have to be. If the Coca-Cola Company didn’t exist, we’d pray for

someone to invent them. I’m sure the folks at Coke would say that nothing contributes as

much to the present-day success of the coca-cola company as Pepsi.

As the cola wars continued into a second century, Coke and Pepsi faced such perennial

question as: how could they maintain their growth at home? How would the industry’s

changing landscape affect their profitability? How should they redesign their strategies in

response to diverse and constantly evolving market condition abroad?

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Case Analysis

The Cola wars Begin

In 1950, Alfred Steele, a former Coca-Cola marketing executive, became Pepsi’s CEO.

Steele made “Beat Coke’ his theme and encouraged bottlers to focus on take-home sales

through supermarkets. The company introduced the first 26-ounce bottles to the market,

targeting family consumption, while coke stayed with its 6.5-ounce bottle. Pepsi’s growth

soon began tracking the growth of supermarkets and convenience in the United States.

There were about 10,000 supermarkets in1945, 15,000 in 1955, and 32,000 at the peak in

1962.

In 1963, under the leadership of new CEO Donald Kendall, Pepsi launched its “Pepsi

generation” campaign that targeted the young and ‘young at heart” Pepsi’s ad agency

created an intense commercial using sports cars, motorcycle, helicopters and a catchy

slogan. The campaign helped Pepsi narrow Coke’s lead to a 2-to-1 margin. At the same

time, Pepsi worked with its bottlers to modernize plants and store delivery services. By

1970, Pepsi’s franchise bottlers were generally larger compared to Coke bottlers, Coke

bottling network remain fragmented, with more than800 independent franchised bottlers

that focused mostly on US cities of 50,000 or less. Throughout this period Pepsi sold

concentrate to its bottlers at a price approximately 20% lower than Coke. In the early

1970s, Pepsi increased the price to equal that of Coca-Cola. To overcome bottler’s

opposition, Pepsi promised to use the extra margin to increase advertising and promotion.

Internationalizing the cola Wars

Coke and Pepsi also increasingly looked overseas for new growth. In the 1990s new

access to markets in china, India, and Eastern Europe simulated some of tye most intense

battlers of the cola wars. In many International markets, per capita consumption levels a

fraction of those in the United States. For example while the average American drank

878eight-ounce cans of soft drinks in 1998, Coca-Cola held a world market share of 51%,

compared to Pepsi’s 21%. Among major overseas markets, Coke dominated in Western

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Europe and Latin America, While Pepsi has market presence in the Middle East and

South East Asia.

Coke and Pepsi approached international market differently. Coke built brand presence in

developing markets where soft drink consumption was low but potential was large, such

as Indonesia: With 200million inhabitants, a median age of 18, and per capita

consumption of 9 eight-ounce cans of soda a year, one Coke executive noted that “they

sit squarely on the equator and everybody’s young. It’s soft drink heaven. In order to

penetrate Coke strongholds Pepsi utilized a niche strategy with well-executive blitzes,

targeting big cities in latin America and other countries. At the same time, Pepsi moved

badly into markets where Coke had little or no Presence.

Cola Wars in Japan

Coca-Cola first introduced to Japan in 1961. By the early 1970s, Japan became Coke’s

largest market outside the United States, contributing 18% of Coke’s total corporate

earnings.

Pepsi had never had a notable presence in Japan until Suntory became its master

franchisee in 1997. As Japan’s second largest beverage company, Suntory offered Pepsi

access to its broad distribution system and was expected to double Pepsi’s market share

to about 16%.

Cola Wars in Germany and Eastern Europe

Germany, although a profitable market for coca-cola, had been for many years a

patchwork of 160 small and poorly capitalized bottlers. Under Goizueta’s initiative, the

bottling network was consolidated to 60-well capitalized bottlers by the early 1990s.

Pepsi went another route, taking control of all its independent German bottlers in the mid

1980s When Coke moved quickly into West Germany and Eastern Europe in 1989, Pepsi

remained preoccupied with reorganizing its existing German bottlers.

