Summary
When a company faces problems, changes are needed to improve operations. One such change can be a new CEO. A new director can bring a fresh perspective to the company and improve its success. Sound change management is indispensable for satisfactory service delivery, but it requires special skills and approaches. By using change models such as Cummings and Worley’s five dimensions of leadership and change management or Kotter’s eight-step approach, a company can achieve success as quickly as possible. The examples of Disney and Amazon show how a change in CEO can have a positive impact on a company.
Introduction
The most crucial choice for the owner is to replace the CEO. In the traditional model, the CEO is a strategic thinker with excellent communication abilities. His managerial approach is motivating, pleasant, and delegative. A traditional type that can focus on the primary item and envision a specific objective can uncover and execute innovations, and it is constantly evolving.
The world has evolved dramatically over the past several years. CEO expectations have also shifted. A leader cannot continue at the same level with short-term planning, shifting tactics, the need to occupy new niches, changing supply chains, import substitution, and mobilization.
The core abilities of the leader are also evolving; the new-age CEO has a very high level of stress tolerance, flexibility, and adaptability to current events. A portrait of a relatively self-assured, charming individual who can handle discussions well while still making a difficult choice about streamlining corporate operations. This is why some businesses must make adjustments at the CEO level. The purpose of the paper is to examine how change occurs in large companies. Disney and Amazon have recently changed CEOs, leading to improvements in their operations.
Disney – From Chapek to Iger
The history of the Disney brand is inextricably linked with children’s cinematography. Walt loved Max Fleischer’s animations, in which cartoon characters were brought to life. The concept was lifted from here, but executed precisely the other way around. In the history of the Disney Company, a new film called “Alice in Wonderland” premiered, and the public enjoyed it. The earnings were used to change the corporation’s name to “Walt Disney Company” (Wasko, 2020).
The Disney Company has a lengthy history, and in the current era, it is the largest conglomerate in the entertainment industry and one of the top ten most valuable brands in the world. Initially a tiny animation business, it has expanded into the largest Hollywood studio, the Disney Company. Disney has a diverse history, including 11 amusement parks and water parks, as well as television networks, including the well-known American corporation ABC.
Disney currently owns all of the aforementioned brands. Disney is one of the most valuable corporations in the world as of 2019 (Wasko, 2020). It is a component of the Dow Jones Industrial Average and had a market capitalization of $266 billion in 2019 (Wasko, 2020). Conservatives and religious organizations, however, frequently attack the company’s film business. This is due, in part, to the subject matter of some of its films, as well as the company’s support for homosexual individuals. However, the corporation is not deterred and continues to please its audience with new films.
The Disney board of directors immediately reversed the CEO move that occurred in early 2020, and, equally unexpectedly, the renowned Bob Iger returned as CEO, replacing his previous replacement, Bob Chapek. Under the new agreement, Iger, who is also Disney’s biggest investor and served as CEO from 2005 to 2020, would continue to oversee the media giant for at least two more years, with one of his key tasks being to select and nurture a long-term replacement (Wasko, 2020). Bob Chapek was, of course, Bob Iger’s protege, but the Board of Directors was allegedly displeased with his achievements. Chapek was lauded for being an excellent substitute for Iger, much as Tim Cook was for Steve Jobs.
However, several issues erupted right away after the transfer, seriously harming Bob Chapek’s credibility and public image, including the feud with Scarlett Johansson in the simultaneous showing of the comic book film Black Widow in theaters and on Disney+ and the LGBTIQ society’s slow response and backing in reaction to the disputable “Don’t Say Gay” bill. Since the company’s problem was a lack of creativity, when Bob Chapek took over as CEO, he faced the monumental challenge of transforming Disney’s heritage into an asset for future generations (Wasko, 2020).
In fact, this meant going outside the box – a typical media and entertainment firm – and incorporating more technology businesses into the old business model. Simultaneously, even at the beginning of the year, many people began to think that Bob Chapek was faltering and had lost authority over the kingdom. In contrast, Bob Iger was well-competent at maintaining order. Under his tenure, Disney acquired Pixar, Marvel, Lucasfilm, and 20th Century Fox, launched the online movie theater industry, and successfully rebuilt the company following the COVID-19 epidemic.
