Leading Culture Change at Seagram
NUS Business School, semester 2 2012/2013
Change Management
Leading Culture Change at Seagram
Why did Seagram need to Change? Why did it use a values based approach?
In the mid-nineties, Seagram’s core market, the spirits and wine business, had stalled. At the same time its CEO, Edgar Bronfman Jr. (Bronfman) sold their 25% stake in the chemical giant DuPont. This was the payment from when Seagram’s in 1982 sold the oil company
Conoco to DuPont. This stake in DuPont, by 1995, represented about 70% of Seagram's total earnings. The income from the sale fueled a further diversification of the company, but also a strengthening of its core business with purchases that gave access to new markets. Bronfman had anticipated the need for change as the markets matured and liquor sales fell, but in this situation to sell the Seagram’s Group major source of income, I would put in the same category as Cortez’s burning the boats. One could argue that because Bronfman had anticipated the external events in the market that required change, the process was a strategic reorientation. On the other hand, Bronfman’s goal of shifting the values and culture are sign of re-creational or frame-braking changes (Nadler & Tushman, 1989). Having sold the major source of revenues and facing a declining market, it was imperative for Seagram to change in order to achieve the growth goal of 15% per year.
Seagram is an old organization owned and managed by the Bronfman family for three generations. Such mature organizations typically have strong cultures not calibrated for changing, unpredictable business conditions. Change is neither sought after nor welcomed. It upsets the balance in the company and the employees resist it (Strebel, 1997) Values are relatively stable perceptions of valued behavior in a person or group. They are closely related
1
to organizational culture as the culture reflects individual values (Selznick, 1957). Different teams can have a
Change Management
Leading Culture Change at Seagram
Why did Seagram need to Change? Why did it use a values based approach?
In the mid-nineties, Seagram’s core market, the spirits and wine business, had stalled. At the same time its CEO, Edgar Bronfman Jr. (Bronfman) sold their 25% stake in the chemical giant DuPont. This was the payment from when Seagram’s in 1982 sold the oil company
Conoco to DuPont. This stake in DuPont, by 1995, represented about 70% of Seagram's total earnings. The income from the sale fueled a further diversification of the company, but also a strengthening of its core business with purchases that gave access to new markets. Bronfman had anticipated the need for change as the markets matured and liquor sales fell, but in this situation to sell the Seagram’s Group major source of income, I would put in the same category as Cortez’s burning the boats. One could argue that because Bronfman had anticipated the external events in the market that required change, the process was a strategic reorientation. On the other hand, Bronfman’s goal of shifting the values and culture are sign of re-creational or frame-braking changes (Nadler & Tushman, 1989). Having sold the major source of revenues and facing a declining market, it was imperative for Seagram to change in order to achieve the growth goal of 15% per year.
Seagram is an old organization owned and managed by the Bronfman family for three generations. Such mature organizations typically have strong cultures not calibrated for changing, unpredictable business conditions. Change is neither sought after nor welcomed. It upsets the balance in the company and the employees resist it (Strebel, 1997) Values are relatively stable perceptions of valued behavior in a person or group. They are closely related
1
to organizational culture as the culture reflects individual values (Selznick, 1957). Different teams can have a
References: Jick, Peiperl.2011, Managing Change, Cases and Concepts Selznick, P. (1957). Leadership in Administration. A Sociological Interpretation. Berkley: University of California Press. Strebel, P. (1996) Why do Employees Resist Change?, HBS May-June 96) 4