Cola Wars in India

Strong Nationalist sentiment once forced both Coca-Cola and Pepsi out of India in the

1970s. When the Indian government insisted that Coke disclosed its secret formula in

exchange continuing operation, the company closed its business in that hot and thirsty

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country of 800 million souls. Pepsi was permitted to return in 1988 only upon agreeing to

export $5 of Indian made products for every $1 of materials it’s imported. Coke returned

two year later, agreeing to channel its investment through local joint venture partner parle

exports. Coke invested 470 million in India’s largest bottler, acquiring parle’s own brand

as well as immediate access to Parle’s 54 bottling plants. Parle, however, continue to

bottle and sell its own brands, including local market leader “Thumbs Up” after having

sold the right to do so to Coke. In protest, Coke concatenated marketing support on its

own, rather than Parle’s former brands. Even so, in 1996, coca-cola owned brand held

just a 20% share, trailing both Thumbs Up’s 401% share and Pepsi’s 30% share of the

Indian market.

The Cola Wars Today

In the last few years Coke’s market share has steadily declined, though it spent nearly

$2 billion advertising its brands last year. On top of that PepsiCo snatched some of

Coke’s long-held sponsorships. The cola fight is heating up again and Pepsi is landing

most of the punches.

In India, 1998, this fight escalated the last time. PepsiCo took Coke to court. PepsiCo

claimed that Coke had snatched employees, bottlers and agents, which were bound to

Pepsi by a contract. Coke was claimed to induce key employees and associates to break

existing contracts illegally. Pepsi wanted a permanent injunction against Coke and the

right to seek financial damages from Coke if necessary. But the judge refused to grant

this injunction. By the way, in the first three months in 1998 Pepsi swept Coke away in

India. It reported a growth of 27 percent, while Coke’s market share increased only by 21

percent.

In the U.S. carbonated soft-drink market Pepsi’s share increased by 0.2 percent to

31.6 percent last year, but Coke leads easily with 43.7 percent share. Both companies’

colas, which together make up one third of the sodas sold in the U.S., lost share last year.

But Coke lost more share, while Pepsi was very successful by launching new flavours

Code Red and Lemon Twist. The majority of Coke’s sales make up the international

operations and only 38 percent were coming from the U.S. last year. Pepsi is not as big

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globally, but currency fluctuations are still an important factor, as the international sales

made up 29 percent of its sales in 2001.

PepsiCo landed a painful punch by snatching Coke the National Football League

sponsorship away. This sponsorship had been Coke’s for 22 years. But Coke declared the

setback for null and void, because it still retained two thirds of the individual

sponsorships of the league’s teams. Though Coke showed itself calm, executives were

mourning the National Football League sponsorship. The last thing the company wanted

was seeing Pepsi gaining share.

What made Pepsi more successful than Coke wasn’t just money, but an aggressive

promotional plan. Surprised and outsmarted by Pepsi’s advertisement Coke didn’t have

enough time to develop a package to counter Pepsi’s. Coke is said to be upset that Pepsi

outmanoeuvred its management. A marketing brawl later this year is the logical

consequence, also because both, Coke and Pepsi, want to get as much sponsorships as

possible in the National Football League.

Some analysts think that Pepsi has more fizz left in its stock than Coke. Both

launched new products. Coke launched Vanilla Coke in April, which seems a bit

nostalgic, because John Travolta orders a Vanilla Coke in “Pulp Fiction” in a 50’s styled

restaurant, for example. And Pepsi started selling a berry flavoured cola, Pepsi Blue, in

August. Pepsi wants to reach the younger generation and they reached them. Pepsi is

going after the right market and it increased its market share by 1.3 percent last year,

while Coke’s declined by 0.2 percent.

Another reason for Pepsi’s recent success is its diversity. Many are attracted to Pepsi

because they have more faith in their ability to grow earnings. Pepsi isn’t only successful

on the beverage side but also with snack foods. In fact, the carbonated beverages don’t

even make up the largest part of Pepsi’s earnings. Its soft-drinks made up 19 percent of

the sales, while its snack foods made up 61.2 percent.

