leading change case study group project · web view... so she avoided a phenomenon called “change...

CHARLOTTE BEERS: OGILVY & MATHER WORLDWIDE1

Charlotte Beers: Ogilvy & Mather Worldwide

Gregory Hayes

Katie Ferrari

MSL 640 Leading Change

Date Submitted


Charlotte Beers: Ogilvy & Mather Worldwide

Basic Facts of the Case

Ogilvy & Mather (O&M) Worldwide began in 1948 when founder David Ogilvy invested

his entire life savings to start an advertising agency. He built it from scratch and had several

initial ad campaigns that are still famous to this day that made his agency an almost overnight

success. Quickly Ogilvy saw success and was able to merge and expand oversees to become a

global advertising giant. Ogilvy was known for his quirkiness, creativity, and his presence.

When he retired in 1975 replacing him with the right leader proved to be a challenge. In 1989,

WPP Group Plc acquired O&M in somewhat of a “hostile” takeover for a hefty sum of money.

Soon after the takeover, then CEO Ken Roman resigned stating “we were a proud company with

a constant stock market growth, the masters of our destiny. Suddenly, we were raided” (Ibarra,

2011, pg. 4).

Next in line to lead O&M was Graham Phillips, a veteran of the company, but one was

not described as a motivational type of leader. His time as CEO proved to be challenging with

changing client needs and expectations as well as it becoming a very political type of work

environment. During these challenging times, O&M was slow to make changes that clients were

demanding and started losing major accounts, including the ones that had been their long running

relationships like Unilever and Shell. Despite the loss of these critical clients, O&M still wasn’t

reacting to the changing demands from their clients and the staff started losing confidence as fast

as the company was losing revenue. “Despite declines in revenue, the agency found itself unable

to adapt to clients’ changing demands. Budgets were not reduced at local offices, even as large


clients pushed Ogilvy to streamline and centralize their accounts” (Ibarra, 2011, pg. 4). The

biggest blow was when American Express pulled their $60 million dollar account, a relationship

that had been around almost since the beginning of O&M. Graham Phillips stepped down, and

Charlotte Beers enters the picture.

Challenges Faced

Beers faced many problems similar to incoming CEOs. A major hurdle was that Ogilvy

was a living legend and the next four successors did not come with his charismatic presence or

his skills (Ibarra, 2011, pg. 2). He launched many successful advertising campaigns, including

American Express’s iconic “don’t leave home without it” slogan, which made losing their

business reverberate through the company on many more levels than just financially (Ibarra,

2011, pg. 2-4). It’s possible that many employees thought that David Ogilvy simply could not be

replaced.

Another challenge that she, and the company, faced was that the world was going global

and the firm was falling behind. Rather than be an asset, it seemed that people at the firm tended

to rest upon past successes, in what Paxton would call a kind of “cultural complacency” whereby

few people besides a handful of leaders see any need to change (2009). One executive put it this

way: “Everything was going well. All we had to do was wake up in the morning and we were

plus 15%. So why did we need to change?”

A third challenge was that the firm was entrenched in the old way of transacting business

and had become “a high-cost operation in a low-cost world” with little structure or discipline

when it came to financial decisions (Ibarra, 2011, pg. 4). Eliminating wasteful spending in a

large corporation such as O&M was going to be difficult.


Lastly, she faced the problem of not only being an outsider, but the first outsider ever to

lead O&M. One O&M veteran went so far as to say “This is an organization that rejects

outsiders” (Ibarra, 2011, pg. 5). There is a long-standing theory that it is better to hire from

within. Adams cites Wharton Management professor Matthew Bidwell who concurred in his

work, noting that external hires earn about 20% more than internal promotions, but have a longer

learning curve and a higher tendency to move on in the first two years, with 61% of them being

fired (2012).

