MNG3702/201/2/2016

Tutorial Letter 201/2/2016

Strategy Implementation and Control

MNG3702

Semester 2

Department of Business Management

IMPORTANT INFORMATION:
This tutorial letter contains feedback on Assignment 01.
CONTENTS

1 INTRODUCTION .......................................................................................................................... 3
2 FEEDBACK ON ASSIGNMENT 01 .............................................................................................. 3
3 IN CLOSING ................................................................................................................................. 9

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1 INTRODUCTION

Dear Student

This tutorial letter provides feedback on Assignment 01. You need to review the contents of this tutorial letter
carefully, as it will give you valuable insight into your studies and guide you in your learning experience.
Assignment 01 introduced you toplanned strategic change, organisational learning and how to shape and instil an
organisational culture that supports a chosen strategy.

You will receive your marked assignment together with the marker's comments and the assignment evaluation
sheet (rubric) in the post. The assignment evaluation sheet (rubric) shows how marks have been allocated
and will help you to identify areas that need improvement (Tutorial letter 201 does not indicate the mark
allocated; the rubric indicates the assessment criteria and mark allocation). You should therefore read this tutorial
in conjunction with the feedback given in the assignment and the rubric attached to your assignment.

2 FEEDBACK ON ASSIGNMENT 01
Assignment 01 was an essay-type assignment. Tutorial Letter 101 provided you with guidelines for answering
essay-type questions. If you did not adhere to these guidelines, you would have been penalised. In addition, it
would not have been sufficient if you merely copied facts from prescribed books without supporting your answers
where necessary. You needed to demonstrate that you could balance theory on strategy implementation and the
application of strategy concepts to a case study. I cannot provide detailed model answers for case studies where
application to a case study or a chosen organisation was required. Each student's answer differed and was
assessed individually. Marks were allocated based on the strength of your arguments and practical application. I
will give some guidelines on how this should have been done below.

Remember that you had to number your pages and include a table of contents as the first page of your assignment.
An essay-type assignment starts with an introduction that should clearly state the topic of the essay and explain
what the aim of the essay is. It should also introduce the reader to the company on which the assignment is based
- in this case, Unilever.

The following is an example of an introduction to this essay-type answer:

1 INTRODUCTION

The discussion that follows is based on the Unilever case study in Tutorial letter 101, annexures A and B. The
sections below will deal with planned strategic change and recommendations on managing strategic change.
Acritical evaluation of organisational learning and becoming a learning organisation is done as well. In the final
section a critical evaluation is done of organisational culture change efforts, as well as recommendations are made
on shaping and instilling an organisational culture that supports Unilever’s chosen strategy.

Note that one mark was allocated if you included a table of contents with appropriate headings and numbering.

In terms of mark allocation for the introduction, one mark was allocated if you included an introduction that clearly
indicated to the reader what would be dealt with in the sections that followed. Note that you had to deal with all
three questions in your introduction.

Now you should have answered the assignment questions, using headings and subheadings that correspond with
the questions and the table contents.

2 PLANNED STRATEGIC CHANGE

Explain what the planned strategic change process entails. Give examples from the Unilever case study to support
your explanation and make recommendations with regard to managing change at Unilever.

Strategic change is required to move an organisation from its current state to a desired future state. To achieve
this, future desired state in a spontaneous and unplanned manner is highly unlikely. Strategic change has to be
managed in a planned manner. In terms of the Unilever case study, the CEO played a key role in articulating and
leading the strategic change efforts in a planned manner. The specific change model that was used is not stated
explicitly, but there is sufficient evidence in the case study that Unilever took steps to manage strategic change in a
planned manner.
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In the sections below, John Kotter’s model is used as a framework to explain what the strategic change process
entails and examples are given from the case study that support the explanation of each step (see learning unit 2,
section 2.5, pp 28–32). You may have used another change model, but your explanation should have followed a
number of steps to indicate a planned and managed changed process.

John Kotter’splanned change model consists of eight steps, namely:

Step 1: Establishing a sense of urgency

This phase requires leaders to establish a need for change and create a sense of urgency around the need for
change. In terms of strategy implementation, not changing would be a threat or a hindrance to the continued
success of the organisation, and employees will have to be convinced of that in order to create a sense of urgency.