Coke was languishing a nearly six-year low, but despite its troubles, its stock

increased by 19 percent since January 31. Pepsi shares are almost on an all-time high and

have nearly doubled during Coke’s long period of losing market share. There’s nothing

great going on at Coke, but Pepsi reinforced its image that it’s for the young generation.

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Pepsi has a great promotion using celebrities like Britney Spears or Shakira. And for

companies that sell very similar sugar waters, image is everything.

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Coca Cola Pepsi Cola

Strengths Worlds Leading Brand

Large Scale of operation

Robust revenue growth in three

segment

Strong brand name

(Number 2 in industry)

Strong international

market

Rising earnings in 2004

Weaknesses Negative publicity

Sluggish performance in North

America

Decline in cash from operating

activities

People are questioning

its water purification

process

Health craze may lower

consumption of

products

Opportunity Acquisitions Intense

competition

Growing bottled water market

Growing Hispanic population in

US

Changed name of Diet

Sierra Mist to Sierra

Mist Free

Growing international

market after Coca-

Cola’s European anti-

trust settlement

Threats Intense competition

Dependence on bottling

partners

Sluggish growth of carbonated

beverages

Relationship with

Advertising Agency is

in jeopardy

NHL Lockout means

lack of exposure for

Pepsi Center in Denver

SWOT Analysis of Coke vs. Pepsi

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Analysis of the Profitability of Soft Drinks (Coke &

Pepsi)

As analysis using Porter’s five forces shows why the soft drink industry has been so

profitable. Suppliers and buyers have not had more power over the industry than it has

had over them. Internal rivalry, while seeming intense, has not eroded the profitability of

the industry because of its concentration and the fact that the two major players have

primarily competed on the basis of advertising and promotion and not price. Entry is

difficult both for reasons of scale and the strong brand identity of the current major

players. Substitutes have not been close enough to take away significant market share,

although the emergence of new substitutes may pose the largest threat to the industry’s

profitability.

Suppliers and Buyers

Suppliers to the soft drink industry are, for the most part, providing commodity products

and thus have little power over the industry. Sugar, bottles and cans are homogeneous

goods which can be obtained from many sources, and the aluminum can industry has

been plagued by excess supply. The one necessary ingredient which is unique is the

artificial sweetener; aspartame is clearly preferred by consumers of diet beverages and for

a time was under patent protection and therefore only available from one supplier.

However, the patent expired and another producer entered, reducing the market power of

NutraSweet. Buyers can be considered at the consumer or the retail level. For consumers,

taste will be an important part of the preference for a particular soft drink; thus although

there is no monetary switching cost, there may be a loss of enjoyment associated with a

less-preferred brand. Because of this, consumers have historically been brand-loyal and

not based purchase decisions on price. Retail outlets have not been able to exhibit much

buyer power over the industry, although they can do so more easily than consumers.

Traditionally these outlets have been fragmented and have been reliant on the major soft

drink brands to increase store traffic. However, at the time of the case there has already

been evidence of some buyer power on the part of grocery stores, as they successfully

resisted an attempt to price the varieties with more costly inputs higher. As grocery

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chains increasingly consolidate and as discount outlets continue to grow, buyer power on

the part of retailers is likely to increase.

Substitutes

While the U.S. soft drink market was growing, substitutes did little to interfere. Soft

drinks are sufficiently unique that when a consumer wants a soft drink another product is

not likely to satisfy. Other cold drinks such as water, juices and iced tea offer similar

refreshing qualities, yet they do not have the same taste or properties. Hot beverages and

alcoholic beverages are not desirable or appropriate for many of the occasions when one

would want a soft drink. The one category which threatens soft drink producers is the

“new age” product which offers (or implies) more natural ingredients and/or health

benefits. The soft drink industry’s initial answers to these beverages, in the form of Tab

Clear and Crystal Pepsi, are not going to compete effectively with the new age products.

