Keller Graduate School of Management

After Walmart’s acquisition of Jet, Walmart experienced significant growth in their clientele. On account of Jet’s ability to lower prices, customers added more items to their shopping carts, which helped the world’s largest retailer reach more customers including the millennial shoppers. By Walmart acquiring Jet, it strengthened Walmart’s existing e-commerce infrastructure. Since the acquisition, Walmart.com now sells millions of first and third party items. Sales now are up 10 million than they were a year ago (34 million a quarter ago). The Jet deal follows a five-year e-commerce acquisition spree in which Wal-Mart has bought 15 startups, seeking the talent and technology to make it a dominant player online and narrow the gap with Amazon. Despite Walmart’s success by acquiring Jet.com, the company is still very far behind its largest competitor, Amazon with their online sales being six times greater in the U.S.

There has been a positive impact with Amazon since its acquisition of Whole Foods. The retailer reported sells of $2 billion in groceries in 2017. Before the acquisition, Whole Foods main market offered consumers a variety of local and niche brands that were hard to find anywhere else. After the acquisition, Whole Foods, announced that some smaller vendors would have difficulty getting shelf space in the store. In order to be competitive in the market, Amazon has renewed efforts to deliver fresh food through Whole Foods — a service that has been a struggle in the past. Unlike shampoo or paper towels, fresh food can spoil quickly and it is costly and complicated to deliver. Those challenges plagued its efforts with prior delivery service, Amazon Fresh.

Of the six images, our team selected Director, Coach and Interpreter. These images involve more active, intentional, and directional views of the ability of change managers to produce organizational change. However, these images are used separately in organizations in order to promote a change and therefore achieve success in an organization.

How have the images influenced Walmart and Jet’s acquisition? One example of how all three images impacted the acquisition was when Jet’s employees started complaining that the in-office happy hours would have to stop. The in-office happy hour included one kitchen cupboard full of liquor and the option for employees to consume at their desks. Walmart’s interpreters had the task of creating meaning for others which helped them made sense of events and developments that, in themselves, constituted a changed organization. However, with this case we can conclude that probably interpreters were wrong, since change leaders did not consider how important this transition for Jet’s employees were.

Walmart’s director image has a conservative corporate culture that includes companywide prohibition. After acquiring Jet, Walmart removed all liquor cabinets and shifted happy hours to nearby bars, which was considered a compromise. Conversely, Jet executives complained that fewer employees were attending happy hour after it was moved off-site. In order to avoid conflict and using coaching as a tool, Walmart reversed its stance, allowing happy hour to return to Jet office and loosening similar restriction on other recently-acquired startups.

Regarding Amazons acquisition of Whole Foods, the director image would give oversight in a top-down scenario. The change leader would give direct instructions to the affected offices and scheduled reviews of their progress. By acquiring Whole Foods, Amazon aims at becoming a key player in the food distribution at a worldwide level. Amazon’s focus is on buyer’s data and product development in private branding. The director image is often carried out with an “n-step” model (often 8 steps) which is addressed as a step by step until the change has solidified into the organizational norms. The change manager is advised to follow the steps indicated (the number of steps varies from model to model), in the correct sequence, and regardless of the nature of the change, in order to ensure successful outcomes. (Buchannan, 2017)

Utilizing the Coach image, the change manager is the catalyst that molds the organization into a productive unit as the change is initiated. Amazon combines data on Whole Foods 365 brand while integrating 8 private brand lines of fashion apparel. Creating a customer analytical model database. The change manager will often be challenged with dealing with operational norms which may have to be reevaluated and or readjusted to incorporate the change at hand. These change managers must stress the importance of values such as humanism, democracy, and individual development. Organization development “interventions” are designed to develop appropriate skills, reduce interpersonal and interdivisional conflict, and to structure activities in ways that help the organization’s members better understand, define, and solve their own problems.

The interpreter image has the task of creating meaning for others, helping them to make sense of events and developments that, in themselves, constitute a changed organization. Convey to stake holders that the data mining garnered will establish a productive Analytical Model outlining customer shopping habits. It must provide legitimate arguments and reasons for why their actions fit within the situation and should be viewed as legitimate. Creating an understanding of cultural norms and using stories help galvanize an organization around a defined business goal.

