Promoting Change In Your Organization

Change means giving up something. What are you willing to give up to move forward? Stop resisting change, even if it hurts. The way you look at a changing situation, or even a person who is changing, determines your reaction.

Think about the times you have changed in your personal life without the support of your friends or family. It hurt, right? But with or without them, you made the change happen. You knew it would work out, even though it was painful.

Consider the following reasons for resisting change:

  • Defend the old ways.
  • Fear of the future.
  • Uncertainty.
  • Unexpected change.

Are any of these reasons holding you back, causing you to negatively affect a situation, yourself, or other people?

The four phases of change are:

  • Denial: You deny the change is happening.
  • Anger: You become angry at the change.
  • Bargain: You bargain for the “old ways” instead of the change.
  • Tackle: You accept the change.

You may notice lower productivity in your own performance or from others, along with lower morale if you or they are in the denial, anger, or bargain phase. What is critical is how quickly you can adapt and bring quality and quantity above the pre-change level, before the denial phase.

Take the time to know yourself and how you manage change with steadfastness, practicality, and creativity. You are always in a position to make a difference. Control your attitude by monitoring your self-talk. Take some ownership of the changes by considering a central part of your job description to be personally responsible for managing change. Choose your battles carefully.

Upper management catches a lot of criticism during times of change. Now you have a chance to show your loyalty and commitment. If your organization waited until the change could be made perfectly, it would never happen.

You should practice good stress management techniques because adjusting to new circumstances is a drain on your psychological energy. Keeping your sense of humor is a step in the right direction, as is taking good care of yourself physically.

What about organizational change? “Organizations should reward risk-takers, even if they fall short once in a while. Let them know that promotions and glory go to innovators and pioneers, not to stand-patters who fear controversy and avoid trying to improve anything,” wrote Captain D. Michael Abrashoff in his book, It’s Your Ship.

There are three types of organizational changes:

  • Adaptive: You reintroduce a familiar practice.
  • Innovative: You introduce a new practice used elsewhere.
  • Revolutionary: You introduce a new practice that has never been used before.

Any one of these organizational changes should include vision, skills, incentives, resources, and action plans from beginning to end to identify specific goals, authority, control, and status. With this approach, an organization can address employee questions and reactions to avoid confusion and resistance.

Continuously communicate about changing roles, responsibilities, and expectations, and provide active, visible support to departments. Do not create a culture of fear of failure. Expect and learn from the mistakes, because they will happen.

After empowering employees, become less directive by stepping back and letting them perform. An organization should enforce changes through rewards and flexibility until the they become stable and permanent.

Some Companies That Changed And Found Success

Some people are born and quickly find a purpose. In 1762, at the age of six, Mozart was performing in exhibitions at the court of Maximilian III of Bavaria in Munich. Carl Friedrich Gauss, who lent his name to the measurement, completed his masterwork, Disquisitiones Arithmeticae, at the age of 21, before going on to earn the moniker of “greatest mathematician since antiquity.”

Just like people, some companies are formed around a concept that defines them for their lifetime. In 1708, when Sebastien Artois became the master brewer at Den Horen, the brewery took his name, becoming Stella Artois, which went on to become a part of ABInBev, the world’s largest brewer. Established in 1526 and owned by the same family for over 500 years, Beretta had its humble beginnings as a supplier of arquebus barrels to the Arsenal of Venice.

But there are also those companies who wander aimlessly in the general direction of a strategy. Those companies, who become entrepreneurial magpies, snatch up whatever shiny objects they can find, hoping some consumer, somewhere, might be willing to pay for them. To these companies, adaptability is the raft that has kept them afloat and allowed them to weather the often dicey seas of business. In their search for profitability and stability, many of these companies have utterly redefined their goals, strategies and marketing techniques. They have overhauled production processes and, in some cases, sought advice from the unlikeliest of sources.

Today, we discuss some major companies that embraced change and found success.

PayPal

Originally founded in 1998, Confinity Inc. — creators of PayPal — was based around a service that allowed the transfer of funds between two Palm Pilots. The idea was simple and elegant: with millions of people carrying both PDAs and wallets, PayPal would combine the purposes of the two items in a way that allowed consumers to pay their bills and make purchases digitally via their PDAs. At the time, online money transfers constituted a secondary, less viable stream of revenue for the company.

All that would change in 2000, when PayPal enabled eBay payments. Revenue from online transfers and payments for auction items suddenly dwarfed revenue generated from Palm Pilot transfers. By the end of the year, PayPal had discontinued its Palm Pilot service entirely.

By 2001, with over 1 million users, PayPal had gone public on the NASDAQ, and in 2002, the company was purchased by eBay for $1.5 billion.

