Case Study Solutions on Managing Change and Innovation

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Bethel had worked for the Fortune Company for almost 15 years. Although the company had gone through some tough times, things were starting to turnaround. Customer orders were up, quality and productivity had improved dramatically from what they had been only a few years earlier due to a company wide quality improvement program. So it came as a real shock to Bethel and about 400 of her coworkers when they were suddenly terminated following the new CEO’s decision to downsize the company.


After recovering from the initial shock, Bethel tried to find employment elsewhere. Despite her efforts, after eight months of searching she was no closer to finding a job than the day she started. Her funds were being depleted and she was getting more discouraged. There was one bright spot, though: She was able to bring in a little money by cutting grasses for her neighbors.


She got involved quite by chance when she heard one neighbor remark that now that his children were on their own, nobody was around to cut the grass. Almost jokingly, Bethel asked him how much he would be willing to pay. Soon Bethel was cutting the grasses of five neighbors. Other neighbors wanted her to work on their grasses, but she didn’t feel that she could spare any more time from her job search. However, as the rejection letters began to pile up, Bethel knew she had to make a decision.  On a sunny Tuesday morning, she decided, like many others in a similar situation, to go into business for herself—taking care of neighborhood grasses. She was relieved to give up the stress of job hunting, and she was excited about the prospect of being her own boss. But she was also fearful of being completely on her own. Nevertheless, Bethel was determined to make a go of it.


At first, business was a little slow, but once people realized Bethel was available, many asked her to take care of their grasses. Some people were simply glad to turn the work over to her; others switched from professional grass care services. By the end of her first year in business, Bethel knew she could earn a living this way. She also performed other services such as fertilizing grasses, weeding gardens, decoration and ground cover. Business became so good that Bethel hired two part-time workers to assist her and, even then, she believed she could expand further if she wanted to.



  1. Bethel is the operations manager of her business. And hence, all responsibilities of an operation manager are now the responsibilities of Bethel. Explain the major ones in relation to her businesses?
  2. In what ways are Bethel’s customers most likely to judge the quality of her lawn/grass care services?
  3. The town is considering a new regulation that would prohibit putting grass decoration at the curb or on the side of the road for pickup because local landfills cannot handle the volume. What options might Bethel consider if the regulation is passed?
  4. Bethel decided to offer the students who worked for her a bonus of $25 for ideas on how to improve the business, and they provided several good ideas. One idea that she initially rejected now appears to hold great promise for competitors. The student who proposed the idea has left, and is currently working for a competitor. Should Bethel send that student a check for the idea? What are the possible trade-offs?
  5. All managers have to cope with variation.
    1. What are the major sources of variation that Bethel has to deal with?
    2. How might these sources of variation impact Bethel’s ability to match supply and demand?
    3. What are some ways she can cope with variation?
  6. Bethel is thinking of making some of her operations ethical and sustainable. What are some ideas she might consider?


Part I. Open Questions

  1. Why is managing change and innovations are an integral part of every manager’s job?
  2. Why organization development is planned change? Explain how planned change is important for organizations in today’s dynamic environment.
  3. Most of change programs implement in public sectors in our country such as BPR, BSC and the like were not fully bring intended results. What do think the reasons from course concepts or from practical experience you know?
  4. Describe the following concepts of change
    1. The calm water metaphor
    2. The white water Rapids metaphor
  5. Questions related to Innovation
  6. Why does innovation matters
  7. Why is innovation so difficult
  8. How can you make innovation a little bit easier


Part II.  Case Questions


Case Question I


Read the case given below and answer the questions given at the end of the case.

TransAct Insurance Corporation (TIC) provides automobile insurance throughout the south–eastern United States. Last year a new president was brought in by TIC’S Board of Directors to improve the company’s competitiveness and customer service. After spending several months assessing the situation, the new president introduced a strategic plan to improve TIC’S competitive position. He also replaced three vice presidents. Ram Kumar was hired as vice president of claims, TIC’S largest division with 1,500 employees,50 claims center managers, and 5 regional directors.


Ram Kumar immediately met with all claims managers and directors, and visited employees at TIC’s 50 claims centers. As an outsider, this was a formidable task, but his strong interpersonal skills and uncanny ability to remember names and ideas helped him through the process. Through these visits and discussions, Ram Kumar discovered that the claims division had been managed in a relatively authoritarian, top down manner. He could also see that morale was extremely low and employee-management relations were guarded. High workloads and isolation (claims adjusters work in tiny cubicles) were two other common complaints. Several managers acknowledged that the high turnover among claims adjusters was partly due to these conditions.


Following discussions with TIC’S president, Ram Kumar decided to make morale and supervisory leadership his top priority. He initiated a divisional newsletter with a tear–off feedback form for employees to register their comments. He announced an open-door policy in which any claims division employee could speak to him directly and confidentially without going first to the immediate supervisor. Ram Kumar also fought organizational barriers to initiate a flextime program so that employees could design work schedules around their needs. This program later became a model for other areas of TIC.