Opportunities/Suggestions/Tactics

Moving forward, Beers quickly recognized the need for change in several areas. To that

end, she embraced Kotter’s strategy of creating a sense of urgency (2012). She quickly identified

the group of people who would help inspire change throughout the organization. She described

this collection of top executives, creative people, and account directors as her “thirsty for

change” people (Ibarra, 2001, pg. 7). The team met throughout the summer and created a

conceptual framework that contained 22 distinct change initiatives. While most of the initiatives

were probably important in their own regard, and those who advocated for some initiatives must

have thought they were critical, Beers wisely recognized that no one, not a person nor a

company, can focus on 22 things at once (Ibarra, 2011, p8-9). She boiled them down into three

items, and by doing so she avoided a phenomenon called “change saturation” whereby

employees can lose focus and can even result in minor outbursts of frustration (Cole, 2013). She

issued the three strategies for change with an urgent message: “I think we have hit rock bottom

and are poised for recovery. Poised but not assured.” (Ibarra, 2011, pg. 9). That must have had an

impact on the most entrenched resistors to change. The strategy was dubbed the Chewton Glen


Declaration, named after the resort where the “thirsties” had last met, and consisted of three

things: Client Security, Better Work, and Financial Discipline.

According to Kotter “vision plays a key role in producing useful change by helping to

direct, align, and inspire actions on the part of large numbers of people” (Kotter, 2012, pg. 8).

Beers need to take the essence of Brand Stewardship and use her guiding coalition to develop a

clear vision. “In order to create a clear and compelling vision, you need to be able to then

answer these questions: If we were more deeply fulfilling our mission, what would our business

look and feel like? What would it be like to be a part of our team? What will we be providing to

our key stakeholders” (Anderson, 2012, pg. 1). At O&M some leaders wanted to have a very

large group to help create the vision, and they prevailed. The entire O&M board of directors

plus eight other local presidents attended the meeting to create the new vision for O&M. The

meeting in Westchester, NY started out rather unproductive. Everyone was getting frustrated

and it seemed like they might never develop a vision.

Beers needed to act quickly before the entire meeting was a waste of time. Attendees

were split up into four groups, each group with a specific assignment. Beers’ group was tasked

with the actual wording of the vision. The second group was to make a statement of values and

integrate them in with O&M’s principals as part of the new vision. The third group was focused

on the communication strategy to share the new vision with all of O&M and the clients. The

final group was tasked to think through possible structural changes including title changes and

any other barriers. After much debate and thoughts of failure they finally came together and

created the new vision for O&M. The vision was “to be the agency most valued by those who

most value brands” (Ibarra, 2011, pg. 11). They further said “what’s new is a restructuring of

resources, an arsenal of modern techniques, and an intensity of focus that add up to a major


advance in the way we do business. We call in Brand Stewardship- the art of creating, building,

and emerging profitable brands” (Ibarra, 2011, pg. 18).

Equally as important as creating the right vision for O&M would be conquering the

challenge of communicating that vision clearly across a global and diverse enterprise that

spanned many countries. Although senior leadership and the client’s initial reactions to the new

vision and the concept of Brand Stewardship were enthusiastic, communicating that vision to the

rest of the company would prove to be a challenge for Beers. Even the best created visions can

fail to create and guide change if they are not communicated clearly and at all levels.

“But even an incredibly compelling vision won’t do much good if it remains only

in your head. You still need to communicate effectively–and that means being your

organization’s chief listening officer. When key information needs to be shared, some

leaders will simply send out a memo or give a speech and check communication off their

list” (Ryan, 2009, pg. 1).

Then when the new vision fails and change doesn’t occur they will be bewildered as to why

nothing happened. Beers knew that the vision had to be communicated to her entire organization

and that it would take some time and some finesse to get all parties on board. Initially there was

confusion on all levels really, on the new vision, what brand stewardship meant, and what

exactly that meant when providing a service or product to their clients. The creative teams put

up the most resistance to the new vision, thinking that it hampered their creativity and took away

their freedom. I think that Beers’ method of communication could have been greatly improved

at this stage of the process. The team just wasn’t understanding and there seemed to be a period

of confusion again after the initial vision was created. Local branches and centers were doing


business differently and they were not synching up. Communication about the vision should

have been more clear and concise, it should have come from Beers and her traveling around to

the major centers, and it should have happened much quicker than it did. “Vision is usually

communicated most effectively when many different vehicles are used: large group meetings,

memos, newspapers, posters informal one-on-one talks” (Kotter, 2012, pg. 95). There were two-

hundred and seventy-two leaders running things their way, and certainly not on the same page.

Now that Beers had begun communicating her vision for change it was time to empower

her employees to be the vehicle for that change. According to Kotter, two of the things most

important in empowering subordinates are removing structural barriers and dealing with

troublesome supervisors. She called a meeting of eight local presidents and the entire worldwide

board of directors in Westchester, NY at the Doral Arrowwood conference center. At the three-

day conference in Westchester, when people were getting frustrated, Beers issued a personal

challenge to each of the attendees: “In any change effort, one-third are supporters, one-third are

resisters, and one-third are apathetic. I’m in the first group. Where are you?” (Ibarra, 2011, pg.