Nintendo

Formed in 1889 by Fusajiro Yamauchi, Nintendo was originally founded as a purveyor of handmade hanafuda playing cards. By the late 1960s, the company had unsuccessfully attempted to enter a number of markets, including taxi services, a TV network, and “love hotels.” As the public’s interest in playing cards waned, the company’s stock plummeted to an all-time low, and the fate of the company hung in the balance.

The company’s fortunes changed in 1966, when an assembly line engineer named Gunpei Yokoi brought one of his personal projects to work. That project, called the Ultra Hand, marked Nintendo’s first venture into the toy market. The Ultra Hand went on to sell 1.2 million units in Japan and its success led to Yokoi’s promotion to the newly formed Nintendo Games.

In 1974, Nintendo entered the video game industry. A student by the name of Shigeru Miyamoto was placed under Yokoi’s direction, tasked with designing cases for Nintendo’s Color TV system. Miyamoto went on to design one of Nintendo’s most iconic games, Donkey Kong, which introduced the world to Mario, the company’s longstanding mascot.

As of May 2013, according to Forbes, Nintendo has a market capitalization of $14.39 billion.

Hasbro

Founded in 1923 by Henry, Hilal and Herman Hassenfeld, Hassenfeld Brothers was a company that dealt in the sale of textile remnants. It remained a textile dealer for the next 20 years, eventually widening its horizons to manufacture pencil cases and school supplies.

Everything changed in the early 1940’s when Hassenfeld Brothers produced toy versions of doctor and nurse kits. By 1942, the company had transitioned into being a full-time toy company. Ten years later, it hit pay dirt when it purchased a creation called Mr. Potato Head from inventor George Lerner. The toy was a runaway success and led, in part, to the company becoming a Disney licensee in 1954.

Changing its name to Hasbro Industries in 1968, the company went public. It continued producing popular toy lines such as G.I. Joe and Transformers for the next 45 years, eventually surpassing Mattel as the world’s largest toy manufacturer. As of September 2013, the company has a market capitalization of $6.48 billion.

J.Crew Group, Inc. Announces Strategic Organizational Changes

J.Crew Group, Inc. (the “Company”) today announced several strategic changes across its organization to better position the Company for sustainable and profitable growth.

“Today’s retail environment is changing more rapidly than ever before. Customers demand greater speed to market, convenience and personalized shopping experiences” said J.Crew Chairman and CEO Millard Drexler.  “At J.Crew, we are embracing this change and making necessary adjustments to our business and teams to move us forward in a more efficient and dynamic way.”

As a part of the strategic reorganization:

  • Michael J. Nicholson, President, Chief Operating Officer and Chief Financial Officer of J.Crew Group, Inc. will additionally assume responsibility for the J.Crew Brand which includes the planning and allocation, merchandising, marketing and design functions.  Mr. Nicholson joined J.Crew in 2016 and has been instrumental in directing and driving J.Crew’s strategic evolution.  Mr. Nicholson has extensive experience across all aspects of retail and will continue to optimize operational excellence while leveraging the power of the iconic J.Crew brand.  He will continue to report to Millard Drexler, Chairman and CEO.
  • Lisa Greenwald has been named Chief Merchandising Officer of the J.Crew Brand.  In her new role, Ms. Greenwald will oversee merchandising across J.Crew women’s, men’s, and crewcuts.  Ms. Greenwald joined J.Crew in 2004 and has held various positions of increasing responsibility in both the J.Crew and Madewell merchandising organizations.  Most recently, Ms. Greenwald served as  Senior Vice President of Merchandising for Madewell where she leveraged her proven merchandising skills to build and grow the business.  Ms. Greenwald will now report to Mr. Nicholson.
  • J.Crew also recently announced that Somsack Sikhounmuong was named Chief Design Officer, effective April 5, 2017.  In this role, he oversees the women’s, men’s and crewcuts’ design teams. Mr. Sikhounmuong has been with J.Crew since 2001, serving in various senior design roles, and from 2013-2015 he was Head of Design for Madewell where he was a key contributor to the brand’s success.  Mr. Sikhounmuong will now report to Mr. Nicholson.
  • Libby Wadle has been named President of the Madewell Brand.  Most recently, Ms. Wadle served as President of the J.Crew Brand and joined the Company in 2004. Throughout her tenure, Ms. Wadle has held senior management roles across multiple functions of the business, including J.Crew Factory and Madewell. Ms. Wadle will continue to report to Millard Drexler, Chairman and CEO and is well positioned to lead the Madewell team into its next phase of growth.

“We have an incredibly talented team of passionate leaders and will further leverage their strengths and talents as we continue to focus on making critical improvements in our business,” said Drexler.

