The process of change is ever present in the business world. If a company does not change, it can falter. Imagine if Netflix had not changed their working model to the streaming service seen today or if certain stores such as Target, Kohl’s or Macy’s did not begin to offer the option to buy online and pick-up in store. Those businesses could potentially cease to exist for failing to change. On the converse, what if MySpace altered its user experience model or Blockbuster shifted its work model and kept up with the innovation of streaming or on-demand movie services? Would Facebook still be the powerhouse that it is, and would Netflix still be a contender?
The current business landscape could be completely different. The introduction and implementation of change is needed within organizations of all types. It is important for organizations to be thoughtful and intentional about the approach that is taken to begin change implementation when needed. Failure to change can lead to failure evolve and ultimately a failure of the business.
This paper will examine two different companies; Coca-Cola, a company that experienced success from a change initiative and Borders Bookstore, which was not successful at executing a change initiative.
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The New Coke
On January 29, 1892, in Atlanta, GA, Cola-Cola was born and incorporated. Originally created as a medicine, it quickly became one of the most popular beverages in the world. However, around 1985, the company was beginning to lose its place in the market to other diet drink formulas and non-cola beverages. Additionally, research was beginning to show consumers preferred Pepsi in blind taste tests. As a result, Pepsi began to leverage this information in their commercials and advertising. “This campaign contributed to Coca-Cola’s slow, but steady decline of market share in the soft-drink category” (Schindler, 1992, pg. 22).
This prompted Coca-Cola to reevaluate their existing formula. The result was Coca-Cola introducing “New Coke” on April 23, 1985. At the beginning of the launch of the new formula, consumers were quite receptive to the formula even more than Pepsi. However, much of the focus went to those consumers that were protesting and wanting the company to go back to the original formula. The growing attention around customers protesting and wanting the previous formula began to put pressure on executives to make a decision. On July 10, 1985, almost three months later, the company switched back to the original formula.
Coca-Cola heard the needs of their consumers and was able to successfully turn the corner on what could have been a detrimental change to the company. Over the next several decades, the company continued to grow and expand its beverage repository to be more diverse and meet the needs of their customers making Coca-Cola, one of the most successful and recognized brands in the world.
No more Borders
Before there was Barnes & Nobles, Kindles or Audible.com, there was Borders Bookstores. Borders bookstore was established in 1971 in Ann Arbor, MI. Over the next several decades, Borders began to grow exponentially, and stores could be found in malls across the United States. In the early 70s, Borders was the innovator in creating software that would track inventory and project customer sales giving them a competitive edge over all bookstores for nearly two decades. However, once the 90s emerged, Borders began to struggle to keep up.
The new trend was to have an online presence with not only books but with CDs and DVDs, which was an area that Borders began to heavily invest in. “It invested heavily in CDs and DVDs just as music and movies were going digital” (Austen, 2011, pg. 95). This was a step behind the rest of its competitors, such as Amazon and Barnes & Nobles.
Amazon emerged with an online presence in 1995 and it took Borders more than three years to duplicate those same efforts. Additionally, brick and mortar stores of all kinds began to grow more obsolete. Borders made efforts to try and stay current. For example, Borders produced an e-reader called the Kobo, which was comparable to the Kindle, but it failed to make waves. Over the next several years, Borders went through several leadership changes, closed several international locations, filed bankruptcy and finally it closed in 2011.
Coca-Cola vs. Borders
Both Coca-Cola and Borders were faced with very challenging changes to implement and one company emerged on top and the other ultimately went under. Much of what can help drive and dictate success is how the change is implemented. When Coca-Cola began planning to create a new formula, the process was supported by the change management implementation style. They set out to drive a change with no thought about a plan b or a contingency to change the strategy of implementation.
The initial implementation of the plan to introduce a new formula to meet the challenge of competitors was successful. However, even once the first plan was started and completed, the change did not stop, and Coca-Cola went to the contingency implementation to meet the needs of consumers and adjust back to the original formula. This agility allowed it to sustain and eventually grow to one of the most recognized brands in the world. On the converse, Borders started off very innovative in their operating model but eventually became very reactive to needed change in the way the company worked. There seemed to be no sense of urgency to meet the demands of the industry and this is one of the mistakes of why change fails.
According to Palmer, Dunford, & Buchanan (2017, pg. 318) “management must create a sense of urgency.” Borders did not appear to have a set change management plan. It introduced changes based on the contingency plan. Borders was trying to meet the need the company based on what they believed it needed at the moment. This did not provide the narrow focus that it could have used to be more competitive and successful like its competitors.
Lessons Learned
Looking back, what could Borders have leverages to make the change more successful? Coca-Cola surveyed its consumers to understand what they were wanting and what their preference was in terms of sodas. From that data, a plan was formulated to create a beverage that could meet the needs of consumers. Coca-Cola also had the wherewithal to adjust and provide a contingency plan when the original planned changed and did not resonate with consumers.
Borders, however, seemed to lack a focus on one area and failed to be turned into what consumers needed and where the industry was going. Borders could have been more successful with a more structured plan of implementation on a new innovative area that could move the business forward. “Borders proved incapable of upgrading the systems and processes it had pioneered” (Austen, 2011, pg. 97). Technical innovation is what originally propelled Borders in the 70s.
Conclusion
Companies are constantly changing and evolving, and some businesses survive, and others fail at the change they were trying to initiate. Much of this success or failure is based on that approach and implementation style of the change. Two companies, Coca-Cola and Borders books faced implementing change in their business model and products. Coca-Cola took the necessary steps to rectify and change that ultimately proved negative for them and they ultimately came out on top. However, Borders did not have the same fate and struggled to be successful at the change initiative(s) they proposed. Change is important but how change is introduced and implementation can dictate success or failure.