Entry

Significant barriers exist to entering the soft drink industry. Bottling operations have a

fairly high minimum efficient scale and require fixed assets which are specific not only to

the process of bottling but also to a specific type of packaging. Exit costs are thus also

high. Bottling operations do exist which in theory could be contracted out, but they are

tied up in long-term contracts with the major players and thus can only contract with

other producers in a limited way. Perhaps the most significant barrier to entry, however,

is the strong brand identity associated with the best-selling soft drinks. Placing another

cola on the market is not an attractive value proposition.

Internal rivalry

The concentration in the industry (Coke and Pepsi have 73% in 1994) would suggest that

internal rivalry is somewhat less than if there were many players of equal size. Although

the competition between Coke and Pepsi has become more fierce over time, they

traditionally competed primarily on advertising, promotion and new products rather than

price (although the explosion of new brands did eventually lead to some price

competition). The products are similar but not homogeneous and buyers are fairly brand

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loyal. Retail buyers have significant costs for switching from the major brands since

those are responsible for bringing people into the store.

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Conclusion

Through their competitive battle, Coca-Cola and PepsiCo have created a stable and

highly profitable duopoly in the U.S. soft drink industry. As the domestic industry

matured and the cola wars moved to international markets, Coke and Pepsi tried to

redesign their competitive strategies as well as the vertical structure of their corporations.

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Case-2: The Forestry Commission: cultural

change to deliver a new strategy

1. Introduction

This case describes the Forestry Commission (FC) of Great Britain’s strategic response to

society’s changing expectations about what forestry should deliver. The case is primarily

concerned with how the strategic change processes were managed during the period from

1995–2003. It contains detailed descriptions of some of the change programmes that were

implemented and accounts by the people involved describing the challenges they faced.

The case provides a context in which to consider the extent to which these change

programmes succeeded in effecting strategic change.

2. Position of the case

The Forestry Commission case relates to the tasks and processes involved in managing

strategic change. It should be positioned towards the end of a strategy course.

3. Learning objectives

The case can be used to help to explore and debate the various elements of the ECS

framework for managing strategic change. It also provides an opportunity to consider the

importance of context in managing change, and develop an understanding of the dynamic

relationship between the context, process and content of organizational change, which

Pettigrew and Whippy (1991) describe as the three components of change. The case can

be used to help to develop an understanding of the following:

3.1 Different types of strategic change

The case provides an opportunity to consider the nature and scope of the change

experienced by the Forestry Commission as a means of exploring the different types of

strategic change. It is also possible to debate whether the type of change remained

constant or shifted over time and explore the potential causes of any such shift. What

need to realize is that different types of change will require very different managerial

responses.

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3.2 Importance of context

The case can be used to think about the importance of the change context and the need

for managers to adopt different approaches to change depending on specific factors in

their change situation. Everyone should realize that there is no “one right way” to manage

change and that different approaches will be more or less effective in different situations.

3.3 Organizational culture

The case shows that the cultural web can be used as a means to analyze the cultural

context for change. It also demonstrates how the web links the strategic with the

operational: the existing culture can be understood as the “strategy into action”. The

“past” cultural web can be used to illustrate how the cultural forces (in the six outer

circles) act to embed and protect the existing ways of doing things, based on “taken for

granted” beliefs and assumptions (central paradigm). The case also provides a framework

for exploring what kind of culture will be required to deliver the intended strategy.

3.4 Forces blocking or facilitating change

The case can be used to explore how certain forces within the organizational culture may

influence the change context by blocking or facilitating change.

3.5 Styles of managing strategic change

The case provides an opportunity to consider the different styles of managing strategic

change and the degree to which certain styles may be more or less appropriate in different

types of change situations.

3.6 Roles of change agents

The case provides an opportunity to consider what is meant by the term “change agent”

and to recognize that this may refer to different individuals or groups in a range of

Different contexts and stages throughout a change process. The students should recognize

that change agency does not necessarily correspond to a single leader.

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3.7 Change Levers

The case can be used to consider what is meant by the term “change lever” and provide

an opportunity to identify and consider how to make use of certain levers to effect

change.

