Resistance To Organizational Changes

With Starbucks’ popularity, people didn’t blink an eye about paying $5.00 for a cup of
coffee. Starbucks had an average of 35 million customers visiting the store every week
and had loyal patrons who return to the store 18 times a month (Michelli, 2007).
However, with the downturn of the economy and the increased competition of Dunkin
Doughnuts and McDonalds, the flow of traffic decreased in most of the Starbucks stores.
Howard Schultz, the CEO of Starbucks, had every business unit in the company reviewed
and analyzed (Starbucks Makes Organizational Changes To Enhance Customer
Experience, 2008). After the major assessment, Schultz introduced a Transformation
Agenda to make organizational changes to return to the “core of things” and enhance
customer experience (Starbucks Makes Organizational Changes To Enhance Customer
Experience, 2008). Schultz realigned the U.S. field operations from two divisions to 4
divisions and consolidated functional activities into teams (Starbucks Makes
Organizational Changes To Enhance Customer Experience, 2008). As a result of these
organizational changes, some employees adapted to new roles and positions and other
employees were laid off.

Although Schultz developed a new plan to re-connect emotional attachment to

customers, employees resisted some of change made to re-structure the company. For
instance, some employees posted complaints, complained to their colleagues and
expressed disappointed comments in the meetings. However, embracing resistance is part
of Starbucks’ “being extraordinary” principles (Michelli, 2007). Starbucks’ top business
leaders and managers follow the model of not being insulted by a compliant but to listen
and learn from them (Michelli, 2007). Starbucks’ leaders created a standing committee of
senior officers to track emerging and seen problems, find possible solutions and take
appropriate action (Michelli, 2007). The “embracing resistance mindset” is used to satisfy
and improve customer service (Michelli, 2007). These skills are transferred and emulated
by the lower-level employees. Learning to embrace resistance and anxiety made adapting
to new changes in the organization easier.

In phase 1, Starbucks’ embracing resistance principle was the beginning step

towards reducing resistance to the organizational changes. In phase 2, Schultz sent out a
series of emails to every employee explaining the purpose of the changes and exactly
what changes were going to be made. For example, here’s an excerpt from Schultz’s
email:
Since I returned as CEO six weeks ago, we have experienced a lot of change in a very short period…with our renewed
focus on the customer experience and the return to our core--all things coffee…. Together, we have created a blueprint
to transform the company, and I sincerely appreciate all that you have done and will continue to do every day on behalf
of Starbucks. I pledged to communicate with you about our efforts to improve the current state of our U.S. Business,
reignite the emotional attachment with our customers and make foundational changes to our business….the U.S. field
organization will begin transitioning from two divisions to four, with full implementation completed by March 24. The
new divisions are: Western/Pacific, Northwest/Mountain, Southeast/Plains and Northeast/Atlantic…. Each division will
be led by a senior vice president, reporting directly to the U.S. president. Within each division, partners supporting
Store Development, Marketing, Partner Resources and Finance will report directly to their respective functions while
still being accountable for results at the divisional level. These teams are being centralized to create an infrastructure
with global span, capability and effectiveness….The reorganizations of Starbucks support functions are designed to
consolidate functional activities into teams that have a shared vision and goals to support the business (Starbucks
Makes Organizational Changes To Enhance Customer Experience, 2008).
Schultz educated and clearly communicated to his employees about the re-structure of the
company. Providing information about organizational changes kept employees informed.
During the 3rd phase, Starbucks’ leaders articulated the “back to basics” vision of the
company. Schultz completely informed employees about the discontinued items and
services and put everyone on track on the “core meaning of the business”-----all things
coffee (Starbucks Makes Organizational Changes To Enhance Customer Experience,
2008). In the 4th phrase, Employees were aware of the three key strategies around the
transformation 1) strengthening our core business--our coffee and our partners 2)
elevating the customer experience 3) making decisions and investments to benefit the
long-term growth of the business (Starbucks Continues to Implement Transformation
Plan, Announces Organizational Changes to Support Long-term Growth, 2008).
Starbucks provided support for those affected most by the changes. Starbucks closed
7,100 stores nationwide for 3 hours to provide an extensive training to re-educate and
energize over 100,000 employees (Starbucks To Close All U.S. Stores For Training,
2008). Finally, in the 5th phrase, employees were encourage to participate in the change
program of enhancing the “Starbucks Experience” by using their talents and creating their
own style to connect with customers.
References

Michelli, J. (2007). The Starbucks Experience: 5 Principle For Turning Ordinary Into
Extraordinary. New York, NY: McGraw-Hill.

Anonymous (2008). Starbucks Makes Organizational Changes To Enhance Customers

Experience. Retrieved September 27, 2009, from
http://www.starbucks.com/aboutus/pressdesc.asp?id=831

Anonymous (2008). Starbucks Continues to Implement Transformation Plan, Announces

Organizational Changes to Support Long-term Growth. Retrieved September 27, 2009,
from http://www.pr-inside.com/starbucks-continues-to-implement-transformation-
r728512.htm

Anonymous (2008). Starbucks To Close All U.S. Stores For Training. Retrieved
September 27, 2009, from http://www.msnbc.msn.com/id/23351151/