Cisco Systems Company: Leading Organisational Change

Introduction

Leadership is a fundamental element in the operation of organisations in the private and public sectors (Ricketts & Ricketts 2011). Moreover, leadership is essential in an organisation’s efforts to implement change in order to achieve the desired level of competitiveness (Albe 2007). This paper assesses the role of leadership in fostering organisational change. The paper takes into account diverse concepts of organisational change, the Lewis change model, the process of transition, and Kotter’s eight steps.

Moreover, the paper evaluates how to achieve success in change management, the role of technology in leading sustainable change, and the role of sponsor change and change agent. In a bid to develop a better understanding in the real business environment, the paper analyses the case of Cisco Systems, which has undertaken a number of changes in its operation through integration of the concept of mergers and acquisitions.

Literature review

The Lewin Change model

Different theories have been formulated in an effort to explain its significance. Some of the theories include contingency theories, trait theories, behavioural theories, and power-influence theories. Currently, organisations are operating in an environment characterised by a high degree of uncertainty (Roberts & Hanna 2012). The business environment has become unpredictable, which presents a major challenge to organisations’ management teams.

Businesses are facing pressure from diverse macro-environmental forces such as technological, economic, political, social, and legal forces (Needle 2011). Furthermore, organisations are also facing a challenge emanating from the internal business environment (Brown & Humphreys 2005). Despite this aspect, firms’ management teams have a fiduciary responsibility to maximise the shareholders’ wealth (Anderson 2012). This goal can only be achieved if an organisation ca maximise its profitability potential, which is might be hindered by change emanating from internal and the external business environment (Pablo & Javidan 2004).

Ulijn (2010, p.1) contends that change ‘is constant and organisational leaders who anticipate change and react rapidly and responsibly are successful’. Ulijn (2010) further opines that organisational leaders who anticipate change are more likely to be successful because they become leaders in their respective industry. On the other hand, firms that are reactive to change are forced to adapt to the change. Organisations are increasingly focusing on leadership in their quest to succeed in the long term (Nelson & Quick 2011).

The concept of change management has gained remarkable significance amongst organisations over the past few decades. However, the process of managing change varies across organisations depending on the nature of change, the nature of organisation and the people involved (Bissoondoyal 2006). Organisations that manage change effectively achieve long-term survival during those that fail to manage change struggle to succeed (Oakland 2003).

Among the most critical aspects in managing change entails the extent to which the people involved understand the intended change. Kurt Lewin formulated a three-stage model in an effort to explain change. The Lewin’s model is comprised of three main steps, which include unfreezing, change, and refreeze (Blanchard & Miller 2012). The model postulates that understanding the three steps can aid in an organisation’s effort to implement the desired change. The three stages are explained herein.

The unfreezing stage is based on the theory of human behaviour, which is developed from cultural influences and observational learning. The unfreezing stage contends that organisations should integrate new forces or eliminate the factors shaping the current human behaviour (Alvesson 2002). Some of the driving forces of change according to the Lewin’s change model include competition, growing organisation size, change in technology and decline in the level of profit.

On the other hand, the restraining forces include the employees’ attitude, lack of training, organisational culture, and management skills (Bryman & Bell 2007). The unfreezing stage is concerned with motivating the followers to adopt the intended change. During the unfreezing stage, an organisation’s management team should communicate the intended change to the relevant stakeholders (Bauer, Duffy & Westcott 2006). Subsequently, the unfreezing stage entails pointing out the existing gap in an organisation’s operational processes. Moreover, the unfreezing stage focuses on reducing resistance to change (Yue 2008).

The next step refers to the change phase, which involves changing what the organisation has identified as a limitation to an organisations’ long-term survival. One of the aspects involved in the change process entails developing new attitude or behaviour necessary to implement the desired change (Burke 2011). McDonald, Coulthard, and Lange (2005) assert that the change stage entails evaluating the intended change and determining the most effective mechanism to adopt in order to propel the change. A critical evaluation of the intended change is paramount in determining whether it will result to the intended outcome. One of the elements taken into account in implementing change entails nurturing new behaviour and attitude.

