Anna Frisch at Aesch AG: Initiating Lateral Change

LEADERSHIP & CHANGE
MANAGEMENT
Anna Frisch at Aesch AG: Initiating Lateral Change
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Contents:
1. Introduction ……………………………………………………………………..2
2. Causes & Triggers of Change ……………………………………………….2
2.1. Type of Change …………………………………………………………4
3. Organisational, Social & Cultural Dimensions of Change ……………..4
4. Power, Politics & Conflict on Change………………………………………6
5. Recommendations to Lead & Manage Change …………………………..7
5.1. Employee Engagement ………………………………………………..8
5.2. Incentives ………………………………………………………………..9
5.3. Organisational Development ………………………………………….9
6. Conclusion ………………………………………………………………………9
References ………………………………………………………………………….10
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1. Introduction:
Managing organisational change refers to the process of mapping out and enforcing change
throughout organisations in order to reorganize strategies and processes in attempt to
satisfy changing consumer needs, and ensuring that employees welcome the proposed
ideas of change with minimal resistance (Bejinariu et al., 2017). Change is a vital part of a
successful organisation, as consumer needs are constantly evolving – failing to change can
lead an organisation can lose its competitive edge (Richards, 2019). This report will explore
the need for organisational change at Aesch AG, focussing on key issues when attempting
to implement this change, as well as providing recommendations as to how Aesch AG can
lead and manage organisational change.
Aesch AG is a German organisation and one of the worlds’ top healthcare industry suppliers,
providing healthcare institutions with various diagnostic imaging systems and IT systems.
Recently, Anna Frisch was appointed their marketing director, and noticed a shift in
consumer decision-making soon after her new promotion. As Aesch AG’s primary target
consumers were individual healthcare clinicians, external business environmental changes
meant that the decision making process was taken over by administrators and ‘C-level’
positions within the healthcare industry. Frisch’s attempt to implement a change to the
approach by which Aesch AG were marketing their products was met with eventual
resistance across various departments of the organisation, who failed to acknowledge the
importance of altering current business strategies.
2. Causes & Triggers of Change:
The external environment of a business has to be taken into consideration constantly by
organisations in order to be able to modify their current strategies to be able to reflect that of
the changes occurring in the environment in which the business is operating (Teik, 2013).
Without paying close attention to changes in the external business environment, an
organisation can potentially ignore any opportunities or threats, which can weaken their
position within their industry, increasing the threat of competition (Voiculet et al., 2010).
Analyses models such as PESTEL, which focusses on political, economic, social,
technological, environmental and legal factors can be key in identifying opportunities and
risks and hence allowing an organisation to effectively plan and adjust their strategies (Frue,
2016).
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AESCH AG
Political • Limited government funding for hospitals to invest in new devices
Economic • Low market growth rate
• Economization leading to financial deficits in healthcare industry
• Hospitals declaring bankruptcy
• Increasing costs and shrinking revenue in medical facilities
Social • Established global presence
• World largest suppliers in healthcare industry
Technological • Global leader in diagnostic imaging systems, in-vitro
immunodiagnostics & healthcare IT systems
Figure 1
A key factor that Aesch AG must take into consideration is the economic influences that can
affect their organisation. For example, the current German healthcare climate has been
undergoing strenuous difficulties, with two-thirds of hospitals facing financial deficits, and a
further 15% of them declaring bankruptcy. In addition, costs have increased across the
German healthcare sector, as well as decreased revenue, meaning that medical
organisations need to evaluate and adjust their budgets and suppliers. Furthermore, the
German market is expected to experience low growth rates due to previously high spending
on medical devices, low GDP growth and an overall political view that spending on medical
devices needs to be decreased. This suggests that Aesch AG must be wary of competition
and be able to continue to establish themselves as industry leaders in order to ensure the
organisation doesn’t experience any financial deficits due to changes in the German
healthcare climate. This would mean that Aesch AG would have to re-evaluate their current
marketing strategies in order to suit and appeal to their targets across the medical sector.
Furthermore, governmental bodies are in charge of financing the public health sector in most
countries (Amadeo, 2019), meaning that funding and budget allocations come directly from
political decisions based on the economy of a country. In Germany, government funding has
significantly decreased in recent years, meaning that hospitals and medical institutions are
having to make use of current equipment instead of investing in and acquiring new medical
devices. This suggests that as a medical devices supplier, Aesch AG would have to take this
into consideration, and therefore rethink their strategies of marketing to stand out from
competition and convince medical bodies to invest in their products. These factors combined
have led to a major transformation in the decision-making process and purchasing habits
across many healthcare organisations in Germany, whereby higher management and
4
purchasing departments are increasingly involving themselves in the organisations
purchasing decisions.
