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Levi’s Changes Everything – Fast Company – Fred Bigjim

by on October 16, 2007

The Fast Company article “Levi’s Changes Everything” is based on a 1996 interview with a Levi’s Strauss & Co. executive named Thomas M. Kasten. Mr. Kasten recalls how he accepted the challenge in 1993 to be the lead change agent for an internal organization change management initiated at Levi’s. At the time the company had strong market shares and a great profit margin, however the company was concerned with growing complaints regarding the quality of the company’s customer service. Specifically issues that were supply chain related such as slow delivery of products to its retail vendors. At the time Levi’s contracted with approximately 600 contractors in 50 countries and sold approximately 65,000 different combinations of product variables (such as sizes, colors, brands, and fabrics) to 8,000 different customers. Mr. Kasten assessed this complex situation and determined that in order to address it properly it would require a different approach to the company’s traditional top-to-bottom management style.

Mr. Kasten noted that at age 53, he recognized the need to change his own personal management style (one from being a very controlling manager to that of a team collaborator) in order to successfully achieve the type of large scale change he wanted to implement. One problem that Levi’s faced at the time when it came to implementing top-down change was that people would become excited at the start of change initiatives, but as time went on the change progress slowly diminished. One problem noted for this is the company’s lack of properly preparing its people for such change. Although not mentioned directly, I suspect this problem to be similar to what has been discussed in class as far as assigning mangers that already have their own responsibilities to also be expected to participate in side team projects. In class the explanation for why such a top-down practice tends to fail over time is because the managers become overwhelmed with their day to day duties (such as “putting out their own fires”) that they slowly devote less and less time to their assigned side projects. In the Facilitating Organizational Change book this concept is addressed as “permanent white water” where unforeseen disruptive problems tend to call for the immediate attention of managers.
Kasten’s approach to dealing with this problem is very similar to the boat building metaphor described in the introduction of Facilitating Organizational Change. Instead of having department managers be a part of a committee to help create change while at the same time also bearing the burden of running their own departments which had been the traditional approach (and one possible reason why the former change initiates tended to sink under all the regulations and rules of the top-down style) he created a new change division of 200 leaders that encompassed both upper and middle management. He did not just force people to be a part of the change team; rather he had them apply for their positions. This allowed for the creation of a new department of people that were there because they actually wanted to participate in the change and for the team as a whole to have one united goal – focus by working together on the job of innovating change. As in the metaphor, Kasten allowed this new team to think outside of the box (and in the process he changed his own management style by not trying to control everything) in order to come up with plans for change that would actually “float.” This new change management division became their own management entity within the company and approached change from more of a middle-to-top stance. They had their own floor at company headquarters where they were free to explore new ideas for change innovation without the restrictions that tended to stigmatize previous teams that attempted change under the traditional top-down style (basically they were a self managing team within the organization). Some of the methods this new team implemented as part of their change initiative are very similar to those discussed in the Heart Of Change book. For example, the team video tapped some angry customers to help communicate an emotional urgency to others (pg. 18). They nuked their floor of traditional lavish hierarchy offices in order to show others they walked the talk as far everyone being a true part of the team (pg. 92). They pulled in people to be a part of the team and guided them along with the new vision (pg. 47). And they even displayed magazine covers of top-down companies that had recently failed as a sort of emotional motivator to strive for innovative thinking (pg. 33).

According the article this new approach for Levi’s was successes because this change management team achieved their target goal of re-inventing their supply chain in order to better serve their customers. In the process, they also demonstrated the value of cross collaboration when it comes to strategic planning. From a numbers standpoint, according to the article, in 1996 when the article was written, Levi’s had global sales of nearly $7 billion dollars, profits of $700 million, and a market share of around $10 billion.

That Was Then, This is Now.
How effective exactly has this change at Levi’s been since this particular article? According to Forbes in a ranking of private American companies Levi’s was ranked #53 in 2005 with $4.13 billion in revenue sales and $156 million in net profits and that the company has more debt (wwwtest.forbes.com/lists/2006/21/biz_o6privates_Levi-Strauss-Co_H45y.html). From a numbers perspective it would appear that things were financially better for the company back in 1996. However, I do not know how such figures factor into the article because even though the article painted this great uplifting vision of how the changes at Levi’s were innovative and successful within the organization, it never really went into the details of what was being changed. In fact the article only really referenced the supply chain problems in relation to customer satisfaction as being the driving catalyst for their big hoopla of change. I found it interesting that at the same time that this hoopla was being promoted that Levi’s had been also dealing with a product recall problem. According to the U.S. Consumer Product Safety Commission Levi’s had to recall approximately 40,000 children garments due to unsafe levels of bleach (www.cpsc.gov/cpscpub/prerel/prhtml94/94061.html). Also during this change time period according to the a PBS film Levi’s had just been exposed by the Washington Post about the company’s exploitation of sweatshop practices concerning the fact that Levi’s jeans were being made in Chinese prison camps (www.pbs.org/independentlens/chinablue/levis.html). How either of these public image problems at the time factored into the change initiatives I am not sure because again the article never goes beyond the surface level of change.