11). The challenge must have served as a wake-up call for some of those troublesome

supervisors Kotter warned about. After all, among the conference attendees were some of the

highest levels of O&M leadership, some serving for many years. If any of those attendees could

look Beers in the eye and say, “I’m a resister to change,” or even express empathy, what Beers

was really implying with her challenge is, “Be in the second or even the third group and ask

yourself why you are even here.” It was clear that she was moving forward with change with or

without the ones who were not fully onboard. Her challenge achieved the consensus she needed

to achieve empowerment. Beers split the attendees into four groups and rather than serve as the

supervisor or overseer, she placed herself in one of the groups, showing that she was willing to


work just as hard as anyone else in crafting the change she so desired. This was a big step in

empowering her executives. It must have done quite a bit to blur the line between leader and

follower. Beers was engaging in the positive type of behavior that Hendricks would call

“Cultivating the Executive Mentality” in that she was putting herself in their shoes and putting

them in hers (2014). She showed that everyone’s input was as valuable as hers. It was a good

step and one that would be needed in the future if O&M was to successfully change. What Beers

needed was some early victories to prove to everyone that her initiatives were worthwhile.

The next course of action for Beers to take on would be to generate some short term wins

and share them with the company, investors and clients. “Running a transformation effort

without serious attention to short-term wins is extremely risky. Major change takes time,

sometimes lots of time” and nonbelievers “have higher standards of proof” to show that progress

is being made (Kotter, 2012, pg. 123). Beers should shout out short term wins via intra-company

communication, press releases, financial reports, and at all staff meetings. This would help to

instill confidence in her team and show that the new vision and Brand Stewardship was working.

Showing her team that new clients were coming on board, profits were being made, and that the

once coveted reputation was slowly but surely being restored to O&M would go a long way with

her team and their buy in to her vision and strategy.

“Change takes work, plain and simple. As employees begin to behave in ways

that drive change forward, their efforts must be publicized, promoted and praised. Only

then will others see the positive impact a change effort is having on an organization, and

only then will they begin to change their own behaviors to help move that effort ahead.

The importance of celebrating short-term wins cannot be understated” (Evans, 2009, pg.

1).


Beers should take every opportunity to praise branches, leaders, executives and staff that

embody the new vision and shout out their successes that are a result of following the new vision

and strategy. The team needs to hear that the vision and strategy are working; this will help the

nonbelievers convert to believers. The role of these short term wins according to Kotter should

be to provide evidence that the sacrifices that have been made are worth it, they should serve to

reward and recognize the change agents for their efforts, they should “help fine tune vision and

strategies”, they should undermine nonbelievers and resisters, they should keep leaders on board,

and they should help to build momentum (Kotter, 2012, pg. 127). This needs to happen quickly

for Beers in order to keep this change imitative moving and to not lose momentum that took so

long to muster in her first year as CEO.

Perhaps one of the most difficult steps Beers faced was how to both consolidate the

recent gains and propel O&M into more change production. In describing this crucial and

second-to-last step, Kotter explains that patting each other on the back, celebrating, and relaxing

after a series of successful change initiatives and short-term gains can be lethal to the process

(2011). With celebrations comes a loss of urgency, without which will land a corporation in

exactly the same place they started. It is exactly in this period of initial success that a good leader

must be the instrument to sustain the change and solidify the gains. While it was good for all

involved to celebrate the deal with Jaguar and reuniting with American Express, both of which

were victories beyond the financial aspect, there is always a period where success could lead to

complacency. In order to keep the momentum and combat complacency Beers needed to

generate more change, not less. Lussier and Achua would call this the difference between a

manager and a leader, in that managers focus on getting the job done where leaders focus on

innovation and change (2011). It is an important distinction that innovation and change are


separate items. It is the distinction between what could be a temporary change initiate and actual

transformation. In fact, the leadership process itself could be innovative, and a transformational

leader produces innovative followers (Hacker and Johnson, 2013). The conflict that arose with

“highly individual personalities” running the 272 worldwide offices was predictable. One thing

