Case Analysis: Leading Culture Change at Seagram Essay Example

ways” is a liability. For example, Blockbuster was a stable mature firm that chose to look the other way as change of the future stared into its eyes—internet rentals that eliminated physical in-store movie rental needs. This loss in ompetitive advantage is a crucial factor leading to a dark future, avoidable with small necessary incremental changes (Nadler, 1989) best to adapt and evolve, re-energizing mature firms and changing its values simply and rapidly from the inside rather than the outside (Beatty & Ultrich, 1991), as is in this case. The priority at Seagram is to identify customer wants and bring back growth by changing people’s behavior or culture and the way they interacted with each other. New sets of values became policies to live by as Bronfman felt that “values drive behavior, behavior drives processes and processes drives results. True, but consider culture as well. Culture is the experience, the reality of the values; it is what members of an organization see, feel, and hear. It should correspond to the company’s values, mission, and vision or else there is nothing to build on and beliefs will slowly diminish. Ordinarily, culture does not change quickly and certainly not overnight, thus not a strategy of choice in a turnaround situation on short deadlines. This normative-reeducative change strategy is assuming people are social beings and will adhere to the norm by wanting to “fit in” (Chin & Benne, 1969).

Under this assumption, buy-ins is certainly possible with charismatic leadership and momentous excitement, which Bronfman at Seagram indeed “talked the talk. ” Bronfman is someone who learned the ropes of the company in 1982 (www. wikipedia. org), thought the best

expansion method was to revamp Seagram and expand. He began by communicating his new values corporate wide, asking the “how” questions; how to implement and sustain this new culture, how to reward value-based behavior, how to conduct the evaluation process, and how to institutionalize values into everyday behavior?

But in doing so, he lacked to clearly state the “why” questions throughout his firm. He briefly mentioned signs of maturity and eroding markets at Seagram in an executives meeting where the action to implement change is more top-down than bottom-up as the top 15 executives draft the final output of the process. Notably, focus groups were formed from 300 employees along with 200 top managers to debate the process for nine months prior to concluding the agreement on what is the “right wording. ” Either way, the final draft is bias as there are no employees or middle managers present in the actual craftsmanship of the final output.

Exactly who are the top 15 executives? Seagram is a family owned company, sharing the profits and visions as so. The executives it hires and chose to put at the top should share its ideas (Graham, 2006) and support Bronfman come rain or shine. But the plan for the change program process is to “lead not control,” easier said than done. Attempts were made companywide to aim at productively training employees and managers using the activity based approach in creating two value programs; Leading with Values and The Seagram Challenge.

Again, these trainings and challenges are only available to some 200-1,200 individuals out of the whole company made up of more than 15,000 employees. With each closing day, participants give recommendations

only to see that there are no clear plans in place and lack of follow-up to their concerns. There are no connections in terms of management or leadership in this company to its implementation processes. The plan was complicated and unclear which is why it led to concerns and “recommendations” from company employees.

Plainly, the executives were not asking the right questions or being proactive as these voices caught them by surprise and they were lost for words—proof it was not a well thought out plan. Diversification should be within the capabilities of an organization; it should reside in its resources (Christensen & Overdorf, 2000), brands, and appropriate industry in which it reflects experience and knowledge. Seagram’s new vision is fitting as it is known as a beverage company, therefore should aim to be the best.

So why is it that it acquired multiple alternate companies, some completely outside its industry? Random and inappropriate ownership of a non-related industry (oil-DuPont, chemical and MCA-entertainment) once—consider it a freebie, maybe even twice, but the third; MCA/Universal, an entertainment company that nowhere relates to the beverage industry does more damage than good. The resources it takes to learn the new businesses and encompass change values within Seagram plus installing those final values and culture to all newly acquired businesses is beyond cumbersome.

If that is not difficult enough, Seagram’s process does not include short term wins to help focus the large group with measurable results (Kotter, 1996) but enlists the assistance of more outsiders; third party processors and professional coaches to add to the mix. Additionally, change to diversify should be kept simple, brand image maintained to anticipate sustainable competitive advantage

as it may or may not exist, organizations should act as if there is none in order to be able to cope with it (Eisenhardt, 2002). Personally, I feel it is of huge ignificance that Seagram, a multi-national company installs one set of value worldwide to unify all subsidiaries and create awareness of their brand, culture, and values in preparations to future changes. It is more practical when all are under a common understanding as opposed to multiple values, i. e. Satisfaction guaranteed, holding dear the value of consumers. Good corporate governance is the glue that holds together responsible business practices, which ensures positive workplace management, marketplace responsibilities, environmental stewardship, community engagement, and sustained financial performance.

Overall, Bronfman’s vision was commendable and clear but he strayed from it in his actions while composing an implementation plan. The company’s decision would be wiser if it had chosen to expand from what it knows; the beverage industry. Seagram originally was an alcohol beverage company that successfully attained Dole, Tropicana, and Martell (cognac). All within the industry, Seagram still maintains its brand image of a beverage company but has now added on, into the non-alcohol side.

Perhaps creating a niche market in its time as manufacturer of mixed drinks by combining fruit juices with alcohol as it was not as popular then as it is today. Bronfman could have expanded further in this direction. Keeping in theme of simplicity and his vision, this approach would have closely related and painted a precise path for the whole company. It must boost profit and diversify itself, unlearning the old culture of silos, risk aversion, hierarchy, and limited communication (Jick, 2011) and relearning

the innovative, cooperative, communicative, and customer-oriented ways.

These all sound great but it is not necessary to start from scratch if the company is successful and may just need some minor modification. For instance, culture was what the company was originally built on and thus should be kept as part of it; even in the midst of changing. The old culture consisted of personal relationships and individualism which I feel is a valuable asset, a form of networking and self-confidence in being able to rely on one’s self rather than in others—using this in combination with the new values would empower the workers to be team players; who can be accountable independently and within a group.

Furthermore, Bronfman’s tactics lacked consistent motivation as he failed to include short term “highlights” in a reward system of some sort is systems-enhancing change (Nadler, 1989), as mentioned by an employee. This act of positive reinforcement gains trust and builds security in employees’ eyes by retaining company credibility of being trustworthy and customer (its employees) oriented. Company training programs should include all employees, including MCA/Universal employees to effectively communicate the change concept and implement its new values worldwide.

Leadership in this form creates capable and knowledgeable employees that eliminate the doubt factor (gains employee/bottom-up buy-in) and are more willing to “follow the leader” vs. the “Bronfman says” method of creating a controlled environment by letting only certain personnel know the details of its operations and keeping others in the dark—on a need to know basis. Mature companies like Seagram must quickly recognize the need for change; it should not be content, it should be accepting and ready to walk the talk in

changing to a successful value based management firm (see Firgure 1).