In terms of the case study, there was a sense of urgency as far as the need to deal better with strain/stress issues
in the world: VUCA trend. Unilever faced a number of challenges. It needed to make large-scale changes and had
to let go of the beliefs that influenced what gets incorporated into the prevailing strategy. Furthermore the CEO
made the argument that there were limits to the existing brand of capitalism (the business models and strategies)
to deal with the VUCA trend. However, the CEO also made a convincing argument that the VUCA trend presented
an opportunity for businesses, if well managed. By creating a perception of a crisis, the CEO created the conditions
for strategic change and loosened Unilever’s attachment to the status quo.

Step 2: Creating the guiding coalition

The guiding coalition is a group of individuals with the requisite knowledge, skills and attitudes to drive change in
the organisation. In some organisations this may be known as a “steering committee”. One of the key roles of the
guiding coalition is to create and implement a roadmap for change. The coalition should be a good mix of
individuals who complement each other.

In terms of the case study, the CEO, Paul Polman, created the roadmap for change and played a key role in driving
strategic changes.

Step 3: Developing a change vision

The purpose of this step is to create a compelling vision for change that employees can buy into and that will
mobilize them for change. Ideally, a change vision will emphasize the need for change and the aspirations of the
organisation.

In the strategic management process, determining the change vision and the broad roadmap for achieving it, forms
part of the strategic planning process.

In terms of the case study, there is a clear change vision to make sustainable living commonplace. The strategic
goal itself is ambition: double in size and half the environmental impact of Unilever. This ambitious strategic goal
placed pressure on Unilever, which in turn weakened the power of the status quo, combatting organizational inertia
to change.

Step 4: Communicating the vision for buy-in

Simply telling employees about change is not enough; they need to understand what it entails and why it is
necessary, as well as why it will be beneficial to them. In order to achieve this, the change needs to be
communicated consistently and on every possible platform. One of the most powerful tools in transmitting the vision
is through the behaviour and words of leaders. Leaders "walking and talking" the change is more powerful than any
other communication tool.

In terms of the case study, what needs to be achieved and what is achieved is communicated in different ways.
Being authoritative and charismatic, the CEO was able to pioneer initiatives that had impact. More specifically, he
announced a bold new strategic plan, reported on initiatives, targets and measures, and the degree to which they
had been achieved or exceeded. There is also evidence of buy-in from customers and stakeholders in terms of the
value proposition made (making sustainable living common place).

Step 5: Empowering broad-based action

The purpose of this phase is to ensure that existing and potential barriers to change are removed, and that those
responsible for driving change are empowered to do so. Barriers may include structural barriers, such as systems
that are not aligned with the required change, and human barriers, such as resistance to change or lack of skills.

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In terms of the case study, there is evidence of efforts to break down a myopic view of success. The CEO argued
that success did not mean shareholder wealth at the expense of everything else (owning a few shares do not give
shareholders the right to ruin the strategy).

Step 6: Generating short-term wins

Large-scale change needed for strategy implementation can be a long and arduous process. To keep the
enthusiasm and momentum going, it is imperative to show some short-term results. Kotter suggests that this could
take the form of setting performance goals that are aligned with the change, widely acknowledging and celebrating
the attainment of such goals. Such successes are the generators of future change and success.

There is evidence of short-terms wins. The CEO reported on progress made in implementing the USLP (Unilever
Sustainability Living Plan) and with these wins, enthusiasm was generated to work with Unilever under the USLP.
The USLP plan not merely benefitted shareholders, but also other stakeholders that were in interested in doing
business in a responsible and equitable way.

Step 7: Never letting up

Given the long timelines and effort required to effect large-scale change, it is vital to ensure that the change
process never stops and that the momentum is maintained. If this step is executed correctly and the change
process is successful, this step will result in many spontaneous examples of momentum becoming visible, such as
new projects being initiated, efforts being made to keep urgency levels high, and employees increasingly being
empowered.