Earlier this month, Disney presented its fourth-quarter financial report, which disappointed investors because neither its theme parks nor its media businesses met analysts’ revenue targets. The streaming industry is gaining traction, with more users opting for bundles that combine Disney+, Hulu, and ESPN+, but subscription costs are also rising. Interestingly, amid weakening growth and a larger downturn, the board asked Bob Iger to return a few days after Bob Chapek announced massive layoffs (Wasko, 2020). In a formal press release, Disney CEO Susan Arnold thanked Bob Chapek, who has spent 30 years with the company, the last three as CEO (Wasko, 2020). Meanwhile, Susan Arnold remarked that Disney is going through a challenging phase as the sector evolves, and the board believes Bob Iger is the best CEO to guide the company through it.
Thus, Bob Iger took over Disney at a difficult moment; the company’s stock price rose fivefold, and film fees began to bring in billions of dollars a year. Bob Chapek, in turn, intends to change the company’s structure, aiming for the future. For example, he created a unit, led by Mike White, focused on the company’s metaverse strategy (Wasko, 2020). The changes that Chapek intends to make may affect customers, employees, and investors. Customers will get more enhanced services, which will attract them. Employees, in turn, will work in a more innovative environment, which could also lure more promising professionals. Investors will invest more money as they see the company’s progress and momentum.
Kotter’s change management model is the right paradigm for the changes that will take place at Disney. It is an eight-step methodology for engaging individuals in creating organizational changes (Laig & Abocejo, 2021). The strategy is built on the premise that if employees understand the benefits of change, they will help execute it. Kotter’s paradigm is used for top-down change, which helps reduce opposition from rank-and-file personnel (Laig & Abocejo, 2021). However, it may also be used to solidify middle management concepts. Since some employees may be resistant to change and innovation, Kotter’s methodology is well-suited to this situation.
Amazon – From Bezos to Jassy
When Amazon launched in 1995, it was a website that sold only books. Amazon is currently the most valuable firm in the world and the largest e-commerce platform. Amazon has become a worldwide leader in digital fields over the years: the firm streams films on Amazon Prime Video, has a music service called Amazon Music, an e-reader called Amazon Kindle, and an audiobook service called Audible.
Amazon also has its own publishing house. Amazon’s subsidiaries produce technology and operate important Internet sites such as Twitch.tv and IMDb. Jeff Bezos, an American entrepreneur and long-term CEO, founded Amazon. In the early 1990s, he was building a global commerce network, and at one point, he resigned from his position as the company’s vice president of Wall Street, moved to Seattle, and launched an online bookshop (Bryar & Carr, 2021). Jeff, who ran the firm out of his garage, started a book-selling website in 1995.
The business began selling music CDs and, later, video items in 1998. MP3s, different devices, software, video games, apparel, furniture, food, and toys were among the items on offer. There is even a corporate folklore that Jeff built his first desk out of a door. Thus, some desks in Amazon’s headquarters have doors similarly fashioned to remind staff to conserve money.
Amazon chose to take the next step as the company’s success expanded year after year. Using its vast network of warehouses, the business established a single, rapid-delivery service. This immediately increased product sales. Amazon debuted its famous logo in 2000, with a curving arrow in the shape of a grin leading from A to Z.
Later on, things did not always go smoothly for Amazon: relatively modest growth in the first five years led shareholders to worry that the firm was not profitable. At the time, Amazon’s approach and concept were seen as highly unique. Many others were concerned that the firm would not be able to justify the investment or even survive in the long run. Many e-commerce firms have been wrecked by various crises over the years, but Amazon has survived and grown to become a major player in online sales. When the company ultimately broke even and made a billion dollars in revenue, it revealed that Bezos’ unusual business plan had been effective after all.
