Applying Kotter's 8-Step Change Model to Walmart

Introduction: The Changing Business Environment

The business climate of modern society is rapidly changing due to emerging pressures across technological, political, economic, ecological, and social dimensions. As technology evolves, business entities are forced to cope with intensifying competition, allocate funds for new technologies, and integrate innovations that improve organizational operations. In an increasingly global marketplace, economic agents must simultaneously comply with regulations issued by multiple governing bodies. Economic pressures include shifting commodity prices and the internationalization of financial crises, both of which generate changes in consumer behavior. At the social and ecological levels, organizations face growing pressure to operate in ways that create tangible benefits for their communities.

In such a complex setting, it becomes imperative for economic agents to change their approach to achieving business objectives. The primary goal of organizations in modern society remains the pursuit of profitability; however, the means of achieving that goal have shifted. Business entities must now respond to the increasing demands of their stakeholders — in other words, profitability objectives must be pursued through the genuine satisfaction of customer and community needs.

To best examine this situation, the case of Walmart is presented, and a change initiative is proposed using Kotter's eight-step process for leading change. The selection of America's largest retailer is based on the fact that the company built its model almost exclusively on cost-driven profitability, yet that model no longer appears sufficient in today's environment, revealing a clear need for organizational transformation.

Walmart was established in 1962 in Bentonville, Arkansas, by Sam Walton, who had a vision of creating a one-stop store where people could find a wide selection of products at affordable prices. Walton's vision also included the creation of a workplace that recognized and rewarded employee merit and fostered a positive working environment.

Diagnosis of the Problem at Walmart

Since those founding years, however, the implementation of that vision has been increasingly displaced by the pursuit of profitability. Walmart's motto — "Save money. Live better" — reflects their commitment to offering customers the lowest possible prices. Their business model is built on aggressive cost-cutting, and their commercial success has been driven largely by the popularity of low prices among consumers. With this model, the company has generated billions of dollars in profits.

Nevertheless, the relentless pursuit of the lowest price has also been accompanied by serious problems that now cast a shadow over the reputation of the largest American retailer. Walmart was originally conceived as a resource for customers and employees — a place through which communities would thrive. In recent decades, however, the emphasis has shifted heavily toward financial gains, and the well-being of employees, customers, and communities has been relegated to secondary status.

Several examples illustrate how Walmart has drifted from its founding vision:

First, the pursuit of the lowest price led the company to sign contracts with suppliers outside the United States, as these offered more cost-effective pricing. This decision took jobs away from local producers and farmers, generating negative socioeconomic impacts on communities. It also limited customers' access to local products.

Second, in its search for low costs, Walmart frequently imported food items that lost freshness during long-distance transportation. Customers were thus negatively affected by the reduced quality of goods available in stores.

Third, the company's attention to employee welfare declined as cost-cutting became the dominant priority. Employees were paid minimum wages and offered limited medical insurance that did not fully meet their needs.

Additionally, the company reportedly employed several practices to extract extra labor from workers without additional pay. For instance, a few minutes before the end of a shift, employees would be assigned tasks that took an hour to complete. Because these tasks were initiated during scheduled hours, they were not counted as overtime, effectively requiring workers to provide unpaid labor. Employees also complained about a lack of investment in professional development and raised concerns about workplace discrimination. One former African-American employee reported that she was passed over for a promotion for which she was fully qualified, with the position instead awarded to a Caucasian male (Greenwald, 2005).

The poor treatment of staff members was reflected in low employee morale and diminished job performance, which in turn produced lower quality customer service and contributed to negative perceptions of the brand among shoppers.

Finally, while Walmart invested millions in internal store security — including surveillance cameras and in-store guards — parking lots were left largely unprotected and unguarded, and on several occasions became the sites of robberies, assaults, and even murders (Greenwald, 2005).

Kotter's 8-Step Change Model Overview

In sum, Walmart is a powerful and financially successful company, but its position is threatened by a weakening reputation. The core problem is the company's sustained commitment to cost-cutting without the flexibility to adapt its business model to the evolving needs and expectations of its environment.

This rigidity has also been evident in the company's failed expansion into Europe, where Walmart attempted to implement its standardized American model without accounting for significant social and cultural differences across European nations. The inability to identify and adapt to those differences contributed directly to the company's withdrawal from key European markets (Knorr and Arndt, 2003). It is therefore clear that Walmart's long-term sustainable success depends on its capacity to understand the needs of its various stakeholder groups and to integrate those needs into its core business model.

Implementing change within organizations is a highly complex task, and numerous obstacles can arise. In Walmart's case, the scale of the organization alone makes company-wide change challenging. Furthermore, engaging employees in the change process is particularly difficult given their existing dissatisfaction, as well as the natural human tendency to resist change (Weiss, 2012).