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Org Change

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Natasha Lynch

on 8 February 2013

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Transcript of Org Change

Innocent is a UK company that produces healthy and nutritious food and drinks; primarily smoothies.

Innocent was founded in 1998 as a private company.

Strong focus on ethics and sustainability.

Coca-Cola bought an 18% stake in Innocent in 2009, which increased to a majority share of 58% in 2010. Background Political Alignment with Government initiatives, including "5-a-day"

Coalition Government; impact of cuts

Nutrition guidelines Economic Global economic downturn

Sales in the smoothies market fell by 10.6% between 2006 and 2011.

Promotional activity enabled customers to continue buying - 49% only buy smoothies when on promotion

Price rises in raw materials

'Unfair' VAT charging on smoothies Social Technological Value for money

Consumer importance on ethical, organic and functional foods

Trend for ethical business and Corporate Social Responsibility Sustainable packaging

Avoiding high carbon materials

Blog used to communicate directly to customers Situational
Context Situational Context Innocent experienced major growth between 2005
and 2007

Innocent returned a dramatic loss of 8.6m in 2008, and
experienced a 8% decline in value sales between 2008
and 2010.

"Wiping out every penny of profit the company had made since it was founded by three friends a decade earlier."

Competitors, including Tropicana smoothies were being introduced into the market.

Although a dominant brand in the UK, Innocent was not the market leader overseas. Why Coca-Cola? Nature of the Change Conclusion Bibliography Lewin's Forcefield Analysis 120 years of experience

Portfolio fits well

Portfolio expansion and product diversification Passive investor, keep operational control

Ability to offer practical help with issues such as distribution in new markets

Propelled into new markets such as North America Coca-Cola Share in Innocent Organisation Culture and Values
Organisation Structure
Fear of the Unknown Employees Contamination - Distaste for new values or practices
Ignorance & Selective Information Processing Customers The Innocent Foundation Affects reputation
Threat to Power/Influence Security
Contamination Suppliers Dramatic
Innocent faced an economic crisis with the opportunity to expand into new global markets Systematic
Founders have remained in operational control Grundy (1993) in Senior and Swales (2011)
Lewin (1951) Mintzberg and Huy (2003) Micro Environment Macro Environment Retirement of original investors
10% of workforce made redundant
Global ambitions Economic recession
High cost of production, e.g. raw materials
Exchange rate collapse
Major new competitor and a low barrier for new entrants
Competitors increasing sales during recession.
Lack of USP
50-60's boomers, low debt, high disposable income to purchase health products. Trigger –
Financial Survival “We lost more money in 2008 than we made in the company’s entire history.” (Richard Reed, 2011, Financial Times) Held market majority share
30 year plan included growth into global markets
"Set the stage, establish a sense of urgency". (Kotter, 1996)
Created a crisis to utilise Coca-Cola's investment reactions.
Maurice Pinto retirement could have been known to the business previously
2009 minority investment to test stakeholder Competitor thriving during recession. Economic downturn meant a dramatic decline in profits
Needed to react quickly and with resources "willingness to make do" (Nohria & Berkley, 1994)
Maurice Pinto 2010 retirement Proactive/Planned Reactive/Emergent Natasha Lynch
Ellen Frith
Tom Crisp
Grace Smith
Alexander Croft Resistance to Change Cultural Resistance Cynicism Spiral Level of the Change Department of Health, 2012; Food Standards Agency, 2007; Pidd & Hawkes, 2010, Mintel, 2008; Innocent, 2012; Sonne, 2010 Mintel, 2011 Trompenaars & Hampden-Turner, 2004 Lewin, 1951 Palgrave, 2009 Innocent, 2012 Balogun & Hope Hailey, 2004 Robbins et al, 2010 Strebel, 1996 Senior & Swailes, 2011 (Mintel, 2011; Graham, 2011; Currie, 2011; Food and Drink Innovation Network, 2010) (Target Jobs, 2012) Initially, it seems that Innocent was reactive to the external environment, however, Innocent may have created a crisis and the investment may have been planned.

Although facing resistance from stakeholders, the founders were the gatekeepers and the change agents.

Change was undertaken in two stages. Innocent "tested the water" of stakeholder reactions.

