"What really struck me is why so many of these change management programs fail," only to be followed by [image-nocss] similar initiatives within one or two years, often before the original program is completed, said MacLeod, president of BP Convenience Retail USA & Latin America.
Since joining BP in 1988, MacLeod has specialized in business transformation, developing her skills in a variety of marketing, HR, supply and distribution roles across the U.K. and Europe. She has led operational, strategic and marketing elements of the retail business, and most recently led the restructuring of BP's European marketing businesses. MacLeod was tapped to head the U.S. convenience retail business in 2006, providing her biggest challenge: Restructuring the business and transforming the brand for about 1,800 stores from California to Pennsylvania.
MacLeod's project was part of a broader BP reorganization initiative announced in October 2007 to improve the company's efficiency and narrow its performance gap with competitors. When MacLeod embarked on her restructuring program, she had to figure out what was wrong and, more importantly, why three previous initiatives had not worked. She did not want to make the same mistakes, she said.
At the recent Wharton Leadership Conference, co-sponsored by the Center for Human Resources and the Center for Leadership & Change Management, MacLeod urged her fellow leaders to ask themselves: "How can we...free ourselves from our addiction to episodic change and move to a much more healthy habit of continuous business improvement?" She compared the phenomenon to a yo-yo dieter who loses weight only to put it back on because he has not come to understand what's causing his weight gain, or has failed to adopt the healthy lifestyle that would keep the weight off.
Many change management programs are doomed to failure because "the change we are putting in place is not sustainableand sustainability is absolutely crucial," said MacLeod, who is based in La Palma, Calif.
Change initiatives wither in an organization for several reasons: New leaders are often more concerned with "making a big splash" than with following through on a long-term plan to monitor change and keep the program on track. Organizations often revert to old habits because employees do not understand why change is needed, or they lack the tools and training required to sustain the new approach. Nothing changes because ownership of the change rests with an external team or consultants, rather than with the leaders responsible for running the business.
MacLeod urged managers to attend to "the soft side of change" by putting in place programs to fully engage leaders and employees in the process of creating change and sustaining it over time. "As business leaders, we're very good at the rational part" of change: Identifying what's wrong and how to fix it. But the soft side of change managementin terms of really engaging peopleis just as important. If people get it intellectually but don't get it emotionally, I don't believe the change will be sustained."
It's important also to shift the emphasis of change management from "big splashes" to "everyday performance improvement." Make "heroes of our day-to-day deliverers, not those who make the biggest splash. You reward people on how they treat the customer, how they make decisions, how they simplify the business.... And crucially, all of this has to be done in the spirit of open communication and respect.... If [people are] uncertain and they don't feel respected, the change will never stick," MacLeod said.
"The key thing was making our business purpose clear," MacLeod said concerning the c-store business. "We thought we were there to fill up lots of standalone convenience stores and tie up lots of capital, when actually our purpose was to monetize the gas we made at our refineries and make sure we had a secure position in the marketplace for the long term. The question was...how could we put that change in place in a way that would stick."
She said she chose a bold plan that would require wrenching change. Among BP's 1,800 retail outlets nationwide, 800 were company-owned and operated. She would change the business model to 100% franchised with a revamped ampm store brand and new marketing programs to compete more aggressively.
Selling 800 stores to franchisees would eliminate 10,000 jobs at BP, virtually all of the people employed in BP's convenience retail business. The total included 9,500 store employees and an additional 500 support staff at two headquarters. For the store employees, there were no guarantees they would be hired by the new franchise owners. MacLeod and her team faced significant people management hurdles in readying the stores for the conversion process in only 18 months. She would have to motivate store employees to reduce overhead and improve operations, even though they faced "huge uncertainty" about future employment. "Our people were displaying the classic signs of change fatigue.... People were very jaded" and lacked confidence that they could make things better, she said.
In the end, tracking measures showed that employees improved and simplified operations throughout the conversion period, producing $700 million a year in cost savings. Selling the stores freed $1.2 billion in capital for BP to redeploy more productively. Pulse surveys showed morale steadily improved, even though 70% of those responding knew they would lose their jobs, according to McLeod. "The thing I'm most proud of is how our people responded.... You can do some really tough things as leaders and you can do them in a way that people feel valued and respected."
She noted that "it's very easy to get addicted to the change pattern by not getting the change right in the first place, not making the tough calls or bold decisions up front, maybe going for something half-way, and then allowing things to slip back."
Ultimately, MacLeod said, not just corporations, but the global economy depends on leaders to break the cycle. "The economy needs businesses that are clear on why they exist, clear on what their business model is, and have measures in place to know when they need to make adjustments. We need organizations that can manage continuous improvement in a predictable way."
Click herefor the full article.Click hereto view CSP magazine's feature on MacLeod, BP and ampm.
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