Additional organizational changes are also being made across the Company reflecting J.Crew’s commitment to long-term profitable growth while, at the same time, creating a more efficient, nimble and streamlined team structure. As part of the reorganization, J.Crew announced today that the Company will initiate a headcount reduction comprised of approximately 150 full-time and 100 open positions, primarily from its corporate headquarters. The Company expects to realize approximately $30 million of annualized pre-tax savings in connection with this reduction in force and will record a charge of approximately $10 million in the first quarter of fiscal 2017 for severance payments and other termination costs.

Drexler concluded, “We take these difficult decisions very seriously, but believe they are absolutely necessary.  We are streamlining our teams  as we evolve our business and processes to cater to the new demands of the retail industry.  While challenging, we know what needs to be done and this is a critical step to position J.Crew for the future.  We are committed to treating impacted associates with respect and support through this period of change.”

About J.Crew Group, Inc.
J.Crew Group, Inc. is an internationally recognized omni-channel retailer of women’s, men’s and children’s apparel, shoes and accessories. As of April 25, 2017 the Company operates 278 J.Crew retail stores, 115 Madewell stores, jcrew.com, jcrewfactory.com, the J.Crew catalog, madewell.com, the Madewell catalog, and 179 factory stores (including 39 J.Crew Mercantile stores). Certain product, press release and SEC filing information concerning the Company are available at the Company’s website.

Forward-Looking Statements:
Certain statements herein, including the expected benefits from organizational changes and the reduction in force, are “forward-looking statements” made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements reflect the Company’s current expectations or beliefs concerning future events, and actual results of operations may differ materially from historical results or current expectations. Any such forward-looking statements are subject to various risks and uncertainties, including the Company’s substantial indebtedness and the indebtedness of its indirect parent, the retirement, repurchase or exchange of its indebtedness or the indebtedness of its indirect parent, its substantial lease obligations, its ability to anticipate and timely respond to changes in trends and consumer preferences, the strength of the global economy, declines in consumer spending or changes in seasonal consumer spending patterns, competitive market conditions, its ability to attract and retain key personnel,  its ability to successfully develop, launch and grow its newer concepts and execute on strategic initiatives, product offerings, sales channels and businesses, its ability to implement its growth strategy, material disruption to its information systems, its ability to implement its real estate strategy, adverse or unseasonable weather, interruptions in its foreign sourcing operations, and other factors which are set forth in the section entitled “Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K and in all filings with the SEC made subsequent to the filing of the Form 10-K. Because of the factors described above and the inherent uncertainty of predicting future events, the Company cautions you against relying on forward-looking statements. The Company does not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE J. Crew Group, Inc.

The Biggest Hinders To Organizational Change

It’s a matter of common sense to change along with the times. Most organizations that fail to do this is setting itself up for failure. With certain organizations depending on change in order to survive, it’s crucial to properly identify which details may end up hindering your progress. So today, we’ll be tackling some of the biggest hinders to organizational change.

Unclear Goals

In order for change to occur, you need to understand what you’re changing from and what you’re changing into. Clarifying the reasons why change is needed is a great place to start the process from. Whenever change occurs, it can be a precarious and disconcerting time. It’s like waking up one day and being told that you need to throw pieces of your already built puzzle out the widow to make space for new ones.

In order to help all the pieces of the new puzzle to fit together, everyone needs to have a clear idea of what the overall portrait is supposed to be. To avoid losing members of your crew to uncertainty, plot out the end course and make sure everyone knows it. Keeping members in the dark is a sure way to hider the change you want to happen.

Ineffective Leadership

When change is hovering in the nearby horizon, having a trusted captain at the helm will help deliver the entire crew to their goal. When change is executed properly, the benefits can be pretty amazing.

However, when the person or persons in charge of said change bungles the job, it can mean death for an organization. As previously stated, change in an organization can be quite scary–particularly for the employees. A failure by those in managerial position to understand these fears and sensitivities is a pretty sure way of alienating the workforce and causing a divide between the different departments.

Properly providing everyone with information on what the organization as a whole stands to gain is a great way to sooth any preexisting fears or concerns.

Ineffective Communication

In any normal situation, communication is needed. In a precarious time such as a systematic and widespread organizational change, communication is crucial.

Everyone involved must be seen as a key partner to ensure a successful outcome. Clear and decisive messaging is paramount at each and every stage of the change at hand. When departments or people feel they aren’t being heard or considered in the process, it can cause some deep fissures in the system. This can mean some serious problems latter on in the implementation process.

Unnecessary Complexity Of Implementation

Change doesn’t happen overnight. It takes weeks or months of planning and gradual implementation in order to test out any issues in the process. The bigger your organization, the larger and intrinsic the process will be.