Currently the resistance is controlled with founders assuring stakeholders they have kept operational control. It is unclear what will happen in the future. About the Organisation. (2011). [online]. Last accessed 15 Novemeber 2012 at: http://targetjobs.co.uk/employer-research/innocent-insights
Balogun, J. and Hope Hailey, V. H. (2004) cited in Senior, B and Swailes, S (2011) Organizational Change, Harlow: Prentice Hall
CURRIE, Lysanne (2011). The new age of innocent. [online]. Last accessed 12 Novemeber 2012 at: http://www.director.co.uk/MAGAZINE/2011/11_December/innocent_65_04.html
Department of Health (2012). Food businesses pledge to increase fruit and veg. [online]. Last accessed 14 December 2012 at: http://www.dh.gov.uk/health/2012/11/food-businesses-pledge-to-increase-fruit-and-veg
Financial Times [online]. Last accessed 12 Novemeber 2012 at: http://www.ft.com/cms/s/0/e13793d4-a0ba-11e0-b14e-00144feabdc0.html#axzz2DSe6ix00
Food Standards Agency (2007) Front-of-pack Traffic light signpost labelling. [online]. Last accessed 14 December 2012 at: http://www.food.gov.uk/multimedia/pdfs/frontofpackguidance2.pdf
GRAHAM, Natalie (2011). My First Million - Richard Reed of Innocent Drinks. [online]. Last accessed 12 Novemeber 2012 at: http://www.ft.com/cms/s/0/e13793d4-a0ba-11e0-b14e-00144feabdc0.html#axzz2FJEGgPfK
Grundy (1993) cited in Senior, B and Swailes, S (2011) Organizational Change, Harlow: Prentice Hall
Guardian, T., 2010. Smoothie Operators Innocent tread familiar path to lucrative deal. [Online] Available at: www.guardian.co.uk/business/2009/apr/07/smoothies-coca-cola [Accessed 16 December 2012].
Innocent (2012). Daily Thoughts. [online] Last accessed 14 December 2012 at: http://www.innocentdrinks.co.uk/blog
Innocent (2012). Being Sustainable. [online]. Last accessed Last accessed 14 December 2012 at: http://www.innocentdrinks.co.uk/us/being-sustainable/packaging
Innocent (2012). Our Story. [online]. Last accessed Last accessed 14 December 2012 at: http://www.innocentdrinks.co.uk/us/our-story
Innocent not so innocent anymore. (2010). [online]. Last accessed 14 November 2012 at: http://www.ethicalconsumer.org/latestnews/tabid/62/entryid/400/innocent-not-so-innocent-anymore.aspx
Interview: Innocents Richard Reed. (2008). [online]. Last accessed 15 Novemeber 2012 at: http://www.thisismoney.co.uk/money/markets/article-1638593/Interview-Innocents-Richard-Reed.html
Kotter, J (1996). Leading Change, Boston: Harvard Business Review Press
MELENTIN, Julian (2010). Comment on Coca Cola's Purchase of Innocent. [online]. Last accessed 15 November 2012 at: http://www.fdin.org.uk/2010/04/comment-on-coca-colas-purchase-of-innocent/
Mintel (2008) Smoothies - UK - October 2008. [online]. Last accessed 14 December 2012 at: http://academic.mintel.com/display/227765
Mintel (2011) Smoothies - UK - 2011. [online]. Last accessed 14 December 2012 at: http://academic.mintel.com/display/227765
Mintzberg, H. and Huy, Q. N. (2003). The Rhythm of Change, MIT Sloan Management Review
Money, T.i., 2009. This is Money. [Online] Available at: http://www.thisismoney.co.uk/money/markets/article-1682768/Innocent-has-a-rough-time-with-smoothies.html [Accessed 16 Decemeber 2012].
Nohria, N. and Berkley, J. D. (1994) Whatever happened to the take-charge manager?
Pidd, H., Hawkes, A. (2010) Innocent loses fight over VAT charged on smoothies – but not raw fruit. [online]. The Guardian, 22 November. Last accessed 14 December 2012 at: http://www.guardian.co.uk/politics/2010/nov/22/innocent-smoothies-challenge-vat-ruling
Price, D. (2009). The Principles and Practice of Change. New York, Palgrave Macmillan.
Robbins, S. P., Judge, T. A. and Campbell T. (2010) Organizational Behaviour, London: Prentice Hall
Senior, B and Swailes, S (2011) Organizational Change, Harlow: Prentice Hall
Sonne, P. (2010). Coca-Cola Ups Stake in U.K.'s Innocent. [online]. Wall Street Journal, 10 April. Last accessed 14 December 2012 at: http://online.wsj.com/article/SB10001424052702304222504575173873250810894.html
Strebel, P (1996) cited in Senior, B and Swailes, S (2011) Organizational Change, Harlow: Prentice Hall
Trompenaars, F., and Prud'Homme P. (2004) Managing Change Across Corporate Cutures. Oxford, Capstone Publishing. (Innocent, 2009; The Guardian, 2010; Director, 2011; ThisIsMoney, 2009)
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