Introduction
Organizational transformation does not always go as planned, and many cases fail to meet expectations. The current literature provides reasons why many attempts at transformation fail, including adverse reactions to change (Khaw et al. 1; Furxhi 30). As such, the greatest challenge for firms is managing expectations, attitudes, and the willingness of organizational members to embrace change (Heim and Sardar-Drenda 327). This paper will focus on three cases of failed transformations, identify the reasons for the failures, and present recommendations, supported by the literature, to avoid such failures.
Cases of Failed Transformation
Wistia
Wistia, a video marketing software firm, is one case of epic failure in change management. The firm focused on business expansion, leading executives to stray from corporate values and resulting in employee burnout. Wistia implemented a change management strategy that diverted its focus from internal efficiency to business growth. The focus on new creative projects led to increased spending on advertising and aggressive hiring, which ate into its profits. Employees noted the problem and questioned the change, and most left after the once-fun, inventive workplace became extremely stressful.
Ultimately, the firm incurred $17.3 billion in debt to protect itself. Wistia is considered among the few change management failures that overlooked employees’ mindset issues when pursuing organizational transformation (Joshi 84). Failure to think about the long-term consequences of change derailed Wistia’s transformation.
Borders Group Inc.
Borders Group Inc. was once the second-largest bookstore chain in the United States. The company adopted a change strategy to tap into the online market. To achieve this strategic objective, it outsourced all online sales of music, books, DVDs, and videos to Amazon in 2001 (Wannakrairoj and Velu 2). Due to this change, customers began window-shopping at Borders before making purchases on Amazon.
Before the move, Borders was very profitable alongside other physical bookstores, including Barnes & Noble. However, the strategic transformation was a failure, as Borders’ profitability had collapsed by 2006. Six years later, the company declared bankruptcy and liquidated its assets.
Tarsus Distribution
Tarsus is a South African IT distributor that once attempted to implement robotic process automation to reduce manual data entry. The move was not well received internally, as the change communication plan faced opposition from employees from the outset (Abbas).
The primary objective of the change was to reduce employees’ workload. However, the change was widely perceived as an effort to replace employees with robots. The change could not reach its full potential without employee support and buy-in. As such, the change could not be implemented as long as the workers felt threatened by robots.
Comparing Reasons for Failure
Table 1: Comparing the reasons for failure in organizational transformation
Table 1 above shows that each firm pursued a different type of transformation. For example, Wistia chose to expand rapidly by introducing new products to accelerate sales and revenues. Borders sought a digital transformation that would enable it to sell products online while maintaining its physical stores. Tarsus pursued technological innovation in robotics to automate data entry.
The failures across the three cases stem from the firms’ inability to manage certain aspects of the transformation. The current literature suggests that having a well-reasoned transformation strategy is not enough; the firm must also implement it successfully. Poor strategy execution is a significant reason for failed transformation, especially digital transformation (Petruzzelli et al. 37). Borders and Tarsus are perfect illustrations of a well-reasoned digital transformation strategy being poorly executed.
Recommendations
Improve Strategy Implementation Mechanisms
As mentioned earlier, Borders and Tarsus had good digital transformation strategies that were poorly executed. Therefore, it can be argued that if firms were to improve their strategy execution, they would become more successful in achieving the transformation. If Borders executed the strategy successfully, it could have accomplished the transformation to a dual-business model of online and physical stores. If Tarsus had effectively communicated the change to employees and empowered them, they would have embraced and supported the change, and Tarsus’ transformation would have been a success. In this case, improving the mechanisms for strategy implementation addresses many barriers to successful transformation.
Managing Resistance
In many cases, employees do not always support organizational change. The reasons for their resistance may include the impact of the change on employees, ineffective communication of the change, and attitudes toward the change itself. Wistia and Tarsus are perfect illustrations of how resistance to change can stifle transformation. Managing resistance to change should facilitate transformation, especially when employees are directly involved.
A key starting point is to ensure that employees show positive attitudes and agree with the change, which should motivate them to implement it (Tamunomiebi and Akpan 21). Some scholars argue that failure is an opportunity to learn and adapt, suggesting that it is not the end of a transformation attempt (Schwarz et al. 161). A firm that faces resistance at first should not consider the change attempt as failed.
Change as a Process
Change should never be viewed as an event, but rather as a linear process comprising trajectories and milestones. The process viewpoint enables management to keep the end goal in sight and maintain a sense of direction (Heracleous and Bartunek 215). This means perceiving change as a linear progression of steps or smaller sets of events culminating in the desired transformation. Such an approach enables organizations to break down change into smaller, more manageable objectives. For instance, Tarsus could have started with prototypes before implementing the full version. Similarly, Borders could have followed up on its outsourcing of online sales by creating its own online platform, thereby decoupling from Amazon.
Conclusion
Organizational transformation efforts are more likely to fail than succeed. Many failures can offer valuable lessons on avoiding pitfalls when pursuing organizational change. Wistia, Borders, and Tarsus all failed because they were unable to manage various aspects of the transformation effectively. Most importantly, they all perceived change as a singular event, such that initial failures were seen as failures of the whole undertaking. Therefore, firms must learn to improve their strategy implementation, manage resistance, and adopt a process-oriented view of change.
Works Cited
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