Organizational change is inevitable in the current volatile political and global economic environments as organisations try to face decline or adapt. These environments are characterised by a number of potent forces including competition, professionalisms, technological innovations, and demographics that shape process through which an organisation adapts to changes. Due to this, an organisation might choose to modify its goals, adopt new forms, shift focus, and restructure roles. All these adaptive efforts aim at redesigning an organisation. According to the managerial wisdom and organisation theory committee, an organisation can survive if only it is compatible with the surrounding environment including all external economic, social and political conditions. The environment influences the actions, survival and nature of an organisation. In this article, I will discuss some of the companies that have undergone a shift in organisation or culture as a result of innovations.
According to research, around 88% of the Fortune 500 companies that were in existence in 1995 are gone (Helleloid, Nam, Schultz, & Vitton, 2015). Some have either merged, gone bankrupt, or still exist but are no longer at the top Fortune 500 firms. Most have been forgotten and cannot be recognised today. The companies' life expectancy is shrinking and organisations need to be more careful than ever. There is the need to remain innovative and future-proof their businesses. So many companies have been left out by technological advancement which has contributed to their decline. Most refused to change their entire organisational cultures and business models so as to fit into the new emerging business environment. Some of the famous companies that have undergone this shift includes; BlockBuster that used to deal with movies was unable to transition towards a digital model and was declared bankrupt in 2010. Toys R US, Compaq, Kodak, and General Motors failed to innovate and blatantly ignored competition leading to its fall. The list is endless but in this article will put more focus on Delta Airlines Company, a major United States airlines and a legacy carrier.
The unconventional move by the Delta airlines including profit-sharing plans for her employees and purchasing an oil refinery greatly contributed in regaining its lost position as an industry leader in the U.S. Among the issues that contributed to this loss included her destructive decision making, short-term thinking and poor working relations with her employees. However, the company came to realise the risks associated with the traditional airline business model. In 2007, the company managed to emerge from her bankrupt status and become more receptive to the changes (Helleloid, et al, 2015). Even though the Delta had the right people, culture and values, there was the need to have the right organisational strategy in place. The company also needed to accept the competition and then adjust with new emerging market trends. The company realised that expanding their geographical reach required some partnership not only with U.S carriers but also with foreign carriers. Fleet and airport operations required to be reorganised and adapting new pricing models. In 2008 Delta successfully merged with NorthWest Airlines extending the employee stock ownership plan (Helleloid, et al, 2015). However, all these convectional changes and moves were not enough for the company to come back at the top but strengthening the organizational culture as well as pursuing a more innovative strategy was important.
As soon as the two-year restructuring was completed, Delta Company initiated a profit-sharing program for the employees which stood out as their key competitive advantage, setting them apart from their peers. Every year the company paid out 10% (Helleloid, et al, 2015) of earnings as bonuses. One year after merging with NorthWest airlines, the company introduced a stock ownership plan providing her support staff, pilots, ground crew members and flight attendants with a 15% company equity. Above all these changes, Delta became the only airline in the U.S with a reservation system in operation. The company also managed to buy stakes with the overseas carriers like in Aeromexico, the UK's Virgin Atlantic and the Brazil's FOL and realised better fuel cost management strategies including acquiring the Trainer oil refinery. The delta's new approaches to their organizational structure and operations coupled with the determination to have employee invest both figuratively and literally has made Delta emerge as the most profitable and healthiest airline not only in the U.S but also in the world. In 2013 the company re-joined the S&P 500 and in 2014 reclaimed control of reservations system and data (Helleloid, et al, 2015). Today Delta, a company that was once declared bankrupt, is ranked highest in terms of performance; on-time flight arrivals, baggage handling, cancellation avoidance and customer service. Today, Delta is the leading transport company in the U.S after staying in the wilderness for years.
In conclusion, considering the rate at which technological advancements are happening organisations need to be highly adaptable to avoid being left out. Organisations that are constantly renovating their business models and processes are most likely to survive in the market. This has been contributed by the progressive growth in science and technology resulting to advancement and application of communication technologies and business operations. Technological advancement such as automation enabling an organisation to grow not only in terms of output but also become more impactful while reducing the number of personnel, the application of computer-assisted communication and technologies that aid in decision making and the high-risk technologies that help at reducing potential accidents.
Helleloid, D., Nam, S. H., Schultz, P., & Vitton, J. (2015). The US airline industry in 2015. Journal of the International Academy for Case Studies, 21(5), 113.
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