2.1. Types of Change:
According to Grundy (1993), there are three types of change (Grundy, 1993, as cited in By,
2005). The first is known as ‘smooth incremental’ change, which refers to change that is
expected, slow and predictable. The second is known as ‘bumpy incremental’ change – the
rate of change fluctuates as there are periods of slow and steady change that then suddenly
accelerates, and eventually reverts back to slow, creating a ‘bumpy’ notion, which is caused
by both internal and external factors. The third and final type of change is ‘discontinuous’
change, which is seen as sudden and rapid changes that are caused often by reforming a
business strategy, culture, structure or all three, due extreme internal issues or considerable
external shock (Senior, 2002). Supporters of discontinuous change suggest that this method
is cost-effective and more efficient as it is sudden and does not require extended periods of
adjusting initiatives and developing strategies to implement changes (Guimares &
Armstrong, 1998).
In Aesch AG’s case, it can be suggested that discontinuous change will have to take place
throughout the company, due to the economic climate in Germany and the limited funding for
healthcare institutes from the government leading competition to become an increasing
threat as Aesch AG attempts to remain an industry leader. As Frisch has analysed a big shift
in the decision-making process of Aesch AG’s target audience, whereby ‘C-level’ influence is
higher than ever on purchasing behaviour, it is essential that the company re-evaluate their
marketing strategy in order to complement these changes and appeal to the C-level, as
failing to do so would mean that the company risks having to step down and allow
competitors with new and improved marketing strategies to take over.
3. Organisational, Social & Cultural Dimensions of Change:
Organisational culture refers to the core philosophy of a business, including any
expectations, values and experiences that dictate employee behaviour as well as any
organisational norms, beliefs, symbols and habits (Business Dictionary, 2019; Needle,
2004). Every organisation will develop their own unique culture, which essentially
establishes boundaries whereby every employee will act and behave in a way that is in line
with company values (Wedgwood, 2017). In order to implement change, every member of
the organisation needs to be ready to welcome new adjustments, as organisational change
5
is closely linked to organisational cultural change as well (Denning, 2011). For a cultural
change to be effective, executives across the company departments and divisions need to
be open to and welcome the idea, changing their own behaviour to begin with so that
employees underneath them in the business hierarchy can take example (Heathfield, 2018).
Taking into consideration Aesch AG, Frisch is attempting to modify the way in which the
company promotes and markets their products to their target consumers, in such a way that
would require the approval and joint effort of various departments. Seven different
departments are involved in the process of developing and selling a single product for Aesch
AG, so implementing any sort of change would mean that all seven departments are open to
the idea of strategy modification, allowing them to work together as a unit, thus adjusting the
culture of the company, as currently the seven departments do not work closely together as
a collective, but rather have their own input in the products individually.
Furthermore, Frisch’s attempt at implementing cultural change was met with resistance,
bringing about social repercussions. The case study states that Frisch felt ‘alone and
rejected’ following the meeting to discuss her new proposal of how Aesch AG should move
forward. Having left the first meeting with high hopes, whereby the topic of implementing a
change in strategy due to a shift in decision-making bodies of their target consumers
seemed to be supported by the various department VP’s, must have left Frisch feeling
extremely demotivated when her proposal was met with hostility and opposed as the VP’s
were reluctant to assign a budget to implement her new strategy, stating that other things
were more important. A lack of motivation as an employee, and particularly in Frisch’s case
as someone who has a high position within Aesch AG, can lead to adverse effects on the
organisation. Lack of employee motivation can lead to higher turnover, meaning the
business has to spend money on recruiting a new marketing director which is timeconsuming, a lowered ability to overcome any challenges, as well as lower productivity and
eventually a decrease in customer satisfaction as a result of this (Leonard, 2019).
Agreeing to implement the proposed changes would lead to a higher level of communication
throughout the organisation as all departments would integrate to adjust their sales and
marketing strategy, as well as allow Frisch to further develop her skills as a marketing
director, and hence be able to motivate and empower employees. This on the long-term can
enhance organisational success (Hyken, 2017).
