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Bryce A. Smart – Levi-Strauss

by on October 2, 2007

Levi-Strauss has long been a household name in the trouser industry, especially where jeans are concerned. Their classic, even vintage, look and feel seems to be a timeless staple in the American life. Why, then, would such a classic, established organization need to change, after all, their products are basically the same as they have always been.

Despite its roots and customer loyalty, Levi’s is still a business. Hence it must handle fixed and variable costs, evolving markets, rebranding to stay fresh, etc. Perhaps their greatest challenge is to one-up their competition. When Levi’s financials soared through the 1980s, the company became complacent, following the mantra: “If it ain’t broke, don’t fix it.” Unfortunately for Levi’s, some things were “broke” and proved difficult to fix.

Levi’s first major change came in 1985 when a group of managers brought discrimination grievances to the CEO. After probing the organization, the CEO found that the claims of discrimination were valid. In response, Levi’s launched a change initiative that began with the crafting of a new “Aspiration Statement” calling for the company to embrace diversity, manage ethically, and improve recognitions for those who contribute positively to the company’s mission statement. To reinforce the calls for a fundamental cultural change, the company required its staff to take part in a training series on diversity and ethical leadership. The most powerful thing they did, however, was to tie employees’ bonuses and performance evaluations to how well they exemplified the Aspiration Statement.

As later organizational change drivers observed, this change, while mostly successful, fell into the trap that would force Levi’s to undergo the most radical transformation in the company’s long history. Their entire organization would be rearranged.

In 1995, Levi’s profits continued to soar, as they had for the past ten years. Yet leadership began to realize that something was starting to go very wrong. Their customers were demanding change—and not just small change, either. They wanted changes that would force Levi’s to completely revisit their core processes. Levi’s supply chain had become corrupted. Sometimes their retailers would have to wait a month before their shelves would be restocked, other times clients would have to open and inspect each Levi’s shipment for quality before accepting the order. These retailers didn’t have these problems with the competition. Levi’s was headed for trouble.

Leadership decided to take a dramatic approach to the situation. They established a change group of several hundred people, tore down and rebuilt an entire floor of their headquarters, and turned it over to the change team. The change team reinvented the supply chain; they reinvented the organizational structure, moving away from a traditional centralized approach to a modular, or cell, system where empowered teams worked together on a manufacturing project with oversight, rather than a simple assembly line model. The process took years, beginning with post-mortem analyses and research on what worked and what didn’t in previous change efforts (including the recent “Aspiration” change) and attempted to apply the lessons learned in their planning. From the discrimination reform, they realized that the human side of change was a critical component in gaining buy-in and making the changes stick (an issue that dampened the success of the HR changes). The change team took every precaution to ensure that employees would adopt and maintain the new culture.

Levi’s change group learned to recognize dissent early on and resolve concerns as best they could. They saw that concerns were typically non-verbal, or voiced “in code”. They realized that while not everyone would want to stay with the company through the changes, they could not afford to leave people behind. They knew they had to provide all the support they could for employees, training, handbooks, guides, professional counseling, etc.

Not to say that there were several missteps. As the nature of their jobs changed, the change group dissolved every employee’s position, rendering them simply: Levi-Strauss employee. The employees then had to reapply for their own jobs (or other jobs in the company that better fit them) upsetting their social and support circles. Worse yet, they erased the seniority of people who had given many years of their lives to the company and took pride in their contributions over the years—those employees felt that all of their sacrifice and work had just been thrown out.

After several years of intense change planning, preparing, and implementing, Levi-Strauss had become an entirely different company. One which could compete in the 21st century: the era of just-in-time inventory strategies, of employee empowerment, of iteration and innovative process flows. A century of rapid and continuous change.

Sources:
1. Sheff, David. 1996. Levi’s Changes Everything. FastCompany.com. June, Issue 03. p. 65.
2. Sandon, Andrew. Levi’s management ideas to improve teamwork in their company. ProfEssays. http://www.planetpapers.com/Assets/6600.php. Accessed on 9/27/2007.
3. Miller, Paul. 1997. Change = get involved – get ownership – corporate change. LookSmart. http://findarticles.com/p/articles/mi_m4422/is_n9_v14/ai_20115583. Accessed on 9/27/2007. Originally from Communication World Oct-Nov issue.
4. 2007. Organizational Culture: Change Process. Symphony Orchestra Institute. Accessed at: http://www.soi.org/reading/change/process.shtml on 9/27/2007.

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