4. Case analysis

4.1 Imperative for strategic change

A combination of factors in the external environment created the imperative for strategic

change within the FC.

Economic factors – collapse in world timber prices meant that the organization

urgently needed alternative sources of income.

Environmental issues – as a result of the world environmental summits,

governments were under pressure to meet targets to improve the environment,

which resulted in legislation and funding to undertake environmental projects.

Social agenda – the politics of New Labor’s social inclusion agenda meant that

funding was available to develop social forestry.

All of these factors gradually began to make an impact and change the role of forestry

and what it was expected to deliver into society.

4.2 Diagnosing the change situation

When an organization decides to embark on strategic change it is very important that

those involved understand the nature and magnitude of the challenges that lie ahead.

Their framework for managing strategic change highlights the importance of effective

diagnosis of the change situation and suggests a number of diagnostic models.

(a) Types of strategic change

The scope of strategic change is generally adaptive in that it can be accommodated within

the current cultural paradigm by building on existing skills, beliefs and familiar routines.

However, occasionally transformational change is required and this involves a paradigm

shift, which requires a fundamental change in shared beliefs and assumptions within the

organization. It could be argued that over time three different types of change can be

discerned in FC:

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Adaptation – Balogun and Hope Hailey (2004) describe adaptation as change which is

not transformational and which is implemented slowly through staged initiatives. ECS

states that adaptation is change that occurs incrementally, which can be accommodated

within the current culture and paradigm. During the period from the 1980s to 1993 the

changes imposed on the FC by government were incremental and gave the organization a

reasonable time to realign systems and processes to meet various change targets that were

set through a series of staged initiatives. These changes were about “doing more of the

same, but doing it more efficiently” and as such did not involve a fundamental challenge

to the taken-for granted assumptions and beliefs about the role of forestry and what it

delivered into society.

Reconstruction – Balogun and Hope Hailey (2004) state that reconstruction often

involves significant change such as business re-engineering in order to ensure the long-

term survival of an organization. However, whilst these changes are fairly urgent and fall

into the category of “big bang”, they are not transformational as they are still aimed

primarily at making the organization more efficient and do not attempt to significantly

change the organizational culture. Johnson and Scholes (2002) describe reconstruction as

rapid change that involves a significant amount of upheaval, but which does not

fundamentally change the cultural paradigm. The Forestry Devolution Review in 1994

reflected the political concerns of the time and recommended significant changes to the

way the FC operated. These changes could be described as “big bang” as they were much

more immediate and involved a considerable amount of internal restructuring and

resulted in significant job losses.

However, although these changes were wide ranging the scope of the change could be

described as re-alignment as it still did not involve any fundamental challenge to the

taken-for-granted assumptions and beliefs about the role of forestry and what it delivered

into society.

Evolution – Balogun and Hope Hailey (2004) describe evolution as transformational

change implemented gradually through different stages and interrelated activities.

According to ECS evolution requires change to the culture over time. From 1997

onwards the New Labor government’s social inclusion agenda placed a much greater

emphasis on social forestry. Environmental issues also began to be higher on the political

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agenda as a result of the agreements reached at the environmental summits in Rio and

Kyoto. This meant that society’s expectations about the role of forestry were changing

significantly, which required transformational change. During the same period world

timber prices collapsed and this created an urgent financial crisis within the FC. If the FC

had been a purely commercial organization, the change would probably have been

revolutionary, as the nature of the change would have been “big bang” and the scope

would have been transformational. However, the government agreed to fund the shortfall

in return for commitments to deliver various social and environmental agendas and this

meant that the nature of the change could be more incremental, which meant evolution

rather than revolution.

(b) Importance of context

The case helps to develop an understanding that the task of managing strategic change is

context specific. Some commentators offer prescribed formulae for managing change.

Kotter’s steps are described in the key debate. Burnes’ (1992) nine-step model of change

is also typical of some of the more formulaic literature on change management, whereas

ECS states that “there is no one right ‘formula’ for the management of change” and

emphasizes the need to adopt completely different approaches, depending on the

organizational context.

