SHELL: In 2004 Shell was facing an oil reserves crisis that hammered its share price. The situation was compounded by the abrupt departure of the oil group’s chairman, Sir Philip Watts. The new group chairman, Jeroen van der Veer, believed that in order to survive, the corporation had to transform its structure and processes. A series of global, standardized processes were identified. These, if introduced, would impact more than 80 Shell operating units. While the changes were vital to survival, they proved unpopular in the short term as some countries stood to lose market share. The message was a tough one, and many operating units balked. However, for a change programme of this scale to be successful, everyone had to adhere to the new systems and processes. The leadership of Shell Downstream-One, as the transformation was known, needed unflinching determination and to focus on gaining adoption from everyone involved. Those leading the change had to ensure that the major players in all their markets knew what was required and why. They needed to be aligned with the change requirement. From the start, it was recognized that mandating the changes was the only way for them to drive the transformational growth they aimed for. This wasn’t an opt-in situation. The main message of the change team, led by van der Veer, was that simpler, standard processes across all countries and regions that benefited Shell globally trumped local, individual needs. That meant everything from common invoicing and finance systems to bigger more centralized distribution networks. By identifying and rapidly addressing the many areas of resistance that emerged – such as that some influential stakeholders stood to lose control or market share – adoption was accelerated. The team of experts – made up of senior leaders, in-house subject matter experts, implementation consultants and external change experts – who delivered the change programme, were crucial in this phase. They’d been picked because they had both technical understanding and could provide change leadership. They both modelled and drove the new behaviors needed for the change to succeed. They briefed the people who would be impacted by the change; risks and potential problem areas were discussed and mitigated – before any real change was even delivered. In all major change programmes, there’s always the danger that change management gets delegated; leaders distance themselves from the challenge of implementing the priorities they once championed. That can cause the initiatives to fail. In Shell’s case, however, the change leadership started and finished with Jeroen van der Veer, who never drew back from emphasizing how important full implementation of Downstream-One would be.

Question A : (50 marks)

A. Explain the possible causes of resistance to change that Shell faced during its transformation phase. Identify the symptoms of resistance to change by Shell employees. (25 marks)

B. Identify the eight failure factors by John Kotter. Explain five of the failure factors that Shell could face owing to change management. (25 marks)

EXPERT ANSWER

Answer:Answer 1:

Possible causes of resistance to change and the symptoms that the employees of the Shell faced during its transformation phase are:

1. Because of the implementation of change, some of the countries thought that they would lose the developed market share.

2. Since the message of change was a tough one, therefore, many operating units of Shell showed their unwillingness in accepting the ideas of change.

3. Most of the key stakeholders to change were unaware of the reason for the change.

4. Resistance to change may also be shown by the employees because the change management gets delegated by the top leadership of the organization and sometimes the leaders distance themselves from the challenge of implementing the priorities they once championed.

Answer 2:

Eight failure factors by John Kotter are:

1. Allowing too much uncritical satisfaction so that the people see no reason to change.

2. Failing to create a sufficiently powerful guiding alliance of leadership and power.

3. Underestimating the power of vision and not letting people know what you’re trying to change to.

4. Under communicating the vision from change for the organization.

5. Permitting obstacles to block the new vision.

6. Failing to create short term wins.

7. Declaring victory too soon.

8. Neglecting to anchor changes firmly in the corporate culture.

Five of the failure factors that shell could face owing to the change management are:

1. Allowing too much uncritical satisfaction so that the people see no reason to change. Shell has not undergone a change for a longer period of time and hence employees in such companies are satisfied with the existing processes and they see no reason to change.

2. Underestimating the power of vision and not letting people know what you’re trying to change to. It has been observed that most of the employees at shell were unaware of the guiding concept behind the change.

3. Under communicating the vision from change for the organization. Leaders of shell have not specifically defined the idea behind the change to its employees.

4. Permitting obstacles to block the new vision. The previous chairman of the shell has not removed the obstacles that blocked the new vision. This has further resulted in the resistance to change.

5. Neglecting to anchor changes firmly in the corporate culture. The shell should implement the mandatory changes in the organization and should make it mandatory for all the employees to get adapted to the change.