Amazon operates like a massive building site, with each component representing a distinct service or business. The Amazon Kindle was one of its most successful products since the corporation always remembered its literary roots. When e-books gained popularity but failed to take hold, Amazon stepped in.
In 2007, Jeff Bezos developed the reading service and began manufacturing e-books (Bryar & Carr, 2021). As a result, the firm eventually became a global leader in the area. Amazon faced significant competition in the digital arena from Apple and Google in the early 2010s (Bryar & Carr, 2021). Amazon Music, like Apple Music and Spotify, has lately entered the fray. Amazon was also the first corporation to create a smart gadget, the Echo speaker, which had its own artificial intelligence system, Alexa.
The world’s richest man will focus on other initiatives after stepping down as Amazon’s CEO and will soon travel to space. Andrew Jassy will succeed Jeff Bezos. On July 5, 2021, Jeff Bezos stepped down as CEO of Amazon, the business he established (Bryar & Carr, 2021). Powers were transferred to Andrew Jassy, who formerly ran Amazon Web Services. The business’s New Shepard reusable spacecraft, built by the corporation, was launched on July 20 for its maiden manned flight, in which Bezos will be a participant (Bryar & Carr, 2021).
Over the past 20 years, the 53-year-old man has created AWS from the bottom up and was named CEO of the cloud platform in 2016 (Bryar & Carr, 2021). Jassy served as Bezos’ “shadow advisor” at one time, accompanying the boss to high-level meetings. Jesse made almost $36 million in 2016, whereas Bezos earned roughly $1.7 million (Bryar & Carr, 2021). This distinguishes him as a future successful leader.
With powerful goods, the corporation controls numerous significant areas, including retail, cloud services, streaming, and e-books. The corporation is not slowing down and is expanding into other industries, including food sales and delivery. The corporation is also aggressively expanding in the IoT space, enhancing its virtual assistant Alexa and producing smart home devices.
However, Amazon’s main competitor, Walmart, is outperforming the business in physical retail sales (Bryar & Carr, 2021). Furthermore, Walmart is working hard to establish itself as an e-commerce retailer: with websites in over 10 countries, it is outselling Amazon among consumers in the United States, Canada, the United Kingdom, China, and Japan. Walmart’s online sales increased 70% over 2020, hitting $43 billion in 2021, and it is this problem that Jesse is called upon to fix with his unique ideas. Customers will benefit from enhanced service, employees will benefit from new, creative challenges and growth possibilities, and investors will benefit from new investment options.
The Cummings and Worley Model of Planned Change is the best fit for this situation. This model, for example, covers the company’s significant acts during the change process and incorporates the most valuable principles (Errida & Lotfi, 2021). Typically, the transition process is non-linear. Different jobs overlap and are performed inconsistently, and new knowledge or changes in internal and external situations require restarting the change process (Errida & Lotfi, 2021). The planned change approach is best suited to the need for a straightforward, structured approach to handling the Amazon problem.
Conclusion
Thus, a change in CEO is necessary when the company faces problems that the current director cannot solve. Companies’ anti-crisis strategies often include a change of management. A change of director is of great significance for a company, regardless of.
The CEO is a key link in the management system, so his replacement should be well justified. For effective service management, the company needs to implement change in an organized manner, without errors or wrong decisions. Therefore, employing frameworks like the five dimensions of leadership and Kotter’s eight-step model is a logical choice. These models will help the organization design the steps carefully and arrive at the most effective solution to the problem.
References
Bryar, C., & Carr, B. (2021). Working backwards: Insights, stories, and secrets from inside Amazon. Pan Macmillan.
Errida, A., & Lotfi, B. (2021). The determinants of organizational change management success: Literature review and case study. International Journal of Engineering Business Management, 13.
Laig, R. B. D., & Abocejo, F. T. (2021). Change management process in a mining company: Kotter’s 8-Step change model. Journal of Management, Economics, and Industrial Organization, 5(3), 31-50.
Wasko, J. (2020). Understanding Disney: The manufacture of fantasy. John Wiley & Sons.