In terms of the case study, there is clear evidence that momentum was maintained: new focus areas were
developed as insights were gained from implementing the strategic plan (USLP), results were shown, and
employees had clear focus areas. More specifically, employees were empowered and tasked to reduce waste and
material use, source and manufacture through a sustainable lens, collaborate to gain new insights and extend
channels to engage with customers.

Step 8: Incorporating changes into the culture

The most difficult aspect of change is changing the culture or mind-set of the organisation, and this will take up
most of the time. For this reason, it is seen as the last step and not the first step. In order to inculcate change in the
culture of the organisation, it must become part of the shared values and beliefs of the organisation. This could be
accomplished by:
 proving that the new way is better than the old way
 achieving visible success (e.g. increased financial performance)
 accepting that some people may not accept the change and moving on
 reinforcing new norms and values with incentives

In terms of the case study, the Unilever Sustainability Living Plan (USLP) set out to create a better way for Unilever
to do business (a new mental model is introduced by the CEO). This new model was not a trade-off between
responsible behaviour and success. It was rather a proposition of both: setting out to make sustainable living
commonplace and embedding it in the way Unilever did business, which also drove its growth. There is also
evidence of acceptance of the new way of doing business, and the USLP was becoming firmly embedded in all
aspects of the organisation.

In terms of mark allocation, an excellent mark was only awarded if the explanation of the planned changed process
used a planned change framework and all the steps in the change process you used were dealt with in the
explanation. The explanation of each step had to be supported with an appropriate example from the case study.
You had to show a balance of theory and application. If you only presented theory, you would have been awarded
a fail mark. Furthermore, an excellent mark was only awarded when the links to the case study (examples from the
case study) in each step of the strategic change process were well made. If the links between the theory and
application were not made very well or an example given was not relevant to a step in the change process, it
indicated that you could not apply the theory to the case study. A failing mark would most likely have been
awarded.

3 RECOMMENDATIONS ON MANAGING STRATEGIC CHANGE

In the previous sections it was clear that planned strategic change involves a process. This process would start by
identifying the areas of change, and may include both small and large scale change. In the case of large-scale
changes these may include structural changes, people changes and cultural changes. Furthermore, an important
task in this process of managing change is to understand and manage any organisational inertia (resistance to
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change) to make the changes identified. The last issue when strategic change is required, is a need to acquire new
capabilities to implement the new strategy.

Note that the second part of question 1 specifically required you to make recommendations on managing change in
the Unilever case study. You could have made many possible recommendations. In the sections below,
recommendations are made on the basis of contextual considerations. You may have identified another basis for
your recommendations.

Unilever was operating in a VUCA environment. In a VUCA environment, Unilever needed to be agile and quick to
respond to environmental changes, and combat any organisational inertia (resistance to change) there may have
been to make strategic changes. Therefore, in the case of Unilever, managing strategic change should have begun
with the understanding that Unilever would face the challenge of managing for today while preparing for tomorrow.
Based on contextual considerations (the VUCA trend), three broad recommendations were made: a
recommendation on organisational ambidexterity (structural change), the use of tools to counteract organisation
inertia (resistance to change), and the importance of a acquiring a capability to develop new capabilities (dynamic
capabilities).

The challenge of reconciling competing for today with preparing for tomorrow is closely related to the trade-off
between organisations exploiting and exploring at the same time. There is a propensity for organisations to favour
exploitation over exploration, which applies to strategy as well: competing for present trends to take precedence
over preparing for the future. The capacity to do both at the same time is referred to as organisational
ambidexterity. More specifically, structural ambidexterity involves separating organisational units into separate new
units where exploration and exploitation are undertaken. Trying to incorporate exploring units into existing ones
does not foster change. In the case of Unilever, creating separate organisational units that exploit and explore at
the same time would have given Unilever greater structural ambidexterity.

The second recommendation deals with combatting organisational inertia (resistance to change). The challenge for
management in the case of Unilever was to make large-scale changes before they felt pressured by declining
performance. In Unilever's, they had to let go of the beliefs of the prevailing strategy and adopt a new set of beliefs.
The envisioned change required a paradigm shift. Note that if the existing paradigm was still very strongly held,
then change initiatives may simply have been reinterpreted to fit the old paradigm. Hence it was important for
management to combat any inertia to change (prevent the old paradigm remaining the “default paradigm”).