So it’s important to not overwhelm the system or the people with sudden or complicated changes in the process. For large organizations in particular, in order for change to be successful, there needs to be an unhindered perspective that ensures the correct change is applied properly and effectively.

Keeping things simple will be the best way to combat this. Small steps and gradual implementation of change is key to achieving long standing success.

The Factors That Will Dictate Organizational Change in 2017

Companies and organizations, if they wish to stay alive, cannot afford to remain stagnant in an ever changing world. Recent years have seen the rise and demise of several companies that were not able to change their business model to meet the needs of their markets. As a new year has come around, it’s a pretty sure bet that there will be new challenges that will need to be met.

Today, we discuss the factors that will most likely dictate what organizational changes need to occur.

Remote Workers

With the digital evolution of communication and accessibility, most employees prefer to work remotely. For businesses that don’t directly deal with any physical inventory, considering the possibility of remote work and remote workers is crucial.

Remote workers have a higher probability of striking a suitable work-life balance. This leads them to be happier and more productive than those who report to a brick and mortar location. Ultimately, happy workers are better for any business’ bottom line.

Changing Consumer Needs

The one thing that’s certain is that things always change. A clear example of this is the various malls that are closing down all over the US. Gone are the times when people went to malls to hang out or do their shopping. The dwindling economy marked a big change in consumer buying trends. Consumers were introduced to the concept of online shopping and online only deals.

Consumers are always known for wanting high quality products for the lowest price and online retailers met this need. As such, outlet stores in malls all over the US felt a sharp decline in their customers. Consumers have a cycle and only those who are able to anticipate and adapt to this survive.

Whatever business you have, you must always consider the current state of consumer behavior.

Data Trends

With most interactions occurring in the sphere of the online world, it has been increasingly easy for marketers and business to gather consumer data. Particularly with the blossoming concept of smart devices that aren’t limited to mobile devices, businesses would be smart to factor this in.

Smart devices will be able to map out patterns of consumer behavior and for that, maximize product recommendations. Understanding and wielding the data you gather will help any business further understand their market demographic. It is important to collate your data appropriately and ethically to fully anticipate where the trend seems to be heading.

Competition

Startups are slowly taking over the market. Any business will have competitors and it’s crucial to be ahead of the curve. So whenever new competition makes its entrance into a market, it is prudent to analyze how this will affect you.

Complacency can be the start of a pretty bad spiral.

Political Climate

With the political climate being as it is now, there’s little doubt that many businesses will be affected. Recently, we saw several large chains break ties with an already established brand. Clashing opinions often spell trouble for certain businesses.

It’s best to keep feelers out for shifting political climates. Be discerning on when it is appropriate to make a change.

Amazon.com

What started as an online bookstore using the founder’s garage in Bellevue, Washington as the starting warehouse boomed to be the largest internet-based retailer in the whole world. How did Amazon.com accomplish such an amazing feat? This company is arguably one of the best examples of the successes achieved because of organizational change. So today, we take a closer look at Amazon.com and how it became such a giant.

In 1994, Jeff Bezos decided to get in on the Internet business boom and build a business plan for what will be Amazon.com. The website itself went online in 1995. Bezos was not afraid that his business model would be copied by others–his logic was that corporate giants like McDonald’s had mimics yet stood at the top anyway. Bezos narrowed down the choices of what products his service would carry to compact discs, computer hardware, computer software, books, and videos. He chose books in the end as there was a large international market for literature and as the cost of acquisition would be lower than the other choices of his list,

This choice would prove to be the correct one as within two months of launch, Amazon was raking in around $20,000 a week. This was due to the fact that while physical stores and mail order catalogs could offer around 200,000 titles, an online store could offer more as its “warehouse” was digital. After five years, the internet company bubble had burst and several online companies folded. Amazon.com forged forward despite some setbacks like a lawsuit from Walmart. Walmart had claimed that Amazon had stolen trade secrets by hiring former Walmart executives. While the suit was settled out of court, Amazaon enacted changes in its internal restrictions. Amazon but in stricter measures and reassigned the former Walmart executives. The former Walmart employees named in the lawsuit were restricted in their duties which pertained to information systems.

Such a move made sure that no other such claims could be made again–which secured the company’s internal dealings and strengthened it as a whole. From there, Amazon made more changes. As soon as their online book market was steady, Amazon looked to adding more products to their service. In 2002, around eight years since it’s conception, Amazon.com now offered more than two dozen online “stores” which sold more than books. These websites carried cameras, cars, computers, tools, toys, and even travel packages.