Refreezing- This phase involves consolidating the change through formulation of appropriate organisational mechanisms, policies, and norms. Moreover, the refreezing step entails nurturing a strong relationship, nurturing a new identity and self-concept amongst employees.

Kotter’s eight steps

Most change efforts despite their intention to improve organisational results lead to the development of lukewarm feeling amongst the internal stakeholders. Subsequently, most such results fail (Straub 2007). According to Kotter, organisations fail in their effort to stimulate change because of failing to recognise that change is a process. Subsequently, change goes through a comprehensive process in order to achieve the desired objective (Chao 2007). The various stages are interdependent and might take a long duration. Understanding the various stages of change is paramount in promoting the outcome (Stahl 2005). Kotter developed eight main steps that organisations should adopt in their quest to implement change as explained herein.

Creating a sense of urgency

An organisation’s management team should conduct a comprehensive analysis of the external environment in order to determine the intensity of competition. The analysis should focus on identifying potential market opportunities and risks. After the analysis, the organisational leader should activate the necessary organisational forces in order to stimulate a sense of urgency amongst the employees.

Developing a guiding coalition

This step entails forming a group of internal stakeholders who have the capacity to lead organisational change. The group should be comprised of managers from diverse departments. Moreover, the organisational leader should motivate the group members to work as a team.

Creating vision

Organisational leaders should formulate a clear vision for change in order to nurture a positive opinion towards the intended change. Establishing the vision aids in nurturing a positive image towards the intended change. Furthermore, an organisations’ management team should consider developing optimal strategies to accomplish the desired outcome (Stahl & Mendenhall 2005).

Communicating the vision

It is imperative for organisational leaders to ensure a high level of involvement in the change process. One of the ways through which employee involvement can be achieved is by integrating a comprehensive communication program. Different communication mediums should be integrated into order to ensure that all the internal stakeholders are adequately informed. In the course of undertaking it communication role, the guiding coalition should also focus on nurturing new behaviour amongst employees.

Eliminating obstacles

Siraj-Blatchford and Manni (2007) assert that there are different obstacles, which might hinder successful implementation of change. Organisational leaders should identify the possible obstacles such as employee resistance and determine the most effective way to eliminate such obstacles. For example, organisational leaders can minimise resistance by delegating some of the change initiatives to lower level employees.

Furthermore, an organisation’s leaders can also eliminate change by changing the prevailing organisational structures and systems, which might undermine the process of implementing the vision. In addition to the above, Kotter argues that organisational leaders can enhance employees to act on the change by encouraging employees to be risk takers and to integrate non-traditional ideas in the organisation’s operation process.

Establishing short-term wins

To develop a positive attitude towards the desired change, it is imperative for organisational leaders to motivate employees for example by rewarding their success. Moreover, organisational leaders should nurture visible performance improvements.

Consolidating the change

It is imperative for organisational leaders to consider improving the implemented change systems, policies, and structures. This will aid in eliminating policies that do not match with the vision. It is also essential for organisational leaders to consider promoting employees who are committed to implementing change. Moreover, organisational leaders should consider improving the change process by adopting new change themes.

Institutionalising new approaches

This stage entails establishing a clear connection the level of corporate success and the new employee behaviours. Moreover, it is critical for organisational leaders to consider the most efficient method to nurture succession.

Case study; Cisco systems

Cisco Systems has achieved an optimal market position since its establishment in 1984 in the Information Technology Industry (Paulson 2001). The firm’s success has arisen from the adoption of effective growth strategies such as formation of mergers and acquisitions (Bruner 2004). By 2009, Cisco Systems had acquired over 125 companies. Subsequently, the firm has diversified its product and services offering. Moreover, the firm has gained adequate competitive advantage (Saee 2007). By integrating the acquisition strategy, Cisco has improved its innovative capacity and hence the efficiency with which it innovates and develops next generation products. In 2004, the firm acquired Starent Networks at a cost of $2.9 billion.

The firm’s acquisition strategy is guided by the philosophy that focuses on the formation of merger and acquisition as an avenue to improve its intellectual assets (Cisco System Incorporation 2004).To successfully implement the change associated with the formation of merger and acquisition, the Cisco’s management team ensures that a successful transition is undertaken.