Note that the learner guide gives a list of reasons for resistance to change and reasons why change programmes
fail. A practical example is also given of barriers to change and possible solutions (see learning unit 2, section 2.7,
pp 34-37). You may have used any one of these barriers and solutions to these barriers to make recommendations
on managing strategic change, provided sound links could be made to the case study.

Furthermore, to combat any organisational inertia, it is recommended that Unilever create stretch targets that
weaken the powers of the organisational inertia. The idea is that these targets are ambitious and achievable, but
only if employees attach no complacency. Therefore these targets should be associated with "stretch" performance
goals for individuals and organisational units.

Inertia to change can also be combatted by using corporate initiatives sponsored by the CEO. The CEO may
especially be effective in driving change. These change initiatives may be built around a compelling message or
slogan that the CEO uses, combined with symbolic actions.

Ultimately adapting to change would require Unilever to develop new capabilities to implement the changes
identified. This challenge implies that Unilever should grasp where capabilities come from. Distinctive capabilities
that Unilever possessed may be traced back to the founding and early development of Unilever. These capabilities
are subject to a path dependency (Grant 2015). Essentially, the capabilities that Unilever possess today is a result
of its history, the capability is developed in the past. However, to understand how new capabilities should be
developed, Unilever had to look at the structure of organisational capabilities. These new capabilities resulted from
the combination of resource, skills, processes and routines (routinized behaviour). Hence it is recommended that
Unilever look at the building blocks for new capabilities. These would include processes (organisational routines) to
ensure new tasks, given the change agenda are performed in an efficient, repeatable and reliable manner. In more
practical terms, processes can be developed through routinisation and learning. Unilever should use mechanisms
that facilitate learning-by-doing routines and ensure the retention and sharing of learning that takes place (use
mechanisms to create a learning organisation).

Overall the ability of an organisation to repeatedly adapt to new circumstances and not get "stuck" in a competitive
landscape is contingent on an organisation's capacity for change itself. This capability is referred to as a dynamic
capability: essentially a capability to create a new capability (a "higher-order" capability to orchestrate change
among lower-order or "operational" capabilities”). To identify dynamic capabilities, Unilever may equate certain
processes and routines that lead to creating new capabilities (as opposed to ad hoc development of new

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capabilities). For example, processes may be designed to sense new opportunities and fund their development into
new business opportunities. This would give Unilever the capability to explore a larger number of opportunities, and
to make small initial investments in these opportunities. If an investment then showed promise, a larger investment
would be made to exploit the opportunity. The result would be that opportunities that would previously not have
been explored would not be missed.

Note that you could also have made reference to the pre-conditions for effective change - organisational change
capacity (OCC). See learning unit 2, section 2.6 and the open-source book (Judge 2016) referred to in section 2.6.

In terms of the mark allocation for the recommendations section of the question, an excellent mark was awarded if
three or more recommendations had been made, and if these recommendations were sound and relevant to the
case study. This means that your recommendations should have been made on some basis, such as contextual
considerations or possible barriers to change, and these recommendations should have been relevant to the case.
If you merely presented theory as recommendations and these recommendations were not linked on some or other
basis to the case study, you would have failed this section.

4 ORGANISATIONAL LEARNING

Critically evaluate the organisational learning of any organisation. Refer specifically to the learning practices of the
organisation, whether these practices are sound (in terms of the theory on organisational learning) and make two
recommendations on how the organisation can develop its learning practices.

In the previous sections the importance of becoming a learning organisation was one of the issues highlighted in
managing strategic change. A learning organisation (Senge 2006) is organisations that is skilled at creating,
acquiring and transferring knowledge and modify its behaviour to reflect new insights or knowledge. Modifying
behaviour is the important aspect. The idea behind a learning organisation is that it is easier for an organisation to
adapt to sudden change if the organisation as whole has the ability to learn. However, many organisations, even
though they acquire new knowledge and insights, often do not make fundamental changes in their behaviour in
response to insights or new knowledge. Hence an organisation may see or "sense" gaps in systems and focus
solely on closing these gaps (single loop learning). Different strategies or tactics may be employed to close these
gaps, but often the same problem will be encountered at a later stage. The opposite effects may even emerge to
what was intended to be a solution or the organisation may simply run out of ideas.