Amazon partnered with Target and Circuit City and operated its own auction shop. Soon they also started selling clothing, movies, concert and event tickets. They continued to broke partnerships with existing brands in order to add more products to their site. The brands also gained mass exposure as Amazon.com was hosted in several countries and continents. It was safe to say that once you partner up with Amazon, you become an international brand.

On November of 2013, Amazon.com launched a partnership with the US Postal Service–enabling deliveries on Sundays. So instead of having one day where-in purchases weren’t delivered, Amazon made sure now that their customers would be able to shop and receive their orders 7 days a week. Just this year, Amazon announced convenience stores and plans to develop curbside pickup locations for food orders. A store in Seattle called “Amazon Go” was opened to Amazon employees. This store made use of sensors and automatically charges a shopper’s Amazon account as they walk out of the store. The primary objective being the elimination of checkout lines. They aim to open such stores for the general public early this year. Amazon Air’s beta-testing was also launched in 2016. This aimed to make use of drones to deliver orders directly to the homes of clients within minutes of purchase.

A great many lessons could be learned regarding the organizational changes that Amazon.com put into action. They started from a single product and diversified to meet a larger audience. Internal issues were dealt with swiftly. Amazon also continued to pioneer better partnerships and methods to better service their clients from daily deliveries, potential stores with no checkout lanes, and deliveries by drone.

While Amazon has had its share of roadblocks, Jeff Bezos learned from these and adjusted his business practices to keep their business model and services relevant.

Tips and Tricks for Organizational Change Success

The only thing constant in life is change. This is a tried and tested fact that businesses cannot afford to ignore. Whether it is because of employee performances, technological advancements, or staff turnovers—in order for a business or a company to persevere, it needs to be able to undergo and survive organizational change. Let’s look over some established tips and tricks that you can use to successfully navigate your organization’s change.

Firmly Establish Your Vision

When a business goes through an organizational change, it is important that those at the top properly convey what changes are about to happen and why. Teams and departments are able to assimilate the growth better if they understand why things and processes are evolving. The last thing you’d want to craft a culture of secrecy from your employees. Employees are the lifeblood of your company—making them partners and not just cogs in a wheel of change can better serve your purpose in the long run.

Exemplify Your Vision

If you are at the top of your organization, your employees will look to you to embody the changes that you wish to apply. As the captain of your ship, you need to provide the direction in which you want your employees or members to follow. Get your managers and those in position of leadership to showcase the changes as well. A unified front will help calm any worries that your members may already be feeling.

Clarify Short-Term Goals

While the end-goal vision is established, to better focus your organization on what needs to be done, assign goals that can be attained in the immediate foreseeable future. Don’t lay out change and expect sudden and immediate confirmation. Dole out the changes in small parts through short-term goals that your teams can strive for.

Actively Search For Feedback

In order to get your members to really feel that they’re a true part of your organization and the organizational change you’re going to enact, actively ask your employees for their feedback. As the person on top, you may not always be able to truly have a feel of what the changes are like on the ground level. Getting feedback from those that have a different view will help put things in perspective and can further enrich your ongoing changes.

Build New Avenues for Communication

Whenever changes are proposed, there will be a lot of questions that may arise. Building new channels for communication is always a good idea in order to further fortify your teams. Maintaining visibility, being more accessible for conversations, and keeping all members routinely updated will help stem any issues that can come up.

Maintain a Positive Attitude

Another old adage is that “attitude is everything”—and this is quite true. It wouldn’t matter if your plans for change are incredible, if you present it in a manner that isn’t positive, it will fail. Change is often a stressful and confusing time for everyone involved. You and the other leaders will need to keep the tone and climate as positive as possible in order to keep the ship on its proper path.

These are just a few tips that you can apply in your company as it goes through organizational change. If you have any more, we’d love to hear from you. We’ll keep the tips and topics coming along so be sure to check our blog for more organizational change discussions.

Boston Beer Co.: Light Beer Decision

Boston Beer Co.: Light Beer Decision

 

Introduction

Boston Beer Company (BBC) was founded by Jim Koch in 1984.  Koch’s vision for BBC was to lead the craft-brewed beer market by creating and offering a wide selection of high-quality, full-flavored beers.  Over the past twenty-five years, this vision has become a reality because of BBC’s strategic focus on high quality standards, contract brewing, sales and marketing, and product innovation.  BBC’s flagship product was the Samuel Adams Boston Lager, which amounted to 60% of the company’s production volume and the majority of its revenue.   In 1987, BBC introduced its second product, a light beer called Boston Lightship.  Although the sales of Boston Lightship reached 12,000 cases a month, it contributed minimal revenues to BBC.  Unfortunately, this tremendous growth did not last, despite a rising light beer market; by 1998, Boston Lightship was selling fewer than 3,000 cases a month.  In addition, growth rates in the craft segment had slowed from above 40% per year to single digit percentages for the first time ever.  BBC’s current strategy has proven ineffective in a market with shifting consumer demand and an increasing number of competitors.  In order to increase its market share and profitability, BBC must reposition Boston Lightship, cut back on beer varieties, and revamp its reputation among distributors.