One of the aspects that the firm’s management team is concerned with is the prevailing organisational culture. The firm’s management team undertakes a comprehensive cultural analysis between Cisco and the target firm in order to determine the degree of culture fit between the two organisations. Jeffery (2008) argues that conducting a culture fit minimise the likelihood of employee resistance.

Moreover, the firm ensures a close working relationship is developed between the two firms’ employees. This goal is achieved by developing a team comprising of employees from the two organisations (Gertsen, Torp & Soderberg 2004). Furthermore, the firms undertake a selective integration process whereby the employees are charged with the responsibility of determining the internal organisational areas, which will operate distinctly and those that will be merged (Finkelstein 2009). Cisco Systems appreciates the importance of continuous learning in an effort to undertake the merger and acquisition successfully, which has enhanced the firm’s success in acquiring firms, which have adopted different operating model (Thomas 2000).

Cisco Systems is committed to establishing a high degree of employee involvement. Subsequently, the firm ensures that 75% of the top management positions in the new entity established after the merger are allocated to employees from the acquired firm. Subsequently, the firm has nurtured a clear sense of organisational vision amongst the employees (Higgs 2008).

In addition to the above, Cisco Systems manages change by integrating a comprehensive reward system. For example, the firm provides employees with stock options of the new entity, which are converted into share. This plays a fundamental role in developing a positive attitude amongst employees (Pfeifer 2002). Subsequently, the degree of organisational identification is improved significantly (Sarala 2004). Moreover, incorporating employee benefits has played a fundamental role in the Cisco’s efforts to promote a high degree of employee satisfaction and hence the extent of organisational identification.

Analysis

Successful implementation of change

The above case study shows that Cisco Systems has been successful in its effort to implement change through formation of mergers and acquisitions. Sadri and Lees (2001) assert that organisational transformation is a critical aspect in an organisation’s efforts to succeed in the long term. Cisco Systems’ success in implementing change can be explained by a number of reasons. Gitelson, Bing, and Laroche (2004) assert that it is imperative for an organisation’s management to ensure that change is successfully managed, which can be achieved by integrating a number of aspects.

First, it is imperative for an organisation’s management team to understand how employees react to change. Hackett (2009) argues that most people experience anxiety in situations involving change. Subsequently, they tend to resist change (Pfeifer & Sutton 2001). In a bid to implement change successfully, organisations’ management teams should assess the possible causes of employee resistance. Moreover, organisational leaders should nurture sufficient interaction with the employees. Such interaction promotes the likelihood of successful implementation of change. Chew, Cheng, and Petrovic-Lazarevic (2006) argue that interacting with employees enable organisational managers to gather sufficient knowledge regarding the organisation’s operations.

Secondly, it is imperative for organisational leaders to appreciate the complexity involved in the process of implementing change. Thus, organisational leaders should consider change as a complex process rather than a one-off event. Additionally, managers should ensure that none of the steps outlined above is skipped (Goudreau 2010). Consequently, organisational leaders should nurture a high level of patience.

In addition to the above, successful implementation of change requires organisational leaders to integrate the concept of continuous improvement (McLaughlin & Kaluzny 2006). This will aid in dealing with the complexities associated with the change (Llopis 2013). For example, the intended change such as mergers and acquisition may lead to conflict amongst employees. In a bid to deal with such a situation, organisational leaders should adopt the concept of continuous improvement in order to achieve the desired synergy (Hofstede 2001).

Frensch (2007) contends that it is imperative for organisational managers to outsource the services of change management experts in order to ensure a smooth transition. The experts should be involved at an early stage in order to provide them with a chance to come up with a comprehensive appreciation of the clients’ goals, objectives and challenges (Gadiesh, Buchanan, Daniell & Ormiston 2005). Examples of firms that organisational leaders can outsource in their change management efforts include PWC, which is a renowned consultancy firm.

Successful implementation of change also requires organisational leaders to nurture an environment conducive for working amongst employees. One of the issues that organisational leaders should focus on eliminating includes conflict amongst employees emanating from cultural differences (Mercer 2006).