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4. Power, Politics & Conflict on Change:
Power is defined as an individual’s ability to overcome resistance from others when making
new suggestions, be able to exert their will and create results that are in line with their core
goals and interests (Huczynski & Buchanan, 2013). Power within the workplace is present
even if there is no set outlined hierarchical structure, as various employees present an
eclectic skill set and expertise within different subjects that can lead to colleagues choosing
to value those particular skills over other employees (Lister, 2019). All organisations can be
thought of as political structures, whereby there is a top-down effect of authority distribution,
allowing the exercise of power to take place (Zaleznik, 1970). As an organisation can be
seen as a political structure, it paves the way to allow individuals to be able to develop and
build their careers, as it can be thought of as a platform that allows the communication of
personal interests, skills and motives – such development of careers within hierarchical
organisations depends on the level of power an individual is willing to exert in order to
influence colleagues with their ideas and personal business-related interests (Zaleznik,
1970).
In Frisch’s case, although she has been appointed as marketing director for Aesch AG,
immediately placing her high up in the so-called ‘political structure’ and putting her in charge
of materialising her ideas and thoughts in regards to marketing operations, other powerful
figures within the company have failed to understand her agree with her suggestion, raising
questions as to what exactly the reasons may be behind this.
Firstly, gender may perhaps play a role in Frisch’s suggestions for implementing change
being rejected. For many years, women have been underrepresented at almost every
corporate level in the workplace, not being chosen for promotion in comparison to their male
colleagues, or not being listened to once they have managed to reach authoritative positions
(Krivkovich et al., 2017). Had the appointed marketing director been male and put forward by
him, perhaps the suggestions given by Frisch would have been taken into consideration by
the various department VP’s, and they may have potentially agreed to assign the budgets for
the new marketing strategy as they would have seen it as an important issue concerning
their target consumers.
Furthermore, as Frisch has not been at Aesch AG for a significant amount of time, it is
difficult for various different employees throughout the company to address her ideas and
take them seriously. In order to be able to exert power and influence a particular situation
within an organisation, implementing personal thoughts and ideas, it is essential that a solid
foundation is primarily built in order to establish trust and build a relationship with various
teams (Lepsinger, 2017). Being able to establish this relationship before attempting to
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implement personal suggestions, would help build credibility and hence allow employees to
be more open to listening and believing those personal suggestions are the correct way
forward. As Frisch has not been at the company for an extensive period, she has not been
able to form such relationships and develop her credibility with various powerful figures
within the organisation, therefore increasing the possibility that her ideas would not be
considered as ‘worthy’.
5. Recommendations to Lead & Manage Change:
In order to be a successful leader in business organisations, there are a number of factors
that need to be considered and implemented. Kotter (2012), distinguishes between eight
steps that differentiate a manager from a leader. The first step he outlined is creating the
sense of urgency. In order to successfully implement change, it is essential to get the whole
company on board and ensure that everyone really wants to implement change, as this will
be the first step in initiating the motivation. In order to do this, Frisch may for example
analyse the current threats and opportunities of the external business environment,
presenting this to VP’s in a meeting, which will spark conversations allowing people to
discuss the need for change. Secondly, it is important to form a powerful coalition, and
ensure that everybody is on board. A way to do this is to create a powerful team of influential
bodies within the organisation, incorporating people whose power comes from a variety
departments involving job title, expertise and status.
The next step Kotter identifies is creating a vision for change, whereby a strategy and a clear
direction for change must be developed, in order to help everybody understand what must
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be done. Step four is communicating the vision, and doing so frequently in order to avoid
competition from other communications within the organisation. Frisch can ensure this is
done by regularly addressing any concerns various employees may have about the
proposed change, and incorporate the vision into elements of training. The next step is
remove any obstacles, for example by identifying any individuals who are opposing the
proposed change and aiding them in understanding why change is essential, and by
immediately removing barriers as they arise. This is then followed by creating short term
‘wins’, which is essentially creating short term targets that contribute towards implementing
the change, and helping employees see the targets being accomplished in order to increase
motivation. Frisch can further increase the effects of this step by rewarding employees who
manage to reach targets. Building on the change is essential, as after each ‘short term win’,
it is necessary to analyse what was done correctly and what needs improvement and finally,
it is vital to anchor the changes in corporate culture, ensuring that various department
managers continue to support the change, and making sure that change is seen throughout
every part of the organisation.