Given the goal of the Amazon and Whole Foods acquisition as a long term endeavor the change image of Director would be best suited to motivate this transition. One of the best known “n-step” models was developed by John Kotter (1995), who advocates a careful planning process, working through the eight steps in his approach in sequence (as best as possible), and not missing or rushing any of them. Even Kotter (1995) acknowledges that change is usually a messy, iterative process.

Nevertheless, he remains confident that, if followed correctly, his “recipe” will increase the probability of a successful outcome (Buchannan, 2017). This will allow Amazon to track the implemented changes and how effectively they were applied. The response from Whole Foods following the acquisition was that their food quality had dropped. During this type of transition, the change manager might incorporate a coach image. There is obviously a flaw that he needs to find and implement the proper training within the logistical path for the food goods which have a limited shelf life. Amazon has a focus on achieving greater understanding of customer spending and buying habits. They believe it will create an effective brand differentiation on the internet which is inundated with a plethora of other e-commerce websites.

When Walmart acquired Jet.com the Coach approach of managing image would be best suited to motivate this transition. The coach image is where the change manager does not have direct control over the outcome but rather shapes the organization to change through specific activities, such as making resources available for change, rather than direct control. When Walmart first acquired Jet, the founder of Jet allowed employees to consume alcohol at work during happy hour and occasionally allow the employees to drink at their desk. Walmart’s conservative corporate culture includes prohibition. Walmart initially tried the directive approach, but it backfired. Walmart reversed its stance, allowing happy hour to return to the Jet office and loosening similar restrictions on other recently-acquired startups. Change managers had to deal with opposing organizational norms. To conclude, Walmart was able to implement a mutually acceptable Standard Operating Procedure for Jet employees.

References

1. (n.d.). Retrieved January 19, 2019, from https://www.michiganstateuniversityonline.com/resources/supply-chain/amazons-whole-foods-acquisition-impact-on-grocers-supply-chain/
2. Buchannan, D., Dunford, R., Palmer, I. (2017) Managing Organizational Change: A Multiple Perspectives Approach, Third Edition Retrieved from https://online.vitalsource.com/#/books/1260146235/cfi/6/6!/4/2/2/2/2@0:0
3. Columbus, L. (2018, April 22). 5 Acquisitions That Will Fuel Amazon's Next Growth Phase. Retrieved January 19, 2019, from https://www.forbes.com/sites/louiscolumbus/2018/04/22/5-acquisitions-that-will-fuel-amazons-next-growth-phase/#1694398e65ba
4. Cusumano, M. A. (October, 2017). Technology Strategy and Management Amazon and Whole Foods: Follow the Strategy (and the Money) Checking out the recent Amazon acquisition of Whole Foods. Communications of the ACM, Vol 60 (No 10), pages 24-27 http://eds.b.ebscohost.com.proxy.devry.edu:5050/eds/pdfviewer/pdfviewer?vid=5&sid=d26e9872-5d5f-4595-91b1-48ecf4dd00b9%40pdc-v-sessmgr06
5. Keyes, D. (2018, Feb. 8). Here's where Amazon and Whole Foods stand seven months in. Retrieved January 19, 2019, from https://www.businessinsider.com/amazon-whole-foods-seven-months-2018-2
6. Morris, D. (2017, June 25). After Walmart Bought Jet, It Eliminated In-Office Drinking. Retrieved from http://fortune.com/2017/06/25/walmart-jet-alcohol/
7. Petro, G. (2017, August 03). Amazon's Acquisition Of Whole Foods Is About Two Things: Data And Product. Retrieved January 20, 2019, from https://www.forbes.com/sites/gregpetro/2017/08/02/amazons-acquisition-of-whole-foods-is-about-two-things-data-and-product/#42abefb9a808
8. Wahba, P. (2017, May 18). Walmart's U.S. Online Sales Rise 63%. Retrieved January 19, 2019, from http://fortune.com/2017/05/18/walmart-online/

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