Subsequently, organisational leaders should understand the prevailing cultural differences between employees. Moreover, organisational leaders should promote a high level of interdepartmental interaction. The significance of such interaction arises from the fact that the degree to which change is successfully implemented is dependent on the degree of interaction amongst employees (Mohibullah 2004).

Galpin and Herndon (2003) assert that the intended change should contribute to long-term organisational success. Consequently, organisational leaders should develop a high-performance working environment (Marmeut 2008). The change management agents should advocate for development of effective performance management system. Some of the aspects that organisational leaders should take into account include employee recognition, employee career development, and training (Liew 2009).

Role of technology in managing change

Currently, the business environment is characterises by a high degree of uncertainty. Subsequently, it is imperative for organisational leaders to ensure that change is successfully integrated. In a bid to better the probability of success in their change management processes, organisational leaders should integrate the necessary technologies.

Hewitt (2009) argues that technology aids in promoting operational efficiency during the change process by acting as a driving force. For example, the change process may entail development of a new product in order to attain the desired level of satisfaction amongst employees. In a bid to develop a new product successfully, an organisation may be required to integrate effective operations management concepts such as lean management.

However, successful implementation of lean operations requires firms’ management teams to adopt effective techniques such as just-in-time operations (Shim & Siegel 2009). In a bid to integrate such techniques successfully, it is imperative for organisational leaders to adopt effective technologies such as just-in-time inventory management system (Callioni, De-Montgros, Slagmulder, Wassenhove & Wright 2005).

Technology is critical in creating a supportive environment for the desired change to be implemented. Moreover, the various stakeholders involved in the change process can interact and collaborate with each other (Carleton & Lineberry 2004). In its quest to manage the acquisition process successfully, Cisco System has integrated electronic data interchange technology.

The technology provides the parties involved in the acquisition process to share data and information. Subsequently, the firm can undertake the transition process. Integrating technology in the change process is also critical in enhancing communication amongst the various stakeholders. Subsequently, an organisation can create a common sense of vision amongst employees (Silber & Kearny 2010).

The role of the sponsor and the change agent in the change process

Implementing change is a complex process. Subsequently, it is imperative for organisational leaders to integrate diverse stakeholders (Sherman & Hart 2006). Some of the stakeholders include the change agents and the sponsors. The change agent assumes the responsibility of ensuring that the desired change is implemented successfully. The change agent has four main roles, which mainly involve promoting an effective relationship amongst the stakeholders.

1. Creating a new organisational vision- In a bid to achieve this, organisational leader must create an environment whereby all the stakeholders are involved in the change.
2. Managing the stakeholders’ faith and trust in the change process
3. Managing the stakeholders’ emotions in order to create an adequate level of support towards the desired change
4. Managing time in order to ensure that change is implemented within a set period.

Jeffery (2000) argues that the change sponsor refers to the stakeholder who is charged with the final responsibility of implementing the change. Subsequently, the change sponsor is also referred to as the change owner. The sponsor has sufficient power to legitimise and monitor the desired change. The change sponsor is also required to ensure that the parties implementing change are adequately motivated. In addition to the above, the change sponsor should ensure that stakeholders understand the intended change. Moreover, the sponsored should ensure that the relevant stakeholders support the change process.

Conclusion

The paper identifies change as a critical element in an organisation’s efforts to achieve the desired level of competitiveness. However, managing change is a complex process. Subsequently, most organisations fail in their quest to ensure to implement the desired change successfully. In its attempts to accomplish the expected growth, Cisco Systems has integrated the concept of merger and acquisition as one of its growth strategies. Since its inception, Cisco Systems has acquired over 125 companies.

The firm’s success in the acquisition process emanates from adoption of effective change management strategies. First, the firm ensures that all the stakeholders are involved in the change process. This has enabled the firm to minimise the degree of resistance towards the intended change. Furthermore, the firm ensures that all the stakeholders understand the intended change and its significance in enhancing organisational success. The firm has also integrated an effective reward system in the process of implementing change. Subsequently, the firm has minimised the rate of employee turnover.

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