Change Factors

Throughput factors that can prompt change include leadership and money.

Leadership is a form of human capital, but focused on the top leaders since they have the most influence in the organization. At Wal-Mart, the loss of Sam Walton marked the company's first significant leadership change, with new CEO David Glass taking over. This input resulted in an acceleration of the company's expansion plans as market saturation became the core strategy.

Another key throughput that prompts change is the operating systems. These systems, a product of the company's body of knowledge, can be a major driver of change. At Wal-Mart, one such change was the shift towards overseas outsourcing. The operating system that drove this change was the purchasing system, which demanded constant improvement from the company's suppliers. The result was a shift away from domestic suppliers. This shift ultimately led Wal-Mart to forge its strong relationship, a major strategic shift that has even seen the company take a leadership role amongst Western firms in that country.

Throughputs that facilitate or resist change include the corporate culture. Because of the degree of entrenchment, cultural change is often a slow process but it can also make the change process easier if the culture and the desired change are aligned. At Wal-Mart, the culture is strong, and supports the company's change initiatives. This makes it easy for Wal-Mart to implement new strategies that improve its business.

Another throughput that facilitates or resists change is financial capital. Rarely does money spur change, but the lack of it can make change difficult and a surplus of it can make change easy. Wal-Mart is a well-financed company. This has made many of their change initiatives, from the introduction of Supercenters and Sam's Club to overseas expansion much easier. These types of change initiatives can be difficult, since it involves introducing new ways of doing business and new national cultures to the organization. But for Wal-Mart, their financial clout has allowed them to make these shifts seamlessly by reducing the risk of the change, and allowing for training programs as extensive as necessary.