PCL

PCL was a major manufacturer of Personal Computers (PC) in India. The company was established in
1976 and proudly claimed to have made the first personal computer anywhere in the world. The
company did well and was the leading manufacturer of PCs in India. In the later part of the nineties it
had launched a highly successful distribution business in partnership with the No:1 brand of cell
phones of the time. The good time did not last though. The PC business suffered at the hands of
multinational manufacturers like Hewlett-Packard, Dell and Apple. The company’s market shares
plunged.

Faced with a financial challenge, the company decided to try with a new leader. The new incumbent
did away with the company’s employee friendly policies. Many of the old timers of the company
were retrenched and new people were brought in their place. The company launched new initiatives
by foraying into Education services. The company set up a number of franchisees to offer hardware
education. The students there were trained to be computer technicians. But it struggled to find
employment for them. Its own businesses were declining and hence the company was not in a
position to accommodate fresh technicians. Efforts at employing them elsewhere did not bear much
fruit. The company then tried its hand at providing education software to schools. But this was a
crowded market which was difficult to break in. After some initial attempts the company finally gave
in. It pulled out of the school education services market. The company launched health care services
where they opened clinics in various cities. At the time of writing the case, the future of this initiative
was uncertain. During a chance meeting, an employee said the following.

“The company left its core business of making and selling PCs because of diminishing market shares
and profits margins. The company decided to take a leaf out of IBM’s business model. IN 2005, IBM
had divested itself of its computer hardware business and had decided to focus on what they called
the services business. PCL decided to follow the same path.

“But no one knew what it was. The company kept on talking about the services business and IBM
and all employees were wondering what would follow next. The top management did not
communicate a clear vision.”

“Then this new leader came up from nowhere.” The old man continued, His voice was almost
cynical. “His arrival was announced in a rather strange manner. As we were preparing to break for
lunch, an e mail came in our computer which stated that the lunch will follow a brief meeting which
would be chaired by the chairman of the company. The mail had come from the chairman’s personal
account which now stated his designation as ex-chairman. That is how the new incumbent was
introduced to all of us.”

“From the starting day, what made news was the huge salary at which he had come to the
organization. PCL was a conservative paymaster. But the new leader had been hired at an eye
popping salary and soon everyone in the organisation was talking about that. That I suspect was
another reason that set him off against the old guard many of whom were soon at loggerheads with
him.” After that it was all a long struggle for him. Soon the older employees were out of their jobs
and the company office was agog with all types of rumours. PCL had always been an employee
friendly company. “Concern for employees” was right there in second place after “service to
customer” in the company’s mission statement.
“That is where I assume the new leader lost it.” The old veteran continued ruefully. “He and his new
team lost grip over the organisation. They also lacked the skill necessary to build new businesses.”

The ex-manager of once-proud PCL was obviously unhappy at the way the company he had spent
most of his life working for finally ended up as a sick firm.

As we have studied, here are a few reasons for change initiatives to fail. 1. New reality was not
properly envisioned. 2. The followers did not understand the changes being pushed. 3. People in the
change process lacked buy in. 4. Anxieties impeded the organisation’s ability. 5. Resistance was not
addressed.

Tally instances from the case with the reasons mentioned above.