(c) Organizational culture

According to ECS, if change is to be successful it has to link the strategic and the

Operational with the everyday aspects of the organization. They indicate that the natural

tendency to hold onto existing beliefs and ways of doing things creates inertia and

resistance to change, which illustrates the powerful influence of the cultural paradigm.

The “past cultural web” contained in the case study illustrates the traditional FC culture:

it is a composite of the webs produced by 250 senior and middle managers at the initial

series of leadership events during 2000. The “future cultural web” describes the kind of

organization that the FC needed to become in order to be capable of delivering what

society now expected from the new role of forestry. The key insights come from

understanding what these webs signify to those involved. The following summary

explains the basic assumptions contained in the past and future webs.

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Past Cultural Web

• Forest stewardship is about the sustainability and protection of woodlands and the

way of life associated with them. Forests are important because they support a “forestry”

way of life that is connected to the natural environment, whilst being economically viable

through efficient timber production. Foresters think of themselves as the forestry experts,

which translated into an attitude of “FC knows best” about forestry related issues. The FC

is the largest land owner in Great Britain, which means that the forests belong to the

British public, but foresters tended to see the forests as “theirs” and the public as a

“nuisance”, getting in the way of efficient timber production.

• Public sector ethos – a sense of contributing to society rather than working for purely

commercial gain. This altruism is tempered by a practical streak: foresters realize they

have to produce timber to generate revenue, which they can then use to re-invest in future

forests.

• Top down hierarchy – FC’s military background established a command and control

style of management that developed into a well-established tradition of deference to those

in senior positions.

• Bureaucratic – bureaucracy is something the FC has to live with in return for being a

government department. The bureaucracy had become self-perpetuating and people felt

constrained and overburdened by it.

• Task rather than people oriented – foresters relied on their technical knowledge and

expertise to get the job done, rather than develop people skills. Staff was very critical of

the lack of people management skills.

• Delivers results – there was a hard work ethic with a “can do” approach to getting the

job done, where people took great pride in their ability to deliver results.

• Male dominated/homogenous – forestry is a “man’s world”. The FC was a male

dominated, macho organization that aimed to deliver at all costs.

• Conservative/risk averse – forestry has a long life cycle: it takes at least 50 years to

grow trees. There is a deep sense of tradition and this ethos is deeply embedded, which

made the organization conservative and slow to change.

• Insular/inward looking – FC management had ignored the changes taking place in the

traditional role of forestry because they were so consumed with the process of delivery

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that they forgot to look around them at the relevance of forestry to modern society.

Delivery was such a deeply ingrained distinctive competence that it had become a

weakness: there was more focus on what had to be delivered, rather than questioning the

purpose or rationale of what they were doing. Senior management were perceived to be at

the “whim of political masters”, saying “yes” to anything the government asked them to

do, which created the problem of “initiative overload” and led to workload pressures

caused by a lack of clear priorities. This combination of factors created an ongoing

vicious cycle, and there was evidence of stress and low morale amongst staff.

Future Cultural Web

• Politically astute/influential – this was needed in order to have more influence over

the direction of GB forestry policy and the role of the FC. Devolution posed a potential

threat to the long term existence of the organization: once England, Scotland and Wales

became fully devolved, it was recognized that the government might decide to

incorporate forestry issues into rural policy for each country, which would mean the

organization would be split into three parts and merged with another land agency.

• Outward looking/forward thinking/innovative – this was necessary if the FC was to

remain relevant in modern society as a leader and facilitator of forestry policy, rather than

simply being absorbed in delivery. There was a need to be far more flexible and

responsive to meets the localised needs of each country and region, rather than having a

GB-wide approach to forestry. The organisation would also have to become more diverse

because of the social and environmental issues that had to be incorporated in localized

forestry policy.

• Strong work ethic – people wanted to retain the strong work ethic, loyalty and

commitment of staff.

