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Best Practice Guidebook
Solution Components
Applicability to
Executive Functions
Prepare Identify and
Engage Nominate Change Communicate the
Management Overcome
Stakeholders Champions Change
for Change Roadblocks
R&D/
Innovation
Corporate
Corporate Sales
Strategy Leadership
Strategy
Marketing
CEO Corporate
Development
Walgreens Key Lessons Learned
Investors/ Market Prioritize actions based on what the organization needs todeliver.
Finance Research
READ MORE
Note: Change Management refers to the application of processes, tools, and techniques for managing the
people-side of initiatives to generate organizational buy-in and attain the initiatives objectives.
The contents of these pages are copyright Frost & Sullivan. All rights reserved.
growth team m e m b e r s h i p best practice guidebook
2
Contents
Nominate Change
Champions . . . . . . . . . . 6
Prepare Management
for Change . . . . . . . . . . 8
Business Results Resources Required
Supporting Tools
& Resources . . . . . . . . .15
Five Key Objectives
Outlined . . . . . . . . . 15
Key Behaviors Defined . . 16
Store Walk Report
Illustrative Example . . . 17 Contact the Growth Team Membership (GTM)
Target Behaviors by
Adoption Stage . . . . . . 18
GTMresearch@frost.com www.gtm.frost.com twitter.com/Frost_GTM
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
3
Walgreens builds several change management practices into its strategy implementation and monitoring processes
Applying Change Management to Strategy Implementation
Final Two Stages in the Strategic Planning Cycle
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
4
Walgreens New Strategic Direction
The Change Imperative
Walgreens Pharmacy B
Past Present
Walgreens capabilities did not To deliver its new value
In the past, Walgreens success was attributed to its expanding retail provide a differentiated value proposition, Walgreens needs to
footprint. In 2007, Walgreens considered a shift in strategy based on proposition: change its:
changes to the competitive landscape, innovations in retail pharmacy, and Real estate focus (construction Norms and behaviors of
increasing homogenization of retailchains. and analytics) leadership
Commandand-control culture Organization model
New Strategy
In 2008, Walgreens initiated a new corporate strategy to deliver its new vision of the company.
Vision: To be the first choice in health and daily living for everyone in Americaand beyond.
The new strategy employs a balanced leadership The transformation requires organizational and To measure progress against the five key
model that focuses on four areas. Two areas, cultural shifts at every level of field operations. objectives, Walgreens tracks three key
operational/business leadership and people The front-line transformation focuses on five key behaviors:
leadership, are priorities of the front-line objectives to deliver on the Walgreens vision.
transformation.
Balanced Leadership Model Front-Line Transformation Key Objectives Key Behaviors
Talent &
St es er s
sh r
er me
Leadership Roles
r a ul hi
ip
Planning
R d
Le
te t s p
ad to
Models
gi
a
Le us
c
C
Decision Structure
Rights
er es al
a d s in ion
Performance
Pe de
Le
sh s
Engagement
L e u r at
ip
op r sh
Management
a
Metrics &
pe
le ip
Incentives
O
B
Note: See the Tools & Resources section for additional information on the five key objectives and key behaviors.
