BUSI 335 Week 8 Faith and Leading Change Essay Example

Two Chief Executives and One Lesson: Faith, Humility and Leading Change at Ford and J.C. Penney

Introduction

In 2006 and 2011, two outsiders took charge of famous American companies that were losing their way. Alan Mulally, an aircraft executive from Boeing, became chief executive of Ford Motor Company, and Ron Johnson, the retail executive behind the Apple Store, became chief executive of J.C. Penney. Both chose bold strategies, and both demanded rapid change. Ford returned to profit without a government bailout, while J.C. Penney lost about a quarter of its sales in a year and dismissed Johnson after seventeen months. This essay argues that the difference lay less in the strategies themselves than in how each leader treated the people asked to change, and that Scripture's teaching on humility and counsel explains why.

Leading Change Successfully: Alan Mulally at Ford

When Mulally arrived, Ford was losing billions of dollars a year. In late 2006 the company borrowed more than $23 billion, pledging substantially all of its U.S. assets, including the blue oval trademark, as collateral (Ford Motor Company, 2007). That decision gave Ford the cash to survive the 2008 financial crisis without the federal rescue that General Motors and Chrysler required.

The financing bought time, but the turnaround depended on changing how Ford's leaders worked together. Hoffman (2012) describes Mulally's weekly Business Plan Review, in which each executive reported progress using colored charts: green for on track, yellow for a concern, red for a problem. For weeks every chart was green although the company was losing money. When one executive finally showed a red chart for a launch delay, Mulally applauded and asked the group how they could help. Reporting problems quickly became normal, and problems could then be fixed. Within weeks, other executives began showing yellow and red charts, and the meetings turned from performance into problem solving. Mulally also simplified the company around one plan, which he called One Ford, sold off luxury brands and concentrated on fewer, better vehicles.

Leading Change Unsuccessfully: Ron Johnson at J.C. Penney

Johnson arrived at J.C. Penney with a vision of turning department stores into collections of branded boutiques. In February 2012 the company replaced its frequent coupons and sales with a "fair and square" pricing system of everyday low prices. The change was introduced across the company almost at once, without the small-scale testing Johnson's team might have used to learn how customers would react.

Customers who were used to hunting for bargains stayed away. J.C. Penney's net sales fell from about $17.3 billion in fiscal 2011 to about $13.0 billion in fiscal 2012, a decline of roughly 25%, and the company reported a net loss of $985 million (J. C. Penney Company, Inc., 2013). The plan rested on the conviction of a new leadership team, many of them recruited from outside department store retailing, more than on the experience of long-serving merchants and store staff who knew how loyal shoppers behaved. The board removed Johnson in April 2013 and restored coupons.

What Explains the Difference

Palmer et al. (2016) caution that change managers who see themselves as directors, imposing a planned outcome from the top, often underestimate how much a change depends on people's interpretation and cooperation. Johnson acted largely as a director. Mulally set a firm direction too, but he combined it with practices that invited information and participation.

Research on change recipients supports this distinction. Oreg et al. (2011) reviewed six decades of quantitative studies and found that employees' reactions to change depended heavily on the change process, including whether they were informed, whether they could participate and whether they trusted management. Those reactions in turn affected outcomes such as performance and commitment. Ford's weekly reviews created exactly the conditions this research associates with positive reactions, while J.C. Penney's rapid rollout removed them.

Leadership behavior matters as well. Herold et al. (2008) found that change-specific leadership practices, such as explaining a change and involving people in it, built employees' commitment to a change, and that the effect was strongest when the change affected employees personally. Mulally's applause for the red chart was a change-specific behavior that signaled honest reporting would be welcomed. Johnson's team had a vision; Mulally's team had a vision and a safe way to say when it was not working.

Mulally's example is not perfect, and the essay does not claim that listening alone saved Ford. The financing, the brand sales and an improving product line all mattered. The point is narrower: when the plan met problems, Ford's leaders heard about them early, while J.C. Penney's leaders heard about them through falling sales.

Faith and Leading Change

Scripture speaks directly to the difference between these leaders. Proverbs teaches that plans fail when there is no counsel but succeed when many advisers are heard (English Standard Version Bible, 2001/2016, Proverbs 15:22). Mulally built a weekly practice of hearing counsel, even unwelcome counsel, while Johnson's plan went ahead without listening to those who knew J.C. Penney's customers best. James warns that God opposes the proud but gives grace to the humble (English Standard Version Bible, 2001/2016, James 4:6), and humility in a leader shows up as a willingness to learn from subordinates.

Faith also gives a reason to pursue change at all. Through Isaiah, God tells a weary people not to dwell on former things because He is doing a new thing (English Standard Version Bible, 2001/2016, Isaiah 43:18-19). Believers who lead companies can welcome change with hope. Paul also describes the church as a body whose parts all depend on one another, with no member able to tell another it is not needed (English Standard Version Bible, 2001/2016, 1 Corinthians 12:12-26), and that picture warns leaders that a change imposed over the objections of half the body is unlikely to work. Leading change in a Christian way means pairing conviction about the direction with respect for the people who must travel it.

Conclusion

Mulally and Johnson both brought bold plans to struggling companies. Ford's turnaround succeeded because its leader secured the resources to survive and built a culture where problems could be reported and solved together. J.C. Penney's overhaul failed because it was imposed quickly, without testing and without listening. Research on change recipients and change leadership explains this contrast, and Scripture's call to humility, counsel and care for every member of the body gives Christian leaders a lasting standard for leading change.

References

English Standard Version Bible. (2016). Crossway. (Original work published 2001)

Ford Motor Company. (2007). Annual report on Form 10-K for the fiscal year ended December 31, 2006. U.S. Securities and Exchange Commission.

Herold, D. M., Fedor, D. B., Caldwell, S., & Liu, Y. (2008). The effects of transformational and change leadership on employees' commitment to a change: A multilevel study. Journal of Applied Psychology, 93(2), 346-357. https://doi.org/10.1037/0021-9010.93.2.346

Hoffman, B. G. (2012). American icon: Alan Mulally and the fight to save Ford Motor Company. Crown Business.

J. C. Penney Company, Inc. (2013). Annual report on Form 10-K for the fiscal year ended February 2, 2013. U.S. Securities and Exchange Commission.

Oreg, S., Vakola, M., & Armenakis, A. (2011). Change recipients' reactions to organizational change: A 60-year review of quantitative studies. The Journal of Applied Behavioral Science, 47(4), 461-524. https://doi.org/10.1177/0021886310396550

Palmer, I., Dunford, R., & Buchanan, D. A. (2016). Managing organizational change: A multiple perspectives approach (3rd ed.). McGraw-Hill Education.