 

Strategic Issue #1

The new global, social trend emphasizing physical health has shifted consumer demand from premium beer to light beer.  Boston Beer Company’s light beer, Boston Lightship, is poorly positioned within the light beer market, which is hurting sales.

“The technology for light beers had been around since the 1960s, but it was not until Miller took Miller Lite national in 1975 that a brewer had introduced a light beer with broad success in the marketplace” (7).  In the late 1970s and early 1980s, changes in consumer demand began to occur.  Consumers were looking for an alternative to premium beers; this alternative turned out to be light beer.  The light beer market was growing at a rate of 13% in 1980.  By 1997, the light beer market was growing at a whopping rate of 40%.  The following year, the light beer segment became the largest beer segment in the entire industry.  At the same time, growth in the craft-beer segment was slowing down.  Between 1996 and 1997, the craft beer segment grew only 0.1%.

The main cause of these rapid changes in beer preference seemed to be the result of a new world-wide, social trend that stressed the importance of staying healthy.  Another possible cause was the fact that light beer was beginning to be more commonly associated with having a good time.  Many people live active life styles, and want to drink beer for its refreshing qualities.  People also like the social aspect of drinking light beer; light beer has a lower alcohol content, which allows people to drink some and still remain in control.  The higher alcohol content and full-bodied flavor of craft and premium beers causes consumers to avoid it, choosing to drink light beer instead.

When Boston Lightship was first introduced in 1987, the light beer market was growing rapidly.  In order to gain exposure for Boston Lightship and promote the newly-added brand, Jim Koch, founder and Chief Executive Officer of Boston Beer Company, invited one hundred members of the media to join in a taste testing that included Heineken, Miller Lite, Amstel Light, Becks, and other successful brands from BBC’s main competitors.  The event was a tremendous success, with ninety people out of one hundred voting Boston Lightship as their favorite.  It was very clear to Jim Koch that he had the right recipe to compete against other companies that offered light beer.  Although Boston Lightship’s taste was voted the best, consumers continued to purchase other brands instead; in April of 1998, Boston Lightship was selling less than 3,000 cases per month.  These facts are evidence of a disconnect between Boston Lightship and the consumers of light beer.

Jim Koch believed that Boston Lightship was struggling because light beer drinkers were not willing to pay a craft-beer price for a light beer.  This statement has some merit because Boston Lightship is sold at a higher price than competing light beers, but price is not the key problem.  The marketing and promotion for Boston Lightship describes the beer as being thick and full-bodied; this is the exact opposite of what light beer consumers are looking for.  Also, Boston Lightship is not associated with the Sam Adams brand which potentially harms its appeal to consumers.  Someone who wants a high-quality light beer may not purchase Boston Lightship if he or she cannot affiliate the name with Samuel Adams, which is known for that high quality.  Countless potential sales are lost because there is no connection between the two brand names.  As history has proven, products without proper brand recognition do not succeed in the marketplace.  Overall, Boston Lightship is a great product; it just has poor brand awareness.

On all of the blind taste tests performed by the HBS students, the majority of woman preferred Boston Lightship over the competing light beers.  It should also be noted that Boston Lightship has only 98 calories, which seems to appeal to women more than men (as explained later).  Also, Boston Lightship was voted World Championship Reduced Calorie Lager at the World Beer Championships in 1994, 1995, 1996, and 1998.   This information reveals a pattern among the comments made about Boston Lightship.  Both men and woman say that Boston Lightship needs better brand recognition (Exhibit 7).

BAVC Recommendation

Recommendation

BAVC currently attains its competitive advantage through a niche, best cost provider strategy.

The company’s sole arena is the Bay Area, which it serves by providing access to video equipment and offering technical assistance with video production for non-commercial purposes.  This key arena has served the company well in the past because of its tight-knit community of independent media and artistic talent.  Over the years, BAVC has grown through internal development by expanding its services and adding new services.  We recommend that BAVC continues to execute its current strategy, with a few proposed changes.  Our recommendations will focus on the internal development of the human resources department and the MediaLink Progam, and foster overall company growth through external development.

