Kotter's 8-Step Change Management Plan for Retail

Introduction

A change management plan to implement a new process in the workforce—one that allows businesses to provide more personalized service—is urgently needed in the retail industry (Aloysius, Hoehle, Goodarzi, & Venkatesh, 2018). Brick-and-mortar stores must do something to differentiate themselves from e-commerce businesses, which offer far greater convenience to shoppers who prefer not to leave their homes. In other words, brick-and-mortar retailers need to give consumers a compelling reason to walk through their doors—and that reason is personalized service. This has been demonstrated successfully by companies like Best Buy, which introduced the Geek Squad to provide a service-oriented approach to consumers and draw them physically into the store (Meyer, Shankar, & Berry, 2018).

This paper discusses the topic of implementing a service-oriented approach for brick-and-mortar retailers as a change management plan, using Best Buy as a guiding example and applying the Kotter 8-Step process to structure the plan.

The State of the Change Management Field

The purpose of change management is defined as "to assist the organization in achieving its goals which cannot be attained with the existing organizational structure, functioning and client servicing, and to minimize the adverse effects of any changes made" (Vedenik & Leber, 2015, p. 585). Many models and theories have been used historically to implement change management. These include organizational development theory, socio-technical systems theory, business process re-engineering theory, and processual and contextual accounts of change (Buchanan, Claydon, & Doyle, 1999). However, the most appropriate change management approach for any given company will depend on that company's specific needs. An audit of the company must be performed before anything can be implemented. As Vedenik and Leber (2015) note, "managing change is of key importance if companies or organizations want to remain competitive" (p. 584)—and part of the key to managing change effectively is knowing what a company must do to compete and differentiate itself (Trout & Rivkin, 2006).

With that said, a generic model of change management can be adequate for managing change regardless of the specific industry. A generic model like Kotter's 8-Step model is one such example. This idea is supported by Pfeffer (2013), who suggests that there is a kind of universality to the concept of management.

Current Theories and Areas of Debate

Current theories and debates on change management generally center on two main approaches: the procedural model of change and the self-modeling approach. Kotter's 8-Step model for change management is the most popular example of the procedural approach and can be applied in virtually any organization. It provides a basic, fundamental way for managers to approach both the business and the challenge of change, while showing how context can inform that management process. The eight steps of the Kotter change model are:

1. Create a sense of urgency
2. Create a guiding coalition
3. Create a vision for change
4. Communicate the vision
5. Remove obstacles
6. Create short-term wins
7. Consolidate improvements
8. Anchor the changes

Kotter's 8 steps are most helpful when ample time is available for planning and conceiving the appropriate course of action (Kotter, 2007). However, as Kotter (2012) also notes, there are limits to the amount of time a company can spend in the planning and conceptualizing stage. The Digital Age has ushered in an era of fast-moving change, and companies cannot afford to spend endless hours in meetings. In some cases, leaders must act quickly based on limited data—and that is where the self-model of change comes into play. Researchers debate which approach is best, but the answer ultimately depends on the needs, timeline, and context of the individual company.

The self-model of change focuses on the role the leader plays in managing change. It stipulates that to manage change effectively, a leader must have an innovative orientation and strong leadership ability. A common leadership style associated with this model is transformational leadership (Warrick, 2011). In this model, the leader must communicate effectively and persuade workers to buy into the proposed vision for change. Charisma is generally required to promote acceptance. This model is especially useful in situations where change is required urgently and waiting for higher-ups to process information through multiple rounds of board meetings is too slow.

For the purposes of this paper, Kotter's 8-Step model is the preferred framework for change management, as it provides a general approach that can be implemented in any retail brick-and-mortar store (Vedenik & Leber, 2015). By focusing on customers and becoming customer-centric, retailers will need to identify potential obstacles and address them proactively.