One of Ram Kumar’s most pronounced symbols of change was the ‘Claims Management Credo’ outlining the philosophy that every claims manager would follow. At his first meeting with the complete claims management team, Ram Kumar presented a list of what he thought were important philosophies and actions of effective managers. The management group was asked to select and prioritize items from this list. They were told that the resulting list would be the division’s management philosophy and all managers would be held accountable for abiding by its principles. Most claims managers were uneasy about this process, but they also understood that the organization was under competitive pressure and that Ram Kumar was using this exercise to demonstrate his leadership.


The claims managers developed a list of 10 items, such as encouraging teamwork, fostering a trusting work environment, setting clear and reasonable goals, and so on. The list was circulated to senior management in the organization for their comment and approval and sent back to all claims managers for their endorsement. Once this was done, a copy of the final document was sent to every claims division employee. Jim also announced plans to follow up with an annual survey to evaluate each claims manager’s performance. This worried the managers but most of them believed that the credo exercise was a result of Ram Kumar’s initial enthusiasm and that he would be too busy to introduce a survey after settling into the job.


One year after the credo had been distributed; Ram Kumar announced that the first annual survey would be conducted. All claims employees were to complete the survey and return it confidentially to the human resources department where the survey results would be-compiled for each claims center manager. The survey asked the extent to which the manager had lived up to each of the 10 items in the credo. Each form also provided space for Claims center managers were surprised that the survey Ram Kumar had promised a year ago would be conducted, but they were even more worried about Ram’s statement that the results would be shared with employees. What “results” would employees see? Who would distribute these results? What happens if a manager gets poor ratings from his or her subordinates? “We’ll work out the details later,” said Ram in response to these questions. “Even if the survey results aren’t great, the information will give us a good baseline for next year’s survey.


The claims division survey had a high response rate. In some centers, every employee completed and returned a form. Each report showed the claims center managers average score for each of the 10 items and how many employees rated the manager at each level of the five point scale. The reports also included every comment made by employees at that center. No one was prepared for the results of the first survey. Most managers received moderate or poor ratings on the 10 items. Very few managers averaged above 3.0 (out of a five-point scale) on more than a couple of items. This suggested that, at best employees were ambivalent about whether their claims center manager had abided by the10 management philosophy items. The comments were even more devastating than the ratings Comments ranged from mildly disappointed to extremely critical of their claims manager. Employees also described their long-standing frustration with TIC, high workloads, and isolated working conditions. Several people bluntly stated that they were skeptical about the changes that Ram had promised. “We’ve heard the promises 6efore, but now we’ve lost faith.” wrote one claims adjuster.


The survey results were sent to each claims manager, the regional director, and employees at the claims center. Ram Kumar instructed managers to discuss the survey data and comments with their regional manager and directly with employees. The claims center managers, who thought employees only received average scores, were shocked to learn that the reports included individual comments;some managers went to their regional director, complaining that revealing the personal comments would run their careers. Many directors sympathized, but the results were already available to employees.


When Ram heard about these concerns, he agreed that the results were lower than expected and that the comments should not have been shown to employees. After discussing the situation with the regional directors, he decided that the discussion meetings between claims managers and their employees should proceed by as planned. To delay on withdraw the reports would undermine the credibility and trust that Ram was trying to develop with employees.


However, the regional director in that area attended the meeting in each claims center to minimize direct conflict between the claims center manager and employees. Although many of these meetings went smoothly, a few created harsh feelings between managers and their employees. The source of some comments was easily identified by their content, and this created a few delicate moments in several sessions. A few months alter these meetings, two claims center manager’s quit and three others asked for transfers back to non-management positions in TIC. Meanwhile, Ram wondered how to manage this process more effectively, particularly since employees expected another survey the following year.



(a) Identify the forces pushing for change and the forces restraining the change effort in this case.
(b) Was Ram Kumar successful at bringing about change? Why or why not?
(c) What should Ram Kumar do now?


Case Question II

Gillette has always believed that continuous new product development resulting from extensive R&D is necessary to differentiate itself from its competitors. True to its corporate mantra of ‘innovation is Gillette’, the company has introduced some of the most successful and widely acclaimed innovative products in the consumer products industry. Its product range, protected by trademarks, is legendary with such brands as Sensor, Sensor Excel, Mach 3 and Gillette for Women Venus.


The company’s policy is to generate 40% of its sales from products launched within the last five years. One reason for Gillette’s strong focus on new product development is that the competition has successfully learned to copy its products very quickly. For example, Schick (part of Warner Lambert, later taken over by Pfizer but known as Wilkinson Sword in many parts of the world) had imitated Gillette’s Track II twin-blade razor within five months of the product’s launch.


Further product launches have added to the brand value of Gillette. It has succeeded, in some markets, in making razors less of a commodity product – which consumers just buy on price and convenience considerations – but a branded product that consumers will pay a premium price for.


  1. Define Innovative products and trademarks
  2. Explain how the use of innovative products and trademarks can add to the value of a company such as Gillette.
  3. Analyze the importance to companies such as Gillette of continuing to spend large sums on R&D even in a global downturn.
  4. Evaluate the factors that determine the level of innovation in an industry.


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