1 Managing Organizational Change through Strategic Leadership Day 4 Report Alessandra Rances – G701015 Organizational Behavior and Leadership Professor Trond Varlid 2022/09/19 Managing Organizational Change through Strategic Leadership 2 Abstract Change is the only constant in life; it is challenging and a lot of people resist it and remain in their old ways. The same can be said for enacting change in businesses. The world is ever-changing and organizations need to keep up and adapt to the constantly evolving market. Companies may modify their systems, target different consumers, and provide new offerings. It takes a great leader to navigate this change despite knowing that he/she may face opposition not just from the employees but also from the various stakeholders. Managing change also requires a number of factors such as: (1) creating a strategy that showcases the need for change, how it affects the organization, and the responsibilities of the members of the organization, (2) delegating leaders who will spearhead change in their respective fields, (3) aligning with employees, (4) widening the scope, (5) measuring impact and, (6) knowing the next steps. This report provides an understanding of Unilever’s global strategy of shifting to sustainability. It draws upon the company founder’s, William Lever, philosophy of “doing well by doing good” wherein businesses thrive when they are able to contribute positive effects to their consumers, society, environment, and stakeholders. Keywords: Managing organizational change, creating strategy, leadership Managing Organizational Change through Strategic Leadership 3 Table of Contents Abstract 2 Table of Contents 3 Assessing Unilever 4 Shifting to Sustainability 5 Creating a Strategy 5 Delegating Leaders 5 Aligning with Employees 6 Widening the Scope 6 Measuring Impact 7 Reassessing Unilever and its Shared Value 7 Strategic Leadership 8 Next Steps of Unilever 9 Internal Actions 9 External Actions 10 Conclusion 10 References 11 Managing Organizational Change through Strategic Leadership 4 Assessing Unilever Unilever has been providing consumer goods for decades. They have been the industry leader and have also captured the markets in diverse regions. Making use of the 3Cs framework (Vliet, 2022), we can see a snapshot of Unilever’s situation: Company Competitor Customer •Unilever as an "internally focused and self-serving" company which could be attributed to how Unilever is solely focused on its business objectives •Unilever has experienced a decline in their performance and P&G emerged as the industry leader •As a company providing daily consumer goods, customer preference is volatile as it can largely depend on price, accessibility, an aggresive promotional campaign, etc. With these factors, how can Unilever improve to take back their top spot and be more relevant to consumers? To address this situation, Unilever brought in Paul Polman as the company’s new CEO. Polman has experience in managing similar industries as he came from P&G and has also worked for Nestle. Polman thought of enacting change and disrupting the status quo within Unilever. Instead of just focusing on Unilever’s business objectives, he also aimed to answer the customers’ needs and to be accountable for their effects on the environment, society, and their employees. He believes that in doing so, he will also be able to keep their shareholders satisfied. Polman resolved to head to a more sustainable direction for Unilever. This new direction in strategy is a shift from Unilever’s current actions but is still rooted on the company mission of “doing well by doing good”. This was the philosophy of Unilever’s founder, William Lever, who believed that businesses will reach success when they are able to provide for the needs of customer and contribute to society. As one of the biggest players in the industry who operates in different countries, this was a significant move and the world took notice but also relayed their skepticism. How can a fast-moving consumer goods corporation, who is directly and indirectly responsible for a lot of the damage to the environment, become a champion for sustainability? Managing Organizational Change through Strategic Leadership 5 Shifting to Sustainability Polman knew that this would entail effort and take a considerable amount of time. Despite that, he acted fast and after a year of being in office, he was already able to unveil Unilever’s sustainability strategy. Polman undertook a number of activities in order to make this happen. Creating a Strategy Polman introduced a long-term goal for the company called the “Compass Vision” where he wanted to work towards doubling Unilever’s business while still integrating sustainability in their systems and products. Hinged on the mission, “doing well by doing good”, Unilever released the Unilever Sustainable Living Plan (USLP) to drive their sustainability strategy. USLP had three goals for 2020 which are, “to help a billion people improve their health and well-being, to halve the environmental footprint of making and using Unilever producers, and to enhance the livelihoods of those in its value chain”. In these goals, Unilever involved not only their organization and employees, but also their suppliers, partners, and consumers. They knew that their strategy would be more impactful when they included their whole ecosystem. The strategy for this shift in focus is an important factor as it will stand as the foundation of the organizational change. It will guide the company, its management, employees, and other stakeholders into the new direction. It also provides the overview of the plan, the timeline, the goals, and other responsibilities and tasks that each stakeholder needs to be aware of or fulfill. Delegating Leaders