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
5
Engage Stakeholders
key takeaway: Tailor engagement tactics to match the purpose and target audience
Walgreens uses a series of engagement tactics (tailored to the target audience)
to inform the implementation plan and engender a sense of inclusion throughout the company
Corporate and Regional Management and Front-line Employee Engagement Tactics
Executive team and senior management Market Vice Presidents (MVPs) and regional Store managers and employees
Audience (e.g., Vice Presidents, Senior Vice heads of stakeholder functions (e.g., Finance,
Presidents) for stakeholder functions Legal, and HR)
Generate buy-in on the plan and gain Collaborate with the managers responsible Create a sense of inclusion among the
Purpose approval for resources needed for the for adopting and implementing the new frontline employees and collect information
implementation processes and behaviors on current processes and roles
Head of the implementation team Hold focus groups to collect Administer a series of surveys
conducts ongoing weekly with feedback on the strategys tactics to gather feedback on the
the target audience to discuss and workshops to co-develop new effectiveness of current processes
Tactic the strategy and implementation tools and processes (e.g., workshop and roles (e.g., assistant manager
plan and provide updates on the with the MVPs to develop the role survey)
implementationsprogress Behavior AdoptionMap)
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p
Nominate Change
best practice guidebook
6
Champions
t
ng
Le
C ha
Empathy and trust-building Head of the Provide two-way change
ad
Needs assessments District communications with
Communications Implementation
Manager employees
Company culture acumen Team
Project management
Two-way communication
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p
Nominate Change
best practice guidebook
7
Champions
key takeaway: Nominate front-line champions to drive change from the bottom up
Walgreens creates a temporary positionDistrict Manager Change and adjusts the responsibilities of its Community Leaders
Agentto provide support and conduct training on the change to serve as role models for the operational changes
Champions for Change
The front-line imperative: The success of Walgreens, field transformation depends upon front-line employees (district and store managers) embracing the
new responsibilities and behaviors. Walgreens drives change from the bottom up by designating Community Leaders and District Manager Change Agents.
criteria for district manager change agent and community leader selection
District Manager Change Agents are appointed by their Market Vice The Community Leader position is also a development program for
President based on their: potential District Managers. Community Leaders are chosen based on
Influenceindividuals who have strong networks, can communicate their:
messages effectively, and have the trust necessary to get honest feedback Past performance
Potential Impactsometimes the most vocal naysayers are chosen, Execution skills
because by winning them over management can garner buy-in withothers Key leadership behaviors
Coaching and mentoring skills
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p
Prepare Management
best practice guidebook
8
for Change
key takeaway: Instill management with an in-depth understanding of the change journey
The regional HR and implementation teams conduct training sessions for all managers on the change journey
The Change Journey
The Five Stages of Adoption The Emotional Journey
These stages allow management Commitment This journey is the sequence of emotions
Awareness
to benchmark employees that occur in tandem with the adoption
progress through change using Commitment stages. Employees experiencing negative
target behaviors for each stage. Denial emotionsshock, denial and anger
For example, at the Awareness tend to display resistant behaviors. These
Performance
stage, employees should be able Adoption behaviors include, but are not limitedto:
to describe the transformation Morale/ Anger
Shock Spreading negative messages
in their own words.
Acceptance Acceptance Taking on new responsibilities but not
relinquishing old ones
As employees go through the change journey, Understanding
Agreeing to new responsibilities but
their performance steeply declines through
Recognition not following through
the first three stages because of the emotional
impacts of change. It is managements job to Creating their own interpretations of
help employees move through these first three Time the change
stages as quickly as possible.
and provide guidance on how to support employees through their emotional journey
Recognizing and Addressing Emotions Influencing Behaviors
Stage of Emotional
Employee Feelings Tactics for Addressing the Emotions
Journey
Employee Feelings Emotion-influenced tactics
pinpoint the problem Confusion Provide additional information about the change help management deliver
underlying the Shock the right information and
employees experience Isolation Find someone they can confide in support at the right times
within each stage of the to help team members
emotional journey. transition through each
Business as usual Provide support on expectations for operating differently stage.
Denial
Been there done that Provide information on how this change is different
Note: See the Tools & Resources section for additional information on the target behaviors by adoption stage.
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p
Prepare Management
best practice guidebook
9
for Change
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p
Identify and Overcome
best practice guidebook
11
Roadblocks
key takeaway: Collaborate with front-line managers to build a tool that monitors changes that matter
The strategy implementation team collaborates with the Market Vice Presidents (MVPs) to create a
toolBehavior Adoption Mapsto track the adoption of the behaviors, roles, and responsibilities of the new strategy
Behavior Adoption Maps (BAM) Development
Create BAMs
The strategy implementation team conducts a workshop with MVPs to: The strategy implementation team
Develop seven BAMs, one for each field management role (store includes the MVPs in this process to
managers to MVPs). Each BAM measures 5 key behaviors (including the ensure the actions and measurements
three key behaviors and role-specific behaviors) across multipleactions. are feasible and earn the MVPs
buyin on the process.
Determine the appropriate actions (rolled out in stages) to implement
each behavior and set the thresholds to measure progress.
