Organizational Change:  Theory to Real World Experience

1.     Interview: Talk to someone in an organization about what you read about. Ask them whether their experiences are consistent with the ideas presented in the readings, how the ideas might be useful in their work, etc. (This modality should include your own assessment of what you learned in the interview in addition to reporting the contents of the interview.)

“What do the readings tell me about the organizational structure used by my company, McKesson (MAI)?”  This is the question I sought to address when beginning the readings for CMGT week three.  Like many companies, MAI has had to adapt “on the fly” to a changing competitive environment.  Ideally, a company would be able to redesign an organization by asking and addressing the nine questions recommended by Gould & Campbell (2002), before making all the necessary changes.  Unfortunately, changes cannot be made in a vacuum.  As a company seeks to change it has to do so in a way that doesn’t significantly disrupt the productivity of its employees and units.

MAI sought to modify the sales organization (18 months ago) by adding a functional team to the existing divisional structure.  This functional team is referred to as the “SPS Team” – under the leadership of Andrew Bandurski - an addition made as MAI’s direct response to competitive pressure in two critical product lines (Nohria (1995)– nurse and anesthesia dispensing solutions.  As a member of this SPS team, I have faced some of the challenges Daft (2007) and Nohria (1995) referred to when mentioning matrix organizations. 

As a case study to put the claims of our week 3 authors to the test, I decided to interview my boss, Andrew Bandurski, to ask him a few questions highlighting the origins of the SPS team, SPS challenges, and SPS value to MAI.  After each of the following questions I will provide my own comments in italics.

CH: Andy, if you were to describe the SPS team to a stranger, how would you go about doing that.

AB: Well, first and foremost the SPS team is a team of sales professionals: skilled in driving revenue by finding, pursuing, and closing major capital deals.  SPS’s are product specialists that are a resource for the sales reps in their respective regions.  SPS’s are hunters that seek new opportunities for MAI.  SPS’s are an extension of marketing by bringing competitive intelligence back to marketing and in turn communicating marketing’s messaging to the sales force and clients.

From AB’s response, SPS’s clearly exhibit characteristics of horizontal linkages.  By facilitating communication between marketing and the sales force, and marketing and clients, SPS’s are providing that horizontal coordination that allows organizations to react swiftly to environmental changes (Daft, 2007).

CH: Andy, why was the SPS team added to the existing MAI sales structure 18 months ago?

AB: Hospital distribution models were becoming more decentralized (placing additional importance on SPS product lines).  Omnicell and Pyxis (two major competitors) were dominating in two product lines.  Sales (representatives) wasn’t equipped with the necessary knowledge to compete with specialized personnel from Omnicell and Pyxis.  Omnicell and Pyxis were meeting the needs of pharmacists more effectively – from a sales and technological standpoint. 

Here, AB makes a reference to a changing environment as “distribution models…becoming more decentralized.”  This changing environment is best suited by agile built-to-change organizations (Worley & Lawler, 2006).  MAI’s change in structure was a reaction to a change in environment.  With added specialization the SPS team would give MAI a better chance at competing with competitors.  Added skill and expertise would contribute to increase speed and ability for MAI to respond to the changes in customer needs (Applegate, 1995).”

CH: Andy, what are the biggest challenges the SPS team has faced thus far?

AB:  Lack of acceptance by the existing sales representatives.  Collaboration issues.  Difficulty finding opportunities to build the funnel. 

Whenever organizations are redesigning structure it is imperative that the existing people are capable and willing to accept the impending changes.  As you can see, there was a culture of resistance by many to the addition of the SPS team; which led to friction and ineffectiveness.  Gould and Campbell (2002) recommend that a people test is critical to any organizational design changes.  The losers, or those who lose influence or power, must be taken into consideration before any changes are made (Gould and Campbell, 2002).  In MAI’s case, the loss of influence by the sales reps proved to be a major obstacle of organizational change.

References

Applegate, L (1995). "Managing in an Information Age." Harvard Business School.

Daft, R. (2007) "Fundamentals of Organizational Structure." Organization Theory and Design (9th ed.), pp. 88-125 (Chapter 3)

Gould,M. & Campbell, A. (2002) "Do You Have a Well Designed Organization?" Harvard Business Review.

Nohria, N. (1995). "Note on Organizational Structure." Harvard Business School.

Worley, C. & Lawler, E. (2006) Designing Organizations that are Built for Change, MIT Sloan Management Review, 48(1), pp. 18-23