Crack the Code Written by Beer and Nohria

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envisioned a high performing, innovative company where increased shareholder value was the highest priority. The CEO stated, “We need a culture built around common ideas and goals that include listening, learning, and speed of response, from the stores upwards”. The CEO accomplished his goal at ASDA and was able to gain a competitive advantage. ASDA came up with a way to utilize both theories simultaneously. They created an innovative “Driving Test” which allowed grocery store managers to run the test store as they saw fit to achieve specific goals. It was a perfect way for ASDA to assess whether a manager’s skills in leading the change process at the test store was aligned with the company’s objectives. This process exemplified Theory O, as ideas came to fruition from the bottom of the company yet managers were bound in a Theory E type contract, as those who failed were replaced. In order for a company to successfully initiate change, the employees need to be committed. ASDA’s leaders engaged employees in the change process by constantly listening, debating, and demonstrating a willingness to learn, which won the employees’ trust. Leaders were also candid about its intentions to make changes from the beginning, which allowed them to balance tensions between the two theories.

Moreover, Theory E ties to the course concepts of mechanistic structure and centralization of authority. Mechanistic structure and Theory E are designed to induce people into predictable, accountable behaviours. Their structure offer little to no personal autonomy, as employees are expected to be cautious, obey authority and respect traditions, which tends to result in strong employee resistance to change. Theory O change strategies are based on organizational culture. By transforming employee behaviours and developing an effective culture, an organization gains a competitive advantage. Behaviours and attitudes that conform to a positive corporate culture will decrease resistance to change and increase profitability and productivity. We have also learned how organizational culture affects planning and implementing organizational change, as well as employee attitudes towards change. An organization’s culture affects its performance and ability to remain competitive. Leaders must promote a culture that fits their company’s strategy. Lastly, by encouraging innovation and learning and empowering managers to develop efficient systems, companies are able to maintain high levels of success. As seen in the article, in order to thrive and adapt in today’s economy, organizations must be in perfect step utilizing Theories E and O when building its culture and enhancing shareholder value.