Beers hit upon when pressed with the need for organizational change was that she wanted to

make Oglivy “redder”, banking on the company’s trademark color meaning that emotion, rather

than structure, was the way to keep the high pace of change (Ibarry, 2011, pg. 14). In this vein,

she was leading toward the goal of anchoring the changes in the culture. However, it appeared

that Charlotte was shouldering most of the burden and was making most of the key decisions

herself. What she could have done is made it a more collaborative effort and empowered those

individuals with authority over local decisions, while at the same time cultivating a culture in

which leaders could disagree without discomfort or fear. Beers fought to change the “politeness”

of those who would disagree in order to consolidate gains and keep the momentum of changes

(Ibarry, 2011, pg. 15). Kotter put it best:

“Change leadership is much more associated with putting an engine on the whole change

process, and making it go faster, smarter, more efficiently. It’s more associated, therefore, with

large scale changes. Change management tends to be more associated—at least, when it works

well—with smaller changes.” (2011)

In that manner she was poised to tackle the most challenging step of anchoring the change into

the culture.

The last step for Beers is the most challenging, anchoring her new approaches and vision

into the culture. Every organization has a culture specific to it that has been created and


followed sometimes unconsciously over time. In a change initiative cultural changes can prove

to be the most challenging of all. Cultural change is not fast and a unique strategy for each

organization must be used. In the case of O&M, Beers should first recognize that she “won’t be

able to convert everyone at once” and that she should “start with people who have

disproportionate influence in the organization. Get them committed to the change, or, failing

that, get them out. And once they are committed to change, shine a spotlight on their

accomplishments, so others get the message” (Three Rivers Press, 2009, pg. 1). Beers should

select the most influential leaders at many levels of the organization and use her influence to get

them committed to the cultural changes required to make her change initiative successful. If they

can’t be influenced or refuse to change or help the change than they should be replaced. There

will be people in organizations during a change initiative that will inevitably not change, they

can’t be bypassed and need to be replaced. Some key facts about anchoring change in a culture

are that it comes last not first and will come at the end of the transformational process. The

cultural change will depend on results and won’t kick in until it’s evident that new approaches

are working. Beers will be required to talk a lot, and to influence the chosen leaders to do the

same and she must be prepared to use turnover as the only way to change the culture by changing

key people. Lastly anchoring the change will require decisions on succession to be crucial,

promotions and new hires must be compatible with the new culture and vision or the culture will

revert back to the old ways as soon as any type of trouble or turnover at higher levels occurs

(Kotter, 2012, pg. 166). Beers must spend a substantial amount of time and effort on this step of

the change management process in order to ensure her success. If she underestimates the power

that culture has on the change process then she will surely meet opposition and the possibility of

failure.


References

Adams, S. (2012, April 4). Why Promoting From Within Usually Beats Hiring From Outside. Forbes, Inc.

Anderson, E. (2012). Business Plan or Vision? - You Need Both. Forbes Magazine. Retrieved from http://www.forbes.com/sites/erikaandersen/2012/08/01/business-plan-or-vision-you-need-both.

Cole, J. (2013, May 15). Is your company experiencing "change overload"? Three dials you need to know. Process Excellence Network, Retrieved from http://www.processexcellencenetwork.com/innovation/columns/three-magic-dials/

Doll, Y., & Miller, B. US Army, Combined General Staff College. (2007). Leading and making a transformational change. Retrieved from Combined Arms Center website: http://usacac.leavenworth.army.mil/cac2/cgsc/repository/dcl_LeadingMakingTransChange.pdf

Evans, M. (2009). Celebrating Short-Term Wins. Kotter International. Retrieved from http://www.forbes.com/sites/johnkotter/2011/10/25/celebrating-short-term-wins/.

Hackman, Michael Z. and Johnson, Craig E. (2013, April 8) Leadership: A communication perspective. Waveland Press Inc, Publishers

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Kotter, J. (2012). Leading Change (2nd Edition). Boston, Massachusetts. Harvard Business Review.

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http://www.forbes.com/2009/04/29/vision-communication-judgment-leadership-managing-ccl.html

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http://www.ftpress.com/articles/article.aspx?p=1327759

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http://www.forbes.com/sites/johnkotter/2011/07/12/change-management-vs-change-leadership-whats-the-difference/

http://www.forbes.com/sites/johnkotter/2011/10/25/celebrating-short-term-wins/

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