Polman made a bold move in removing a third of the executives and created a new position that would aid in fully integrating sustainability within the company and also help shareholders be aware of Unilever’s shift in strategy. The new role incorporates both the responsibilities of a Chief Marketing Officer (CMO) and a leader who oversees sustainability. In doing so, this shows how sustainability was not just one small part of the company but is actually connected to Unilever’s whole value chain. He also developed a corporate sustainability group composed of 12 employees who had experience with marketing and operations. By integrating communications and sustainability under the CMO, Polman showed that (1) sustainability should be the focus of all members of the organization, (2) how sustainability is linked in the way Unilever will communicate and transact with their consumers, (3) and how being sustainable is and will be associated to the Unilever brand. Managing Organizational Change through Strategic Leadership 6 Aligning with Employees Another important factor in managing organizational change is to ensure that employees are aligned with the new direction. Polman hired a Chief Sustainability Officer (CSO) who identified the challenges employees have faced in shifting the business strategy to sustainability. Employees felt that sustainability was still a separate initiative and not part of their overall strategy. They also felt uncertain about the responsibilities that they needed to undertake and the cost implications. In order to have a better understanding of the employees’ part in the strategy, the Senior Vice President for Marketing established a program called “Crafting Brands for Life” with the following principles: to put the customers and their needs in the center of their business, to create brand love, and to provide an experience for their consumers. Workshops were also held with the company’s marketers to assist them in connecting their brand with the USLP. Apart from solidifying the brand positioning, this workshop aimed to discover the brand purpose, which goes beyond a product answering a visceral need and looking for the value that it adds to a customer’s life. Aligning employees with goals and strategies of the organization is important as employees can share their feedback, provide more in-depth analysis that can support the new direction, and also let them know and feel that they are an integral part of the whole change. Without their cooperation, the organization would fail to achieve its objectives. Widening the Scope Apart from their focus on hygiene and environmental impact, Unilever was also included in forums and talks with the UN which prompted the company to look into more social issues. The new objectives were added which tackled “fairness in the workplace, advanced opportunities for women, and to develop inclusive businesses”. Unilever also partnered up government agencies, non-governmental organizations, partners, suppliers, and the like to support them in reaching more people with their initiatives, developing their strategies and executions, and learning more about the issues. This was also a way for Unilever to benefit from the credibility and expertise of these groups. It solidified Unilever’s thrust in sustainability and elevated their status as a company who wants to continue generating positive impact to their consumers, society, and the environment. Managing Organizational Change through Strategic Leadership 7 Measuring Impact As a business, outcomes are studied to see if actions taken were effective. Unilever developed tools that measured the impact of their shift to sustainability. Their analysis of integrating sustainability in their value chain resulted to growth and reduction of costs. It also made Unilever adaptable to changes in the market as they have more sustainable systems set in place. Evaluating results is helpful in monitoring the progress and implementation of change. It is a way to identify if there are improvements needed and to learn more about the process. It will give a better understanding of the goals and strategy and can also point out the next steps to take. Reassessing Unilever and its Shared Value Coming from the case study, Unilever’s organizational design had a significant change before and after Paul Polman became CEO. Structure: CEO with a number of top executives Systems: Utilizing the latest technology to support their value chain Staff: SCM, Brand, Sales, Marketing, R&D, Global and Local knowledge Strategy: Diversification and respond to local markets Shared Value: Build a competitive edge and double the business Skills: Balancing global objectives with local needs Style: Fastpaced, competitive, need to adapt Unilever in 2009 (Before Polman become CEO) Making use of the McKinsey 7s model (The McKinsey 7-S Framework: - Making Every Part of Your Organization Work in Harmony, n.d.), it can be deduced that the main focus of Unilever was to grow the business amidst a competitive landscape. They utilized their systems and the skills of their work force to develop an edge. Despite that, P&G took over their spot and Unilever continued to experience a decline in their profits. Managing Organizational Change through Strategic Leadership 8 Structure: Formed a corporate sustainability group and ensured that leaders included sustainability in their own fields Systems: Utilizing the latest technology to support their value chain and to ensure that it will create a positive impact Strategy: Integrated sustainability in the value chain Shared Value: Doing well by doing good Staff: Sustainability in all departments, SCM, Brand, Sales, Marketing, R&D, Global and Local knowledge Skills: Experts in their own field and knowing how to integrate sustainablity