The Good. Concerning the issue that was in fact address in the article of how Levi’s wanted to create some forms of change that would be of value to the customers, I did find an interesting company press release that relates to a new customer service issue. Specifically how Levi’s is now making an effort to satisfy some of today’s more environmentally scrupulous consumers by offering new lines of organic jeans (www.cswire.com/PressReleasePrint.php?id=5895). This is clearly an example of a company understanding that people are becoming more environmentally conscious and I believe it is a smart and innovative approach by Levi’s to cater to this emerging new trend in consumerism.

The Bad. The article never explains how exactly it was dealing with improving its supply chain, however I would guess that what was not being addressed outright was that it was improving its supply chain by outsourcing. In 1996, there were still plants in America that made Levi’s products. According to an article published in 2003 in the San Francisco Chronicle Levi’s now no longer makes any products in American plants (www.commondreams.org/headlines03/0926-03.html). Was this whole supply change initiative in the article just part of a larger ten year plan to eventually outsource all manufacturing outside of the country? From a cut costs in order to improve service stand point it would be understandable, but from a loss of jobs perspective and company loyalty to its workers it may not be so understandable.

The Ugly. Last year the British based watch dog organization for ethical trade, ETI, suspended Levi’s from its international membership for refusing to adapt to the ETI’s “living wage” code (www.ethicaltrade.org/Z/lib/2006/12/levistrauss-press/index.shtml). If one were to look more closely at how this bad publicity came about would one be able to trace some of the factors leading up to it by connecting some of the change management dots that were implemented back in 1996? Again, I do not think it is possible to know if more allegations of sweat shop practices against the company are turning up now as a result of Levi’s outsourcing its supply chain based on information provided in the article. Will this lead to more change brought on by law suits forcing the company to once again re-invent its supply chain operations to places that are more human rights conscious? If so, should we expect a new fluff article in Fast Company about how Levi’s is now once making new strides in management change?

Reference List:
Eoyang, Glenda H., & Olson, Edwin E. (2001). Facilitating Organizational Change: Lessons from Complexity Science. San Francisco, CA : John Wiley & Sons, Inc.
Cohen, Dan S., & Kotter, John P. (2002). The Heart of Change: Real-Life Stories of How People Change Their Organizations. Boston, MA: Harvard Business School Press.
Sheff, David. (June 1996). Levi’s Changes Everything: An inside account of the most dramatic change program in American business. Fast Company Magazine. Retrieved October 12, 2007, from http://www.fastcompany.com/magazine/03/levi.html.
Levi Strauss & Company Recalls Toddlers Coveralls (April 22, 1994). Retrieved October 13, 2007, from http://www.cpsc.gov/cpscpub/prerel/prhtml94/94061.html.
Largest Private Companies: # 53 Levi Strauss & Co (November 9, 2006). Retrieved October 13, 2007, from http://wwwtest.forbes.com/lists/2006/21/biz_06privates_Levi-Strauss-Co_H45Y.html.
China Blue: The blue jeans business (n.d.). Retrieved October 13, 2007, from http://www.pbs.org/independentlens/chinablue/levis.html.
Levi’s Brand Lanches 100% Organic Cotton Jeans (May 5, 2006). Retrieved October 13, 2007, from http://www.csrwire.com/PressReleasePrint.php?id=5895.
Suspension of Levi Straus & Co. from ETI membership (December 20, 2006). Retrieved October 13, 2007, from http://www.ethicaltrade.org/Z/lib/2006/12/levistrauss-press/index.shtml.
Strasburg, Jenny. (September 26, 2003). Levi’s to Close Last U.S. Plants: Much of the work once done in this country has moved instead to cheaper contract factories in Asia and Latin America. The San Francisco Chronicle. Retrieved October 13, 2007, from http://www.commondreams.org/headlines03/0926-03.htm).

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