Organisations therefore often take action to try and cope with strategic issues, as opposed to questioning the
fundamental elements or rules that govern the situation. In other words, mental models that govern what is
incorporated or left out of strategy are rarely re-evaluated or challenged. Once an organisation reaches the point
where it starts to question fundamental assumptions made, an organisation can make fundamental changes that
will move the organisation forward. This process of unlearning mental models held is referred to as double loop
learning. Overall, in order for an organisation to become a learning organisation, several mechanisms, such as
leadership commitment to learning, a shared vision, systems thinking, legitimising dissent, encouraging
experimentation, establishing communities of practice, collaboration and knowledge management can be used in
combination to effect deep seated behavioural changes in an organisation.

Note that you were required to critically evaluate organisational learning of any one organisation. Hence you had to
make a judgement on whether the organisation you evaluated could make fundamental changes in response to
new knowledge and insights made. You furthermore had to justify your judgement. In order to justify your
judgement, you may have looked for evidence that the organisation used learning mechanisms or employed a
particular practice or used a systems/conceptual framework such as a knowledge management system. See the
textbook, section 6.5.11, pp 109-111, and learning unit, section 3.6, pages 46-47. Activity 3.4 gives an example of
a knowledge management system/practice.

In terms of making recommendations on becoming a learning organisation, you could have used the mechanisms
discussed in the prescribed textbook, section 6.5, pages 105-112.

5 SHAPING AND INSTILLING A CULTURE THAT SUPPORTS A CHOSEN STRATEGY

Critically evaluate the culture change efforts at Unilever (Annexure A: Unilever’s compass strategy) and make three
recommendations on how it can shape or instil a culture that supports the chosen strategy.

Note that this question did not require an explanation of what organisational culture entails. You had to
demonstrate that you could critically evaluate Unilever's cultural change efforts and make recommendations on
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how to shape or instil a culture could be shaped and instilled that supported the chosen strategy (compass
strategy) of Unilever. Moreover, you had to justify any recommendations you made.

Leaders play an invaluable role in shaping and instilling culture in an organisation. Leadership is viewed as the
main source of an organisation’s beliefs and values (Schein 1992). The most central issue for leaders is to
understand the deeper levels of organisational culture and to deal with the anxiety that sprouts from assumptions
being challenged (note that in the previous section the issue of unlearning mental models was dealt with), for
example, during change programmes. In terms of Unilever, the focus of its strategic change programme was on
making sustainable living an integral part of how it does business. To execute this strategy successfully, it needed
to establish, to share and to reinforce a set of relatively consistent values and methods of doing business. More
specifically, Unilever focused on creating an adaptive and inclusive culture that promotes performance/winning:
winning with brands and innovation, winning in the market place, winning through continuous improvement and
winning with people. Note that Unilever did not choose to change the strategy to fit the existing culture or managed
around the culture. It chose a much larger challenge; it chose to shape and instil a culture that supported the
chosen strategy.

Note that you may have used a different approach to evaluate the cultural change efforts of Unilever. For example,
you may have used the cultural web as a framework to do the critical evaluation part of the question.
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How does an organisation then go about instilling or shaping its culture? Organisational culture springs from three
sources. The values, beliefs and assumptions of the founders of the organisation are often seen as the most
important source of organisational culture. The other sources of organisational culture are the learning and
experience of group members, and new beliefs introduced by new leaders or other members of the organisation. In
terms of Unilever, its CEO, Paul Polman, was the most important source of the belief that a more volatile,
uncertain, complex and ambiguous (VUCA) world would make it more difficult for Unilever to navigate, but this
VUCA trend was also an opportunity if it was managed well.

How do leaders in practice transmit and shape an organisational culture that supports the organisation’s chosen
strategy? Leaders transmit and shape organisational culture by way of certain embedding
mechanisms,structural mechanisms, symbolic and substantive actions they take and planned change
programmes.(See learning unit 4, section 4.5.1, pp 56–57).