How the BAM Assesses Progress of Key Behaviors How the BAM Calculates Progress
The strategy implementation team calculates each managers performance quarterly by: The strategy implementation team then
1. Comparing each managers performance via the behaviors compares the point value of the behaviors
against progress threshold values to determine
2. Assigning a point value to each action based on a progress threshold the progress ranking. This ranking is then
3. Adjusting each score using a weight system that indicates the prioritization of specific actions entered into the Behavior Assessment Map
Dashboard (discussed on page 12).
4. Aggregating the point value of each action into an overall value for each behavior
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p
Identify and Overcome
best practice guidebook
12
Roadblocks
Not begun In progress Complete Meeting expectations Not meeting expectations Positive No change Negative
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
13
Business Results
Walgreens ability to identify and remove customer satisfaction
low performers has increased six-fold scores have steadily increased
Low Performer Turnover Rate Customer Satisfaction
20092013 YTD (year to date), Indexed 20112013 YTD
6x
80%
68%
61% 64%
40%
0%
2009 2013 2011 2012 2013
Year Year
80%
58%
Engagement 38%
40%
0%
2011 2013
Year
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
14
Key Lessons Learned
Profiled Company Perspective
Work backwards from the goal: prioritize actions and base the implementation
plan on what the organization needs to deliver.
Do not underestimate the time a change management exercise takes, and what
that time investment means for implementation as a whole. Overestimate the time
and communications requirements at the outset.
Understand that some people will not be able to change, no matter how hard you
work to bring them along. That does not mean you should automatically assume
certain people will not change, but you should go into the process giving everyone
an equal chance, and do not take it personally when some people cannot change.
Do not assume that everyone will understand the purpose and challenges of the
initiative as well as you do. This requires you to communicate and work with
peers across the organization to resolve issues.
Be mindful of the effort needed to embed changes within the executive team.
Senior executives tend to be resistant to new behaviors, because they have
been rewarded for years based on legacy behaviors. Overcoming this resistance
requires many conversations in the corporate officeparticularly on driving
alignment on which activities would be managed locally or by corporateand
support by the CEO.
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
15
Supporting Tools & Resources
Five Key Objectives Outlined
Metrics &
Incentives
Decision Rights Structure
Move Operational Decisionspricing, Decentralize Key Roles
merchandising, marketing standards (with Support Functionswhen support functions
about 5-6 subject to customization), and HR (HR, Finance, Merchandising, and Market
Metrics & Incentives
move to the corporate center. Previously, Planning) were centralized within
these were the responsibility of the District Diversify Performance Metricsperformance
corporate, the one-size-fits-all approach
Managers and Store Managers, but they and bonuses are assessed on three key
did not support variations in customer/
occupied about 15 hours of their time every metrics (financial results, team engagement,
community needs and state-by-state
week, which detracted from the time spent on and customer service) that reflect the new
insurance regulations
their new responsibilities norms/behaviors expected of leadership. A
small percentage is also based on community Market Vice Presidentrelocating the
Shift Field Decisionslocal branding, Market VPs to their respective regions
engagement activities
consumables, seasonal items, community improves decision making, enhances
engagement, etc. are moved from corporate to understanding of their regions/markets,
local management and provides a source of insight on the
customer experience for corporate.
Region-specific P&Lscreates accountability on
the health of each regions business
GO BACK
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
16
Supporting Tools & Resources
Key Behaviors Defined
Planning
Manage by exception; lead for
performance (store walks and
community level execution)
GO BACK
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
17
Supporting Tools & Resources
Store Walk ReportIllustrative Example
Section Three:
Section One: Section Two: Section Four:
Store Operations and
Operating Statements Key Behavior Adoption Overall Notes
Management
GO BACK
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.
growth team m e m b e r s h i p best practice guidebook
18
Supporting Tools & Resources
Target Behaviors by Adoption Stage
Present evidence the change has been I agree the change fits within our strategy
Adoption well vetted and will positively affect the and will integrate changes through
company execution to make this business as usual
GO BACK
The contents of these pages are copyright Frost & Sullivan. All rights reserved. Source: Walgreens; Growth Team Membership research.