• Articulated shared vision – FC people had a “not invented here” attitude, which

meant that if the new vision was to become a reality it would have to be very clearly

articulated and owned at all levels.

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• Focused on outcomes/celebrate success – FC would have to become focused on the

outcomes it was delivering into society rather than measuring efficiencies. These

outcomes were often intangible or very difficult to measure (increase in people enjoying

healthy pursuits in the forest, improvement in quality of the environment), therefore the

FC recognized that it would have to find new ways to record, publicize and celebrate its

achievements.

• Flexible/adaptive/responsive – becoming “facilitators” rather than “doers” represents

an enormous change in behavior for a “can do” organization that has always taken pride

in delivering results through its own efforts.

• Valuing diversity – moving away from male dominated ethos of “foresters know best”

and actively recruiting people with different skills and knowledge to contribute.

• Learning culture – the traditional culture was very risk averse and people were used

to being blamed when things went wrong. Therefore it would be an enormous change to

develop a culture that was comfortable letting people try our new things, make mistakes

and learn from them. The information contained in the webs can be used as the basis for

producing a force field analysis.

(d) Force field analysis

A force field analysis can be used to provide an initial view of the change problems that

need to be tackled by identifying forces within the organizational culture that may be

Blocking or facilitating change.

Pushing Resisting

• Devolved work programmes – working in

new ways with external partnerships

• Hard work ethic that delivers results

• Less staff – increased pressure to work in

new ways

• Director General – noticeable

encouragement/support of change

• Feedback from staff survey – staff want

changes in how they are treated

• Unions making noises to reduce stress in

• Traditional structure/ways of working

• Bureaucracy

• Departmental silos

• Workloads/pressure of work

• Homogenous workforce

• Conservative/risk averse/slow to change

• Blame culture

• Command and control management style

• Lack of ownership of the change – “not

invented here” syndrome

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the workplace • Lack of local leadership/communication

• Deference to senior staff

• Past experience of change

4.3 Management styles and roles

This relates to the different roles that managers and others may adopt in managing

change, and how they undertake to make the change happen.

(a) Styles of managing change

Choice of style may depend on a variety of factors in the change context. ECS offers five

styles and suggests the benefits and problems that may be typically associated with each

style. One of the key learning points is that different styles may be more or less

appropriate in different situations and that the most effective managers may be aware of

the impact of their style and be capable of adopting different styles in different

circumstances. This exercise should be limited to the four change programmes described

in the case. It could be argued that the style employed by the FC gradually shifted from

coercion towards education and communication.

During Unification the style might be described as “camouflaged” coercion: staff

perceived this as a superficial attempt at consultation; although they were empowered

with voting rights, staff believed that the decision was a foregone conclusion, as many of

their concerns were not heard by management.

The style during the Connect events might be described as collaboration and

participation. These events were voluntary and were designed to allow staff to air their

views in a safe environment, with senior managers listening and responding rather than

telling. However, in some local areas the style might be described as “camouflaged”

collaboration and participation, because local line managers sent out edicts that

attendance was compulsory. The style during the Leadership and VSPC events might be

described as education and communication, based on the feedback from the majority of

participants. These events were voluntary and very well attended by more than 500 senior

and middle managers. They were designed to engage managers in the strategic debate in

order to encourage them to take ownership of the issues relating to the change, and to

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consider how they might lead change in their own area. So collaboration and participation

were also in evidence.

(b) Roles in managing change

According to ECS a “change agent” is the individual or group that effects strategic

change in an organization; i.e. it may be a top manager, but could be others in a position

to have influence with a group or groups.

During Unification the change agents were David Bills and the Unification Working

Group who conducted a series of communication road shows and workshops. However,

David Bills was perceived by staff to have the ultimate power to make the change and the

consultation was viewed as an exercise in selling the idea to staff and taking them

towards a predetermined decision. The Connect workshops were a deliberate attempt to

involve a wider group of change agents. The consultants worked with members of the

Change Management Team to design an event that would engage and involve all of the

Senior Management Team, Regional Directors and local Line Managers in listening to

and responding to staff views about the required changes.

