Northwell Inc. is a medical company that was formed after the successfully merger of Canada’s Northern Medical and United States’ Wellness Medical Company. The merger of the two companies resulted in the increased market presence of Norwell’s products that in turn resulted in higher volumes of sales, increased returned on equity and profitability. However, in the recent past, the company has experience serious issues that resulting in significant drops in all aspects. The issue of the organizational change is apparent. Northwell is a company for many years has been doing well in the market.
Its product dominates the healthcare market. It enjoys several advantages over other competitors. Among them are high-quality products and close customer relations. As a result, there has been enormous growth in their revenue. For the past few years, the company relied on direct sales and distributors who operated freely. Through the use of this approach in sales, the company gained many customers. However, in the recent years, the company’s competitors have gained much access in the market shrinking Northwell’s revenues.
As a way of addressing the shrinking revenues, the Senior Management asked Claudia, the Chief Financial Officer together with Nathan Daniels to work on something to reverse the current trend. Claudia and Nathan learned of a virtual mall that was to be developed in conjunction with Medichek; a firm based in Dallas. Their proposal is quickly adopted. Northwell contributes $5 million to the development of the virtual shopping mall that Claudia and Nathan saw as a way of improving the sales that have been dipping of late. Although their idea is great, the change is conducted in a way hat threatens the existence of employees and distributors in the marketing department. This is showed by the accelerated resignation of employees in the unit despite the technicalities that have faced the development of the project. If this issue is not checked, the company may lose credibility and a major channel for supplying its products. Kotter outlines eight key steps that ought to be followed in any organization for successful organization change. First, is establishing a sense of urgency. This can be done by researching the current market trends and competitiveness and using the information as a catalyst for change.
Northwell analyzed the market and realized that their revenues had significantly dropped in the past two years. Also, the competitors in the market were gaining more grounds resulting in a shrinking market size for the company. Second, is forming a powerful coalition develop the strategies for achieving the vision and lead the change efforts. Northwell chose Claudia the company’s CFO and Nathan, the Vice President Marketing, to lead the change. Third step involves creating a vision, which is meant to guide the efforts. It is also important for the coalition to develop strategies to help achieve the vision.
Claudia and Nathan had a vision of increasing the sales, return on equity and profitability as it was initial. As part of the strategy to achieve it, Nathan and Claudia proposed the development of a virtual service mall that will increase the company’s presence beyond the previous locations. Kotter suggests that communication of the vision is very important. The team leading the change should use every channel available in the organization to communicate the vision. I believe it is at this point that Nathan and Claudia’s plan has started backfiring.
Claudia and Nathan did a little communication with employees at the sales and marketing unit. Even, the management of the Northwell is surprised by how fast the senior management and board adopted the proposition. Hence, because of the poor communication, other employees felt not as a part of the organization, and it is apparent of the number of voluntary turnover and resignations. After communication, Kotter suggested that empowering others to act in the vision is important. However, when we focus on Northwell, the employees were not empowered in any way to be part of the organization.
In fact, the whole idea of developing a virtual service mall was between the senior management and the Medichek. Nathan and Claudia only played the role of linking Northwell with Medichek. Next is planning for and creating short-term wins. This stage involves planning a visible performance improvement plan that lacked in the case of Northwell. The management cried about improving performance immediately, but they did little instead. Besides. Kotter talks of consolidating improvement to bring more change. The process involves restructuring the systems to ensure that they fit into the vision.
Unfortunately, Northwell does not reach this stage or the last one; institutionalizing the new approaches. Open system perspective was a model that was developed for biological studies but later was found to cut across all the disciplines. A system, in this case, is therefore defined as “all systems are characterized by an assemblage or combination of parts whose relations make them interdependent. ” The complexity and variability of a system increase as one progresses from a mechanical to an organic and social system.
The open system perspective views organizations as hierarchical and both loosely coupled systems. Focusing on Northwell, there are several systems and subsystems available. However, they are slackly attached to each other. The decision-making process only involves a few individuals while others are left out. This is why other employees felt left out and decided to quit. It is no doubt that the view of stakeholders is very important in making major decisions that would result in organizational change. The organization should seek their opinions before embarking on any major change.
Northwell in its decision to change its marketing approach was adamant to the stakeholders’ perspectives, both within and outside the organization. For instance, we see distributors focusing on another line of product after Northwell blindly continue with its development of virtual service mall. The same applies to employees who are regarded as internal stakeholders having previously engaged in rigorous activities to promote sales. Part Organizational change is important in any organization to be it in the area of technology, staffing, production or even marketing among other areas.
In the Northwell case, we see an organization that is trying to bring change. However, the organization faces a myriad of challenges trying to effect the change. This phenomenon brings out concerns about the whole process of initiating and sustaining change. For any successful organization change, it is important to include all the stakeholders. That is to say, proper communication channels should be established to ensure the views of the every stakeholder are taken into consideration. The success of any organizational change lies on the stakeholders.
For that matter, it was wrong for Northwell to ignore the opinions of important stakeholders and imagine that the new system will replace them effectively. The Kotter’s eight-phase model for organizational change provides prerequisite guidelines for successfully organizational change. All the eight stages in this model are crucial and should, therefore, be adhered to the later. The Northwell Inc. shows a closer adherence to this model although they fail to follow all the steps outlined carefully. Although the company initiates some radical changes regarding the implementation of change, it misses on some points.
A proper team should be put in place to lead the change. Kotter talks of a powerful team. The question of what constitutes a powerful team pops in. Northwell Company chose Claudia and Nathan to form the coalition to lead change. Therefore, we are left wondering, does a team of two people constitute a powerful team? The answer is obvious. No. for such a huge undertaking, Northwell should have directed Nathan and Claudia to come up with a team comprising different key stakeholders. The coalition, which now is powerful, would have been able to communicate with all the stakeholders whether internal or external.
Such a move would have helped in ensuring that all the stakeholders are informed of vision of the company and the strategies it has put in place to ensure the vision is achieved within the stipulated time frame. More importantly, it is crucial to follow all the steps up to the end. For instance, it is important to plan on how to impro prove plans in the short term while working on long-term plans. Considering the case of Northwell, keeping the employees in the sales and marketing department and previous distribution channels would have helped improve sales in the short run.
In addition to that, it is important to undertake reforms that would only help to achieve the vision. Replacing of Northwell management was not working well with the realization of the new plan. Hence, it should not have been done. Institutionalizing new approaches through leadership development and succession is important for the sustained success of the new plan. According to the open system perspective, organizations consist of systems and numerous systems that are interdependent. That is to say, these systems and subsystems are connected.
However, the nature of the connection is very important. The systems and subsystems of any organization can be tightly or loosely connected. A tightly attached system in any organization has several benefits. The first one is eased coordination of activities leading to achievement of the organization’s goals. Also, the organizations enjoy better communication channels and involvement of all relevant stakeholders in the decision-making process. On the other hand, an organization with loosely attached systems suffers from poor coordination of activities and lack of communication.
Northwell Inc. resents a case of an organization with loosely attached systems. For instance, there is little communication between the leaders of the change team (Nathan and Claudia) and other employees especially those in Nathan’s department. The result of such type of connection as we have seen is losing of rather a productive workforce. Therefore, it is important for Northwell to improve communication mechanisms in the organization so as to tighten the systems connection. As a result, the organization will enjoy the benefits that come with an organization with tightly connected systems and subsystems.