Examples of embedding mechanisms in the Unilever case study included what the leader measured, how people
were rewarded, how resources were allocated and how Unilever recruited and promoted people. More specifically,
Unilever measured its size and environmental impact. Unilever also focused on reinforcing the values of integrity,
responsibility and respect. Moreover, Unilever rewarded employees on the basis of a performance-based structure
that recognised employees who delivered results and had the right values.

In terms of recommendations of other embedding mechanisms that can be used: the use of non-extrinsic rewards,
such as existential recognition (an employee suggestion program), recognition for the way it is performed
(professional practices rewards), and recognition for dedication.

In addition to these embedding mechanisms, structural mechanisms such as organisational structures and
systems, procedures, rituals, stories and statements can be used to shape or to instil an organisational culture. In
the case of Unilever, the company focused on fewer projects that enhanced margins, actively seeking superior
products that consumers preferred, actively recruiting talented people (the “right” people that fit a winning culture)
and encouraging employees to grow to their full potential. Furthermore, new employees were likely to adopt these
values very quickly due to structural mechanisms that were in place, which would have positively affected goal
alignment, motivation and performance/winning.

In terms of the recommendations on structural mechanisms: the dissemination of stories or legends about core
values could be encouraged, and adopting common themes, such as "winning" that are specific to the organisation
(these themes may be sponsored by the CEO).

In terms of substantive actions and statements, the leader also used reporting in annual reports to show the
progress that was made in implementing the strategic plan and that sustainable ways of doing business had
become firmly embedded in all aspects of the business.

Note that your recommendations may have included the use of a combination of embedding mechanisms,
structural mechanisms, a planned cultural change program or symbolic and substantive actions that the leader
could take to shape and instil a culture that support the chosen strategy. Furthermore, if certain beliefs and
assumptions already existed that supported the chosen strategy, the leader would have focussed simply on
reinforcing what already existed in terms of the existing cultural paradigm.

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6 CONCLUSION

You should have concluded your assignment with a brief overview of the main discussion points. The following is
an example of such a conclusion:

In this assignment the planned strategic change process, organisational culture change efforts and organisational
learning were dealt with. This assignment also highlighted that strategic change is not normal change. Strategic
change is more often disruptive and is essentially about creating the future, as opposed to trying to predict the
future or hope that desired change will happen spontaneously. It may also require that leadership challenge the
dominant mental model held by the organisation. Moreover, unlearning a mental model and creating a new mental
model is the key to make deep-seated behavioural changes in an organisation.

Note that one mark was allocated for the conclusion if you had been able to synthesise the key issues you
addressed in your assignment. If no conclusion or a poor conclusion was presented, then no mark was allocated
for the conclusion.

REFERENCES

You should have used the Harvard style of referencing; if you failed to do so, you would have been penalised for
using an incorrect referencing style. One mark was allocated if all the in-text referencing was done correctly and
one mark if the bibliography was done correctly. If you used in-text references, but did not include them in the
bibliography, the bibliography would have been incomplete and no mark would have been awarded for the
bibliography.

Grant, RM. 2015.Contemporary strategy analysis. Eighth edition. West Sussex: John Wiley.

Judge, WQ. 2016. Focusing on organisational change. Saylor.org/books. Available at:

http://open.umn.edu/opentextbooks/BookDetail.aspx?bookId=128(accessed on 07/02/2016).

Senge, PM. 2006.The fifth discipline: the art and practice of the learning organization. New York: Broadway
Business.

Schein, E. 1992. Organizational culture and leadership: a dynamic view. San Francisco, CA: Jossey-Bass.

Venter, P (ed). 2014. Practising strategy: a southern African context. Cape Town: Juta.

3 IN CLOSING

We encourage you to refer to the learning outcomes in the learning units and ensure you that you can achieve
them. Please pay special attention to the outcomes you have not yet mastered.

We wish you the best of luck with your MNG3702 studies!

Kind regards

Your lecturers for MNG3702

Department of Business Management
Unisa