Style: Hinged on the company value, kept employees involved and abreast of the sustainability strategy Unilever in 2010 after shifting their strategy to sustainability When Paul Polman took on the reins of Unilever, he restructured the company’s value chain and gave rise to change within the organization. From solely focusing on gaining a competitive edge, Polman brought back the original mission of Unilever to do business while continuing to provide value and positive impact to its different stakeholders. This transformation was hinged on the company’s philosophy. With the noble mission of doing well by doing good, Unilever already had a good start as it was centered on a purpose rather than a business goal. The world is ever-changing -- technology is evolving at a rapid pace and consumer needs are becoming more complex and nuanced, as such focusing on the organization’s purpose will strengthen its identity, be more appealing to consumers, and will stand as its guide despite the changes that it will encounter. Strategic Leadership Unilever’s shift to sustainability would not have been possible without Polman’s strategic leadership. “Strategic leadership refers to a manager’s potential to express a strategic vision for Managing Organizational Change through Strategic Leadership 9 the organization, or a part of the organization, and to motivate and persuade others to acquire that vision.” (Strategic Leadership - Definition and Qualities of a Strategic Leader, n.d.) As a strategic leader, Polman possessed a clear vision to go back to the roots of Unilever and provide more value to consumers while also taking responsibility for the environment and society. He challenged the status quo and brought in new thought leaders who were experts in their respective fields and would also support him in his vision. He was able to drive growth for Unilever, increase job satisfaction, provide positive impact to the environment and society, even improve Unilever’s brand reputation, and change the landscape. He showed how a big organization like Unilever can make a difference and influence the market into shifting to more sustainable ways. Next Steps of Unilever Unilever should continue to make a stronger effort to achieve the USLP’s objectives by 2020. As a large company with a number of moving parts, it was already commendable for Unilever to have achieved that growth in a span of 5 years. Sustainability is a long-term investment and it will take time to fully enact change. Unilever as one of the top corporations globally must also make use of their leadership to influence other entities to shift to sustainability and altogether create greater impact. Apart from their continued innovation in making their products more sustainable and partnering up with suppliers, Unilever may also explore other executions that focus on both internal and external stakeholders. Internal Actions Internally, Unilever can focus on their company culture and ensuring that employees are aligned with the strategy and can provide feedback. This can be done in a number of ways: 1. Environmental measures in offices worldwide a. Reduce water consumption b. Reduce use of paper c. Reduce vehicle fleet emissions d. Reduce power consumptions in buildings e. Reduce business travel emissions 2. Having diverse members in the organization – having a diverse pool of employees will provide various perspectives and solutions 3. Establish a sustainability committee in offices worldwide 4. Apply for certifications (i.e. green building certification) Managing Organizational Change through Strategic Leadership 10 5. Ensure that employees are aware of the sustainability thrusts from their onboarding until and having periodical town halls on sustainability External Actions Unilever can also have executions that are geared towards external stakeholders: 1. Sustainability information campaigns and forums for consumers 2. Sustainability programs that are supplemented by partnerships with government agencies, non-government organizations, partners, suppliers, etc. 3. Make employees and even consumers brand ambassadors for sustainability a. Share their experiences on sustainability b. Why they chose to have a more sustainable lifestyle c. Positive impact 4. Release sustainability reports for both internal and external stakeholders 5. Continuous discussions with consumers to better understand their situation and to know how Unilever can continue to provide more value Conclusion This report discussed how Unilever, under the leadership of Paul Polman, was able to successfully shift to a sustainable strategy. Polman made use of his strategic leadership to enact change by starting with a clear vision, developing leaders and aligning with the different members of the organization, having measurable indicators, and utilizing partnerships to reach a wider scope of audience and provide a larger impact. Not only was Polman able to drive growth for the company, he was also able to bring more value to their product offerings while taking responsibility for the environment and society. As a market leader, Unilever can influence other organizations to follow suit and create positive impact. Managing Organizational Change through Strategic Leadership 11 References Vliet, V. van. (2022, January 24). Strategic Triangle (3C’s). Toolshero. Retrieved September 18, 2022, from https://www.toolshero.com/strategy/strategic-triangle/ The McKinsey 7-S Framework: - Making Every Part of Your Organization Work in Harmony. (n.d.). Mind Tools. Retrieved September 18, 2022, from https://www.mindtools.com/pages/article/newSTR_91.htm Strategic Leadership - Definition and Qualities of a Strategic Leader. (n.d.). Retrieved September 18, 2022, from https://www.managementstudyguide.com/strategic-leadership.htm
