Strategy

Radical changes entail substantial modifications of corporate strategies and goals. New strategies should be clear and easy to communicate, and new goals should be easy to justify, quantify and measure. These key success factors are apparent in the words of Mr Colabucci, sales manager at Bosch Automotive Aftermarket Italy:

The change management programme supporting the key accountization of the company, consistent with Kotter (1995), focused on creating a vision clarifying the direction in which the organization needed to move and developing a strategy for achieving the vision. The vision has to be simple, easy to understand and communicate, and capable of capturing the imagination of people in the organization. Without this vision, priorities are not clear and all plans, directives and projects may be confusing and perceived as incompatible: the vision should be the unifying focus of all programmes.

Skills needed to successfully redesign and manage key processes

Generally speaking, in change management initiatives companies should analyse and redesign critical processes when needed, especially to identify the critical skills needed to successfully implement the change. Such processes may refer to both back-office activities and customer interaction management of the front line. For example, Bosch mapped and redesigned some critical processes, especially to clarify roles and responsibilities, the goal being to reduce ambiguity and conflicts. Therefore, after identifying key processes, the company developed for each of them the RASIC matrix, which clearly indicated, for each phase of the process under investigation, the people involved in terms of Responsibility, Approval, Support, Information and Control.

This is in line with the recommendation made by Sirkin et al. (2005), who emphasized that radical organizational changes, such as BAA Italy's key accountization, should be characterized by a clear definition of roles and responsibilities for all the people involved.

The Bosch case highlights the critical role played by communication processes, both with internal (subordinates, colleagues from other departments, etc.) and external counterparts (e.g. customers). As Colabucci pointed out:

In some cases, changes in processes were only short term, tactically oriented. For example, pricing and discount policies were made very flexible at the beginning of the change initiative. The objective was to support the change process by orchestrating some early wins when needed. In fact, the company wanted to keep performance high in the short term to reinforce employees' and customers' commitment.

All this is consistent with Kotter (1995) as well as Sirkin et al. (2005), who noted that every possible communication channel should be used to make employees perceive that the change is useful and possible, and to facilitate two-way information flows to provide feedback from the both employees and customers. Kotter (1995) also pointed out that managing communication processes in radical change management initiatives like the key accountization of the firm also implies orchestrating and creating short-term wins. Meeting and celebrating short-term goals helps boost the credibility of the renewal process, keeping the urgency level high and forcing detailed analytical thinking that can clarify or revise the vision. Since big transformations take time, without some short-term success many people are at risk of giving up and losing faith in the change process. Therefore, change leaders should deliberately plan for visible and measurable performance improvements, create these improvements, and recognize and reward employees involved in such improvements. This does not mean declaring victory too soon. Rather, successful change leaders typically use the credibility gained through short-term wins to further raise the bar and start renewal projects that are even bigger in scope than the initial ones.

Improving internal communication processes also implies the modification of measurement systems (Colletti and Chonko 1997): companies should change what to measure and how it is measured. First, accurate measurement procedures can help justify why the change is needed by providing measurable goals to be accomplished. Second, if the impact of change on results can be measured, empirical testing can reveal what works well or not in the change, thus facilitating learning and continuous improvement. Third, having measurable measures of success provides opportunities for energizing the improvement process: in fact, people feel motivated by reaching quantifiable measures of performance, and demonstrated capacity to succeed reinforces employees' perceptions of their ability to succeed in the future.

Shared values and culture

Neal and Tromley (1995) suggest that when radical changes are expected, as in the case of BAA Italy's key accountization, a culture change is needed. Culture consists of the set of values, beliefs and assumptions underlying the behaviours of individuals.

When the change management process started, Bosch was changing its priorities in terms of key corporate values. Moral integrity had always been the primary value, together with a guarantee of employment to its employees. The new number one value was entrepreneurship and the spirit of initiative: the company wanted a personal contribution from its employees. This called for, among other things, an empowering leadership style, a reduction of bureaucracy in many business processes and higher job mobility, coupled with more meritocratic career advancement opportunities. The strategic change at BAA Italy also called for a stronger market-oriented culture.

To change the corporate culture, one should start from the top: it is of fundamental importance that top managers accept, witness and spread across the whole company the key values of the new culture. To do this, members of the board needed to demonstrate and embody such values by showing consistent actions, i.e. by modifying their everyday decisions and behaviours. This is not easy to accomplish. This was how Colabucci persuaded the CEO to shift from a product-oriented culture to a customer-oriented culture, which was a necessary precondition to successfully implement the change:

This statement clearly suggests that major modifications in company culture must be accompanied by substantial modifications in support systems (e.g. information systems), otherwise it is extremely difficult to implement change in practice. This is also consistent with the above mentioned need to modify measurement systems (Colletti and Chonko 1997). A typical example is the effort to calculate customer profitability to see whether the company is focusing on the right accounts, as well as to estimate the return on time invested, to make sure that salespeople are spending their time on the correct activities.

The example cited above also underlines the importance of the commitment of senior executives in implementing KAM-related change management programmes (see, for example, Sirkin et al. 2005). Furthermore, an important way to modify the corporate culture is to change some rituals. For example, to stimulate employees' entrepreneurship, Colabucci decided to change the way meetings were managed. This is how he describes this change:

Another example of change in rituals refers to the challenge of stimulating a culture of interdepartmental interaction and cooperation. In Colabucci's words:

In addition, the company started to take some people from the sales department and move them to marketing and vice versa.

