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Monday, October 3, 2011

Change in the Corporate Philosophy of Wrigley

A great philosopher once said that there is only one thing that is constant in this world – that is change.  Change is a natural part of our life.  Human beings have to grow old and die.  Plants grow old and wither.  The same is true for every business organization.  The only difference is that for business organizations change is not only a necessity but is an ingredient for survival.  In this age of intense competition brought about by globalization, corporations find change as indispensable for their continued existence. 

This does not only hold true for companies selling products as big as a washing machine or a refrigerator, or heavy equipment.  This principle applies even to companies selling chewing gum – Wrigley.  The Wm. Wrigley Jr. Company is the world’s largest manufacturer and marketer of chewing gum.  Among its well-known products are Juicy Fruit and Doublemint.  Its products are famous all over the world such that its global sales at one point reached $5.4 billion.  Aside from chewing gum, Wrigley also offers mints, candies, and chocolate. 

In 2005, Wm Wrigley Jr. Co. announced that it opened a “Global Innovation Center in Chicago’s Goose Island.  (PR Newswire 4)  This business move was as an affirmation of the company’s commitment to long term growth and strategic innovation.  Wrigley hoped achieve its goal of being able to come up with several new products and launched them into the market.    Specifically, Wrigley planned to release eight (8) new flavors into the market by January of 2006.  (Eric Herman 2)  Among these new products are: a new flavor of double mint called “Cool Watermelon”, two (2) new flavors of Eclipse gum called the “cinnamon inferno” and “midnight cool”, a new flavor of Orbit White gum called “Wintermint”, one new flavor each of Crème Savers and Lifesaver Gummies and mango our which is a new flavor of Altoid Mints (Eric Herman 1). 

This announcement represented a significant change from the old philosophy of the previous management.  Under the leadership of Bill Wrigley Sr. as CEO, the company adopted a conservative tactic focusing mainly on its two products: the juicy fruit and the doublemint.  William Wrigley Jr., however, adopted an aggressive growth strategy for the company.  He emphasized on innovation arguing that while there are risks in adopting an aggressive corporate strategy it is better than the status quo, to wit:  “There are risks and costs to any program of actions, but they are far less than the long-range risk and costs of comfortable inaction.” 

Apart from purchasing the Global Innovation Center, its owners also hoped to expand its operations by considering acquisitions of smaller companies.  This plan soon became a reality when the company announced on October 6, 2008 that Mars, Incorporated has successfully completed its acquisition of Wm Wrigley Jr. Company.  (Matt Fleming 3)  Mars purchased all the shares of Wrigley for $80 per share in cash or a total of $23 billion.  (Fleming 3)  Under the terms of the acquisition, the Wrigley Company shall become a subsidiary of Mars but will retain its current headquarters in Chicago and will operate as a separate business segment alongside Mars’ other products such as Chocolate, Pet Care, Food, and drinks.  (Fleming 3)

While change is something that is desirable for some employees, the majority may think that they are better off without the change.  Most employees may not only have serious doubts and concerns about the change but they may also resist and fight the change.  Resistance to the proposed changes of the company is something that every company hopes to avoid because it distracts the management away from its most important concern which is to ensure that after the change is implemented the company will be in a much better financial situation than it was before the change.

At the outset, it is important to emphasize that resistance to change is normal occurrence in any business environment.  This is actually a good sign since it affirms that the company is a dynamic organization.  While resistance to change is normal, there must come a point, however, where the employees will realize that the change is beneficial not only for the company but for the employees as well. 

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There are several reasons why people resist change.  The first is self-interest.  The reality is that people are more concerned about the implication of change to their position, their chances for promotion, and their salary and their security of tenure.  The second reason why people resist change is because of misunderstanding.  When news of launch of new products or merger is circulated, it is expected that most employees may think that they may be replaced by new employees or their department may be abolished.  Inadequate information and communication problems contribute to the misunderstanding between the management and the employees.  The third reason is the low tolerance for change.  Even if the employees were properly informed about the proposed changes of the company, they still resist change because they have low sense of security.  Another possible reason is the disagreement between the advantages and the disadvantages of the effect of the proposed changes on the company and on the employees. 

It must be stressed that even members of the Wrigley family, especially William Wrigley Jr., the fourth generation owner of this company will have to deal with resistance coming from the managers down to the level of rank and file employees.  His philosophy will be compared to his father’s business philosophy and how different their policies are.  However, it is even more difficult if the persons responsible for implementing these changes are those who are not members of the Wrigley family.  Their intentions will be questioned by employees who have probably stayed with the company longer than these change agents.

An example of the difficulty in introducing changes in the workplace is the assignment of personnel to the new department assigned to manufacture the new products.  For the management, they have a choice whether new personnel will be hired to the new department or whether they will simply reassign existing personnel and transfer them to the new department.  Either decision may create difficulty for the management.  If new employees will be hired, it might create unrest on the part of the existing personnel who may think that these new employees will eventually replace them.  On the other hand, if the employees will be taken from other departments, it may also happen that the old employees may not perform efficiently considering that they may get the ire of their co-workers for accepting their new position. 

As previously mentioned, resistance to change is part of the dynamics of every business organization.  It is strong evidence that the company is a dynamic and living organization.  While resistance at the time these changes are being made is normal, it is very unusual for the resistance to continue until the time when these changes are already being implemented.  The task of the management, therefore, is to intervene so that the employees will have to accept that these changes are part of the company’s growth.  The management has to explain that they are doing what is best for the company and for all the employees.    

One element of change that could cause the members of the business organization to experience stress is the issue of the company’s readiness.   Readiness can be related to the capacity of the company and its employees to implement the proposed changes, or the capacity of the company to sustain these changes and whether the company shall profit from the changes. 

Some employees and managers may think that they are not ready to implement the level of innovation the management expects from them.  For example, the company’s goal of producing and releasing into the market eight (8) different products at the same time require increase not only in company personnel but also in equipment.  If ever the company is able to come up and release into the product the eight products, employees are doubtful whether the company will be able to sustain their production considering the changes in the economy, changes in the purchasing power of the people and the entry into the market of new competitors. 

Most important is the issue of profitability.  Wrigley for many years has been known for its Juicy fruit and Doublemint products.  While these products have been very successful in the past, the company cannot expect the same kind of appreciation for its new products.  After all the planning and purchase of new equipment and hiring of new personnel, it would be such a waste of time and money if the company will eventually discontinue production of its new products.  This has happened before when the company released Surpass, the chewing gum formulated to fight antacid which was not patronized by Wrigley’s customers.  As a result, the company stopped its production. 

The stress brought by the issue of the company’s readiness to implement the changes can be reduced or even eradicated.  This can be done through efficient and effective communication with the employees.  This can be done by informing the employees that a specific department of the company has undertaken a very thorough and diligent case study on the acceptability of new products in the market and that it has found a positive response from the client on all the eight new products.  The company should also communicate to its employees that a well-prepared business plan is ready that will enable the company to implement the proposed changes and sustain the same.  

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