The Leadership and VSPC events were designed with the specific aim of creating

internal change agents who would engage in the strategic debate and take ownership for

leading change in their own area. David Bills displayed leadership throughout the process

by providing direction, encouragement and support at many levels inside and outside of

the organization, through articulating the emerging vision about changes in the role of

forestry. The consultants were change agents – they used their ability to influence

potential change agents through facilitating the ongoing strategic debate and providing

opportunities for managers at all levels to engage with the issues surrounding change.

The change management teams were also change agents as they worked with the senior

management, consultants and the steering groups to facilitate the decision making process

and gain approval and support for the decisions made. Line managers became change

agents as the process unfolded and the second staff survey provided considerable

evidence of a change in management behaviour and indicated that staff experienced

greater empowerment.

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6.4 Levers for managing change

If the change programmes at the FC are considered in terms of the levers for change

explained in ECS chapter 10 the following can be seen:

Change lever How did FC employ this change lever?Structure & control

The purpose of Unification was to unify the terms and conditions of all staff as a way of removing inherent inequalities in the system. The intent was to help to reduce the sense of “them and us” and to remove the “glass ceiling” so that former industrial workers had career progression opportunities that were previously not available to them. The staff survey was introduced as a means for staff to give direct feedback to top management about how they were being managed. This was designed as a control mechanism that sent a signal to allmanagers that the organisation was serious about changing themanagement style.

Routines The Connect workshops signified a change in the routine way that senior management communicated to staff. In all previouscommunication road shows, senior managers were wheeled in, made a presentation, then left. The Connect workshops engaged staff and managers in the debate and senior managers were seen to be listening rather than telling. The style of these workshops has become a regular feature in local events.

Symbolic processes

FC invested heavily in trying to develop leadership skills at all levels through the Leadership and VSPC programmes. One of the most symbolic processes was a change in the behaviour of many leaders as evidenced by staff feedback.

Political processes David Bills gradually built up a network of change agents who were influencing change at many different levels within the FC. This included the various change teams, steering groups, and external consultants who all helped to influence the Senior Management Team, and other management groupings.

Communication The past cultural web showed that staff perceived communication to be poor, but they also reported that they experienced information overload. It was evident to the consultants that management were using general bulletins and e-mails to try to communicate complex changes, and that the communication medium was ineffective. Therefore, many of the change programmes (specifically Connect,Leadership events and VSPC) were designed to support andencourage face-to-face communication, which was to prove more effective at facilitating the complex type of change that FC

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was undergoing. This face-to-face communication gradually began to make an impact and stories began to emerge from staff, who then became advocates for changes that were taking place around them. For example, “When I was talking to David Bills, he said….”

Change tactics David Bills was able to take advantage of two significant events in order to increase staff perceptions about the urgency of the changes facing FC. These werea) The financial shortfall in FC income caused by the drop in world timber pricesb) Increased awareness about the impact of devolution and signal that a Forestry Devolution Review might take place – the clear message was “if we initiate change then it is less likely to be imposed upon us and we will have more control and influence over the direction of the change”.

5. Conclusion

In terms of the process, people initially had not truly conceptualized what exactly needed

to change, although they had an idea of where they wanted to get to. The consultant

noticed that in the course of the many discussion and debates with staff The director

General’s vision of the future became more clearly articulated and shared David Bills

states that:

Culture is about behavior. You cannot have one without the other. You can talk about

values, you can talk about culture but the ultimate thing is how you behave: how you

behave when there is a challenge, when there is a difficult issue, when there is an

opportunity. Run out and look for help or run away from it. Do you dial Head office for

direction or do you get on with it on a local level but with a willingness to share

experience and learn from others success and mistakes. So if we hadn’t achieved

behavior change we hadn’t achieved anything.

An outcome of the overall change process appears to be the acceptance amongst staff that

change is inevitable, as one line manager stated:

At last the change process has made employees aware that change is a part of life now. It

will carry on even if you don’t.

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