Corporate culture can also be changed by modifying some artifacts, such as the company language (Homburg and Pflesser 2000). An example of this is provided by Colabucci:

Even changing the dress code was a way to try to modify culture, attitudes and behaviours. As Colabucci states:

Consistent with Chonko et al. (2002), perceptions of organizational readiness for change and individual learning orientation were stimulated by creating a culture whose main values were market orientation and entrepreneurship. Market orientation is characterized by a continuous effort to create customer value, to collect and disseminate customer and competitor information, and by organization-wide responsiveness to customer needs. Entrepreneurship is characterized by risk tolerance, support to proactivity, receptivity to innovation and resistance to bureaucracy.

Style and leadership

Laabs (1996) reported that 20% of people in an organization are change friendly, 50% are ‘fence sitters’ and 30% resist or even deliberately try to make the initiative fail. Change leaders play a key role in proactively managing the meaning that people attach to change. Such meaning can be interpreted in terms of shared mental models, i.e. common perceptions, beliefs and priorities that facilitate successful change implementation. Since change implies uncertainty and ambiguity, the input of management to the construction of reality is especially important when companies undergo radical changes. Leaders should manage meanings in order to:

• Create shared perceptions and interpretations so that members' actions are guided by a common definition of the situation.
• Justify their actions and the changes they introduce to the organization.
• Recruit followers and motivate members of the organization to support their actions.
  
  

The management of meaning by strategic leaders primarily involves shaping organization members' perceptions and interpretations about (1) the environment, (2) the state of the organization and its performance, (3) the organization's vision and goals, (4) the appropriateness of various means, decisions and actions employed by the organization to achieve its goals, and (5) the ability of the organization to make progress towards meaningful goals.

Change leaders must be credible, and their leadership style should incorporate personal values and personality traits that are consistent with the values of the corporate culture. For example, as stated above, a major modification of Bosch's corporate culture was the emphasis now placed on the employees' entrepreneurial attitudes and capabilities. This calls for a leader who stimulates and supports empowerment and risk-taking. This was clearly a characteristic of Colabucci, as demonstrated by the following statement:

Similarly, a participative leadership style was needed to foster followers' entrepreneurial spirit. Again, this was part of Colabucci's style:

Radical changes usually require a radical discontinuity in the management team. Hence, hiring leaders from outside can be a wise choice, as Colabucci witnessed:

On the other side, hiring a new leader from another company may create problems internally, because the newcomer may lack credibility. To gain credibility, the leader should be perceived as competent, honest and powerful. The company and the leaders can and should do whatever they can to improve such perceptions. Such characteristics in Colabucci's words:

The leader's communication style is especially important in change management initiatives, since it has a strong impact on the cognitive, affective and behavioural responses of individuals affected by change. A communication style characterized by clarity and openness is usually a relevant trait of successful change leaders.

Structure

In terms of organization structure, two major modifications were made at BAA. The first involved the reduction in the sales force size. In fact, since Bosch would no longer manage 4,000 customers but 150, the company needed to downsize its sales force. Therefore, Bosch decided to relocate many members of its sales force to the dealerships, thus reducing the number from 100 to 30; only 10 salespeople did not accept this proposal. To be successful, one key variable was to prove that everyone would earn more in the process. For Bosch, the main advantages were that salespeople helped convey the culture of Bosch to dealers, and that salespeople (and their customers) did not move to competitors. Salespeople did not lose their jobs and continued working with their customer base. Often they also had new career advancement opportunities in the dealers' organizations. Finally, they put their portfolio of downstream customers at the disposal of dealers, who broadened their customer base and hired experienced salespeople.

The second relevant change was that the company created formal teams (as recommended, for example, by Neal and Tromley (1995) and Beer et al. (1990)), thus giving rise to a matrix organization structure. In fact, area managers became leaders of selling teams, each one incorporating a couple of agents and one member from each of the other three departments: marketing, sales administration and technical assistance.

Staff

Bosch realized that most of its employees did not possess the set of skills and competencies needed in the new scenario. At the same time, the company understood that investing in training was a necessary step to motivate people to change. In fact, many employees felt a lack of self-confidence. Empowerment also required an increase in employees' capabilities. Therefore, most members of the organization from all four key departments were involved in inter-functional coaching, training on team building and training to develop management skills and competencies.

In short, the training process at BAA Italy consisted of the following steps:

All the investments of time and money made by BAA Italy with regards to the development of employees' skills, knowledge and capabilities were consistent with Beer et al. (1990), Claret et al. (2006) and Sirkin et al. (2005), who emphasized that to successfully implement profound change projects such as BAA Italy's key accountization, companies should develop new skills and competencies in those affected by change, in such a way that they feel they are ready and well prepared to deal with the challenges of the new context.

Systems

In addition to the interventions on information systems cited above, two other modifications were important to support and successfully implement change at BAA Italy. The first one involved planning: all salespeople were provided with an information-based customer planning tool aimed at setting goals, developing projects, tracking progress, monitoring problems and creating benchmarks for every single customer.

Second, consistent with the recommendation made by Beer et al. (1990), the company completely revised its incentive system. This is a critical issue in a KAM-focused change like the one made by BAA Italy. In fact, since salespeople's remuneration is typically largely related to market performance, change directly threatens the level or variability of sales force income. As a consequence, compared with other personnel, salespeople may be more reluctant to change, because unlike other employees in the organization they have to take upon themselves the risk of losing money (Hurley 1998). The challenge here was to change employees' priorities from monetary rewards to career development opportunities and professional growth. To do this, for example, the company strongly invested in cross-functional training and interdepartmental coaching, stimulated cross-functional mobility and redesigned job advancement paths.

Investing in control systems (e.g. measurement systems, reporting systems, etc.) is also a key success factor in KAM-related change management programmes – as pointed out by Sirkin et al. (2005), companies should schedule milestones and assess their impact. Carefully monitoring the change project's progress implies providing reports, determining whether achieving the milestones has had the desired impact on the company, discussing the problems, determining improvements, etc.