5.1. Employee Engagement:
Another key aspect of implementing change is managing employee engagement. Inherently,
individuals often try to avoid change due to fear of the unknown and having already
established habits, familiarising themselves with their current routine, making them reluctant
to agree to change (Swarnalatha & Prasanna, 2013). Therefore it is essential to ensure that
employee engagement is prevalent when attempting to implement changes within the
organisation successfully. Employee engagement refers to the emotional commitment that
employees have concerning their organisation, and actions they take that arise from this
emotional commitment in order to facilitate organisational success (Allen, 2014). This
emotional commitment creates employee motivation, making individuals feel accountable
and care about the business in which they are employed. In recent years, the way
employees are treated has dramatically changed, whereby employers are concerned with
creating an environment and organisational culture that reflects their core business values
and goals, using employee engagement as an important factor contributing to success
(Allen, 2014).
Primarily, in order to increase employee engagement, Frisch must develop a clear strategic
management tool, that outlines the exact direction the organisation will aim to go towards,
ensuring that everyone clearly understands the goals and visions of the company, and
outlining how each employee can adjust their input into the organisation to contribute to
reaching these goals. In regards to ensuring all seven departments are on board, Frisch
9
should ensure that all VP’s are trained in knowing how to reach the proposed targets, and
provide support for employees under their supervision, increasing communication throughout
the organisation.
5.2. Incentives:
In addition, another way Frisch can engage employees is through incentives and rewards
based on achieving certain targets that are in line with the proposed change. An incentive
refers to an object or item that holds value, or a desired outcome of a particular action that
encourages employees to repeat proactive behaviours that resulted in the desired outcome
(Heathfield, 2018a). Furthermore, implementing incentives throughout the business culture
as a result of employee achievement of work-related goals, means that employee turnover
will be significantly reduced, allowing an organisation to retain experienced employees,
reduce costs of training and recruitment, and also increased experience customer
satisfaction due to enhanced employee performance (Mauser, 2017).
5.3. Organisational Development:
Organisational development refers the systematic change in the values and attitudes of
employees in an organisation through analysing the current business situation and
establishing necessary future requirements that can be further integrated through long term
training programmes (Business Dictionary, 2019a). It is important for Frisch to push her
proposed strategy with emphasis on C-level marketing, explaining to employees why it is
beneficial for the organisation, and expanding on the financial benefits for Aesch AG during
the meetings with the department VP’s. Perhaps if Frisch spoke about the long-term effects
of implementing the proposed marketing strategy, the VP’s would have had a more
understanding approach towards the proposed change, and there would have been a higher
chance that they assign the budgets necessary to implement the change.
6. Conclusion:
To conclude, this report has analysed the various explanations behind the reason for
Frisch’s proposed change, and has explored the possibilities as to why her proposal was
rejected by the VP’s of Aesch AG. Adding to this, recommendations as to how she should
further progress in order to reach her goal of implementing the desired change in order to
satisfy the evolving German healthcare market have been put forward.
External factors of the industry environment are the key triggers behind Frisch’s proposal, as
the decision-making process throughout the healthcare industry shifted, from previously
10
having individual clinicians decide on medical equipment they wish to purchase, to now
having administrative bodies higher up in the healthcare industry making purchasing
decisions. As Aesch AG’s current marketing strategy was aimed towards clinicians, it would
mean that their entire marketing strategy would have to be adjusted in order to suit the
needs of the new target consumers.
Further implications may have also affected the outcome of Frisch’s proposal meeting, such
as underlying gender discrimination throughout corporate organisations, whereby women’s
views are less valued than men’s, creating a power struggle throughout the company.
Furthermore, her limited time at Aesch AG may have been a key precursor to her proposal
being rejected, as current employees may have not entirely trusted her expertise due to the
fact that she had not yet established any form of relationship with any of the seven
departments.
In order to progress and have her organisational change proposal accepted, it would be
beneficial for Frisch to begin to build trusting relationships with various VP’s in the company,
as well as focus her attention on ensuring that employees are well-educated on the values
and goals of the business, as well as issues that may arise should Aesch AG refuse to
change its’ current marketing strategy. Implementing change should be a carefully thoughtthrough process, involving everyone in the organisation and ensuring the goals are clearly
understood in order to facilitate future organisational success.
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