Implementation

In brief, we have made three recommendations that we believe will support your company’s current strategy.  First, we recommend that your company expands into the Silicon Valley region.  Second, we recommend that your company institutes an evaluation process for all applicants seeking employment at BAVC, whether they are recruited or otherwise.  Third, we recommend that your company increases the web-design training in the MediaLink program.  The sections below outline the implementation of each recommendation and the reasoning behind them as well.

Continued growth for the company is crucial to guarantee that BAVC maintains its position at the forefront of the non-commercial media field.  For this reason, we recommend that BAVC expand into the Silicon Valley area.  BAVC must gradually begin to shift back to its’ 1992 state of having more earned income than support revenue.  It is extremely risky and detrimental to the company to have the majority of total income come from support revenue.  In order to reach this goal, we believe it would be beneficial for your company to expand the geographical reach of its services into the Los Angeles area.  Los Angeles has a much larger population than the Bay area with nearly ten million inhabitants.  This is a mostly untapped market where BAVC can offer its services, and have a much greater chance of being successful.  Over time, the expansion into Los Angeles will increase our earned income, which means there will be less dependence on support revenue.

In a perfect world, your company’s income would double immediately from the expansion into Los Angeles.  Realistically however, it could take up to five years before your company can generate the same level of revenues in this new location.  Although BAVC will offer the same amount of classes it has in the past, it will take time to build up a customer base and establish brand awareness in the new market.  What will double almost immediately however, are your company’s expenses.  Some of these expenses include: renting or buying a new building in Silicon Valley, utilities, new equipment, marketing and promotion, and the salaries of the new technicians and trainers that would need to be hired.  Although the expenses are high, Silicon Valley offers a lot of service potential because of its’ large and diverse population.  Along with increasing our earned income by offering classes and training, there also will be many new donors that can be sought out for support revenue.  When donors choose to financially support a certain service or program that BAVC provides, your company has an ethical responsibility to use those support funds only as the donor intended.  Another option that BAVC should consider is checking to see if it qualifies for any government funding.  The move to this new location requires a heavy financial investment early on, but it will pay for itself in the long run.

In order for your company to financially support our recommendations, we estimate that you will need to grow at a rate of $1.1 million annually; this number represents BAVC’s financial growth from 1999 to 2000.  Exhibit 1 in the appendix shows our five-year projected income statement for BAVC.  This increase of $1.1 million annually is essential to paying for the new Silicon Valley location and offering BAVC’s wide array of media services in that area.  Exhibit 2 in the appendix shows our proposed shift in income, which would allow BAVC to depend less on support revenue and more on earned income.  Realistically, BAVC could simultaneously shift its’ income dependence by five percent per year in favor of earned income.  For example, in 2001, BAVC’s total income will be roughly $4.6 million, assuming the company grows at the specified rate.  Instead of having sixty percent of the $4.6 million come from support revenue, only fifty-five percent will.  Your company’s overall revenue will continue to increase at a rate of $1.1 million per year.  The only change will be where the revenue comes from.  Relying more heavily on earned income is better for BAVC because of the variability of support revenue.

BAVC’s trouble with retaining employees is partly because of the low salary it offers and partly because of inefficient human resource management.  We believe BAVC is losing their employees to the private sector because they are hiring people whose number one concern is money.  When it comes to salary amounts, there is absolutely no way BAVC can compete with organizations in the private sector.  The solution is to hire people who have the same ideals, values, and ethics as BAVC in addition to the correct skills.  We recommend that BAVC’s human resources department institutes an evaluation process for all applicants seeking employment at BAVC, whether they are recruited or otherwise.  Candidates will be chosen based on both skill and how closely their values, ideals, and ethics align with the values, ideals, and ethics of BAVC.  The evaluation process could include pre-screening, followed by structured interviews and situational testing, both of which have high criterion validity.  The costs of initiating this recommendation include the costs of making the test and having managers prescreen and interview employees, and the time and effort it takes to grade and rank applicants.  In doing this, BAVC has a better chance of retaining quality employees because the people it hires will not only be qualified, but they will be more likely to fit in with the company’s culture and be satisfied with their jobs.

The decreasing placement rate of the MediaLink program is BAVC’s third largest problem.  In order to increase the placement rate of the MediaLink program, the program needs to be made more relevant.  After an analysis of the current market we have found that web-design is the most needed skill set currently in demand in the Bay Area market.  For this reason, we recommend that your company increases web-design training; internet training will remain the same.  This initiative would require BAVC to hire additional training personnel, which would result in an increase in salary expense depending on how many new employees were hired.  Also, there would be costs associated with offering more classes.  This initiative is socially responsible and has the potential to greatly benefit the MediaLink program.  If BAVC is able to provide more training in web-design as a part of its MediaLink program, its’ graduates will have obtained the newest and most relevant skills required to find a job in the changing economy.  Companies will then be more likely to hire from our pool of graduates because they will have the same skills as the laid-off talent, but will not have to be paid as much.  Potentially, BAVC could also see an increase in the overall enrollment number for the MediaLink program because of its high relevancy to what media companies are currently looking for regarding the skills of new employees.