The Impact on the Industry and Background

The impact of using the Kotter 8-Step plan to introduce customer-oriented process changes in retail could be so significant that it transforms the brick-and-mortar business industry. This change is especially necessary because the Digital Age has given consumers the ability to shop from home. To draw them into stores, companies need to offer something that cannot be obtained online—and that is customer service. Tobias (2015) warns, however, that "the brutal fact is that about 70% of all change initiatives fail. The failure of leaders to challenge themselves to change, and then model the behavior they seek in others, may be a large contributor to these failures" (p. 35). This implies that a combination of leadership change and procedural change is needed to succeed.

Managing change is necessary because, without it, companies grow old and stale (Walker, 2018). This was the problem Best Buy encountered in the 2000s. After slumping at the start of the 21st century in the face of rising e-commerce and the dominance of Amazon, Best Buy reinvented itself to remain appealing to consumers. Having focused on pricing strategy in the 1990s, the company found itself losing ground to online competitors and to Walmart as prices dropped across the board. Understanding that a brick-and-mortar retailer could still offer something that Amazon and Walmart could not—expert, specialized assistance and service—Best Buy revamped its strategy to be service-oriented rather than product-oriented.

Best Buy applied the customer-centric model to its retail stores, allowed managers to apply a results-only approach with sales representatives, and increased its online presence to stay relevant in the age of the Internet. Its chances of remaining relevant are strong, as long as its Geek Squad and staff members stay abreast of the latest technology trends and continue to deliver excellent customer service.

Change is an action an organization takes to introduce a new concept, method, culture, or initiative (Walker, 2018). It aims to alter the way an organization operates so that it becomes more effective, efficient, and productive overall. Change is important because no industry or field is ever static. New approaches are constantly being developed. New technology can render old processes outdated or irrelevant, and new research into workplace culture is continuously reshaping how managers motivate workers and address longstanding challenges (Franken, Edwards, & Lambert, 2009).

In order to determine whether change is needed, an internal audit must be conducted. This process evaluates the organization's processes, goals, staff, production, culture, and all other aspects to identify weaknesses or areas that are acting as obstacles rather than facilitators. The audit can be outsourced or conducted in-house using any appropriate method of review. Crucially, no change should be implemented without a clear indication that it is required. Change without justification will never be accepted by workers: employees need to understand why a change is occurring, and the reasons must be justifiable and rational—otherwise workers will resist it and withhold support, as Kotter's 8-step model makes clear (Appelbaum, Habashy, Malo, & Shafiq, 2012).

Implementing the Plan

Implementing the plan requires managers to first create a sense of urgency by demonstrating to stakeholders that change is necessary. In the retail sector, this step should require little effort—brick-and-mortar stores are under existential pressure, and the urgency is already widely felt. Next, the manager must establish a guiding coalition (Kotter, 2007): a team of stakeholders responsible for organizing and driving the change. To support them, a clear vision of what the business will become must be articulated, one that centers on delivering services to customers that employees were not previously providing.

Employees will likely need new training, which may generate resistance. However, by communicating the vision clearly and removing obstacles to change, the manager can foster a positive culture that embraces the change for the right reasons. Obstacles such as negative worker attitudes must be addressed directly. The most effective tools for doing so include education, support, and the application of managers' emotional and social intelligence. Both intrinsic and extrinsic motivators—such as recognition and performance bonuses—can also help break down resistance. As Christensen, Marx, and Stevenson (2006) note, "employers can choose from lots of tools when they want to encourage employees to work together toward a new corporate goal" (p. 72).

Managers should also celebrate short-term achievements to maintain high morale. With each successive win, the business can consolidate improvements and build its brand in a new direction. Finally, the manager must anchor the changes so that they become institutionalized—the standard processes that new workers learn upon being hired. The old ways will be replaced, and the service-oriented approach will become the defining characteristic of the business.

Conclusion

Change is needed in the retail industry to enable brick-and-mortar stores to compete with e-commerce. A service-oriented approach can be implemented using Kotter's 8-Step model. However, more research is needed to help managers better understand what motivates the new generation of workers—who, as digital natives, are unlike any generation that has come before. The transformational leader can supply the emotional support workers need during difficult periods of transition by drawing on social and emotional intelligence. Focusing on improving and strengthening corporate culture is equally important, and change managers must involve stakeholders throughout the process to ensure lasting success.

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