Asda Case

Asda board of directors brought in Archie Norman to turn the company around and face challenges differently from other executives. They knew that Norman understood that the underlying problem at Asda was not an overnight fix and his approach would have to be an adaptive one. In short, there is no magic formula. The solution would require his company to learn and innovate in order to solve the problem. To be successful, Norman would have to come up with answers using new methods and shattering the existing norms and values in Asda’s organizational structure.

In the readings this week, I learned that Norman’s approach closely mimicked Heifetz and Laurie’s five principles to mobilize people in addressing an adaptive challenge. By using these interdependent principles, Norman was able to give Asda a direction and vision to identify and tackle this adaptive challenge.

1. Identify the adaptive challenge- Heifetz and Laurie’s first step was to identify the challenge. Without doing this first, the company could be unaware of a problem at all. In the case of Asda, this sounds quite simple. It was clear that the company was in disorder and underperforming, however, for Norman this meant he has to start with an in depth analysis of problems surrounding Asda. Norman started by convincing people that there was a problem. “In speech after speech, to employees as well as investors, Norman laid out the details of what he referred to as Asda’s ‘dark moment.’ He ignored frequent advice that he soften his blunt message of ‘gloom and doom.’” i By being blunt and forthright, Norman was able to relay the message of how close to the edge the company really was.
2. Regulate distress- Norman was especially good at this leadership task because he knew how to communicate well. Norman’s communication started by identifying the issues and then moved on to focusing on why change was necessary to eventually turn the company around. In short, he gave his employees a sense of purpose. By giving his employees all the knowledge they needed to understand the problem, they were able to better face the problem head on.
3. Maintain disciplined attention- As we learned from Heifetz and Laurie, “A key leadership task is to keep people’s attention and responsibility focused on the tough questions through a sustained period of disequilibrium”.ii Through Norman’s outstanding communication skills, “it finally dawned on people just how close to the edge the company was to failing” i said a regional manager for the company. This same regional manager went on to say, “It became clear that we couldn’t just wave a magic wand and make all things right.” i Through Norman’s communication, he realized that a disciplined attention and careful adaptive approach to problem solving would be required to bring Asda back. Norman led by example in helping achieve this goal.  For the first six months, the top management team took up residence in a local hotel. They focused on financial crisis, travel to stores and talk to employees while taking notes on processes. Furthermore, Norman facilitated the maintenance of that disciplined attention by defining company norms, strategy, values and their “Asda way of working”. i
4. Give the work back to the people- Norman’s message was “Involve everybody in everything. As long as you’re doing that, you’re going to get the best out of people.” i He believed that this way of doing business empowered the employees of Asda to be a “unique source of advantage” i against competition. By giving the employees of Asda the resources, information and support; the skills and knowledge to address the problem; and the motivation to turn the company around; Norman was able to directly affect performance of the employees. But performance is nothing if there isn’t a unifying direction. By providing a corporate strategy, a statement of company values, operational concepts known as “the Asda Way of Working” i, and finally a vision to make each store responsible for it’s profit or loss, Norman was able to unify and empower his employees to be successful. This led to a stock price that raised 300%, a 33% increase in sales and the sale of Asda to Wal-Mart for $11 billion.
5. Protect leadership below- This goes down to the very core of Asda as a company. Norman strengthened this idea of protect leadership by incorporating it into the core values of Asda. For example, in an effort to breakdown the barriers between management and in-store employees, Norman decided that all employees across the organization referred to each other as “colleagues”. Another example would be in his statement of improvement.

“Our job is to improve the business. Everyone is here to help improve the business every day and in every way. That’s the one job description that really matters. This is your obligation and your duty. I want to see every aspect of our business moving forward. We have lost the habit of innovation in this company. Why? Because innovation is risky. If you innovate, you make mistakes. We got into the habit when mistakes were made of looking for a head in the basket. Let me be clear: if you are not making mistakes, you are not innovating. And that’s the time you should worry.” i

By this statement alone Norman reinforces that leadership from all facets of the organization is extremely important. Lastly, another way that Norman exemplifies this principle is through his presence in the stores. He talks to employees and constantly looks for ways to improve business practices.

Learning these principles and the differences between an adaptive and technical challenge has shed light on challenges that I have been a part of in my past. In hindsight, I realize why these challenges created so much tension and I now have a better understanding of how leadership could have resolved this conflict for the better of the organization.