Conclusion

In closing, we have recommended three changes for your company: (1) Move into Silicon Valley and open a new building, (2) Implement an evaluation process for all applicants based on both skill and how closely an applicant’s values and ethics align to those of BAVC, (3) Increase web-design training.  These recommendations have been tailored specifically to maintain your company’s current competitive advantage while ensuring that BAVC remains socially responsible.  The first recommendation will improve BAVC’s performance by generating a greater percentage of earned income which can then be reinvested back into the company.  The second recommendation will ensure that BAVC has a qualified staff of trainers and technicians that will stay with the company; this will save BAVC money because new employees will not need to be hired as often as they currently are.  The final recommendation will reenergize the MediaLink program by making it more relevant to the current job market; this will result in an increased job placement percentage of your graduates, and should encourage more students to join the program.  It is imperative that these changes be implemented now so that your company can begin building a more solid financial base for its’ future growth.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BAVC Strategic Issue 2 & 3

Bay Area Video Coalition Strategic Issue 2

BAVC is finding it hard to retain experienced technicians and trainers due to the low salary it offers in comparison to organizations in the private sector.

BAVC’s mission is to provide access to video equipment and offer technical assistance with video production for non-commercial purposes.  BAVC accomplishes this by training low income individuals in various high-tech job skills, and by teaching its customers how they can utilize different skills and technologies in their future careers.  BAVC’s status as a non-profit organization limits its ability to charge for services, which results in a limited amount of capital.  Consequently, BAVC is unable to provide its workers with salaries that are large enough to be competitive among for-profit organizations.  Another compounding factor is that much of BAVC’s working capital must be used to support its high-end services and invest in the new technologies that are needed for the organization to succeed and expand into the future.  BAVC’s first priority is keeping the organization afloat; competitive salaries are not a high priority.

BAVC’s inability to provide competitive salaries makes recruiting qualified technicians and trainers very difficult.  In addition, it is tough for BAVC to keep its current employees because at any moment, they can leave BAVC for a similar job at a for-profit organization, which has the ability to offer a higher salary.  This problem was caused in part by the Internet boom; BAVC is directly competing with many dot-coms for talent.  This is a huge disadvantage for BAVC because the company simply does not have enough capital to pay its workers such high salaries.  This means that BAVC must find another way to entice people to join the organization.

Because technological change occurs so rapidly, there is always demand for training in new media technologies.  Now more than ever, it is crucial to keep BAVC’s current employees and attract new qualified individuals to the organization.  Without having qualified technicians and trainers, BAVC cannot effectively provide its services and may hurt its reputation; BAVC’s strong, socially responsible reputation is one of the reasons that people choose it over the competition.  If BAVC is unable to find a way to improve its employee retention and attract new qualified applicants, the organization will not be able to continue providing its services in the non-profit sector.

Bay Area Video Coalition Strategic Issue 3

BAVC’s job placement for its MediaLink program has decreased substantially as of late because of the increase in laid-off talent in the Bay Area market.

MediaLink is a new workforce development program created by BAVC to train low-income individuals in new media technologies.  The program was backed financially by the city government.  The main goal of the program is to provide its students with marketable skills that are relevant to finding a job in the current market, where barriers to entry are high.  Specifically, MediaLink aims to serve students with existing proficiencies in computer and internet basics by offering more advanced skills, which are required for entry-level positions in the media field.  The program was an immediate success; sixty percent of the program’s first graduates were hired by media companies within three months of completing the program.  The following year, the placement rate of graduates increased to seventy percent.

The first problem with the MediaLink program arose between 1999 and 2000, when BAVC was unable to find enough qualified trainers in the labor market to continue expanding the program.  At its’ peak in 2000, the placement rate for graduates of the MediaLink program was ninety-five percent.  In early 2001, the market began to tighten, and many highly skilled workers were laid off.  This caused a flood of talent to saturate the Bay Area market.  This presented a problem for BAVC because the graduates of MediaLink had less training than many of the laid-off workers.  As a result, MediaLink’s job placement rate for graduates plummeted to sixty-eight percent.  The local press in the Bay Area publicized the drastic change in the placement rate and made a big deal of the challenges that BAVC would face in reenergizing the program.  The underlying issue is that people will not join the MediaLink program unless they believe it will help them get a job after graduation.  If this problem is not remedied soon, BAVC could see a substantial drop in program enrollment.