To engage students’ interest in leading change as one of the most challenging functions and requirements of leaders in organizations, entailing showing the way and helping or inducing others to pursue it.

• Explain how understanding the nature of leadership can help us to carry out sustainable organizational change and transformation
• Explain the six core themes and practices of leading change: vision, purpose, shared values, strategy, empowerment and engagement
• Explain applying the leadership model for sustainable change
• Explain how leading change and managing change are different but mutual processes: each is necessary, but neither is sufficient alone

• Leading change is one of the most challenging functions and requirements of leaders in organizations. It entails showing the way and helping or inducing others to pursue it.
• A model of six core themes and practices of leadership is presented that attempts to integrate the diverse and fragmented body of existing leadership research and theories under one umbrella as an over-arching model. The chapter describes how this model can help to understand and carry out sustainable organizational change and transformation. The six core themes and practices in leading change concern vision, purpose, values, strategy, empowerment and engagement, which are each explained and illustrated in turn.
• Effective leaders of change define and communicate a valid and appealing vision of the future. A vision for change is the state that the organization wants or needs to achieve as the outcome of the change. The chapter discusses why organizations have a vision for change, and why it is necessary to have one, its characteristics, and how a vision for change can be developed and implemented.
• Effective leaders of change define and communicate a valid and appealing purpose for change. The chapter describes how effective leaders are people who evoke a clear, consistent purpose for change that attracts followers. Research findings on purpose in relation to change in organizations are summarized. The characteristics of well-crafted and useful statements of purpose, their development, and their linkage to vision, values and strategy are explained.
• Effective leaders of change identify, display, promote and reinforce shared values that inform and support the vision, purpose and strategies for change. Values are principles or standards that are considered to be important or beneficial, and moral or ethical values are those that are deemed to be ‘good’ or ‘bad’ or ‘right’ as opposed to ‘wrong’. The chapter describes how values are part of organizational culture, which may need to be strengthened through change or itself changed. Change initiatives must reflect and be informed by the organization’s core values, and the key values required in the leadership of organizational change and transformation are discussed.
• Effective leaders of change develop, communicate and implement rational strategies for change that are informed by shared values. The chapter discusses the nature of strategy as applied in organizational change and transformation programmes and how strategies for change are developed.
• Effective leaders of change empower people to be able to do what needs to be done. Empowerment is giving people the knowledge, skills, self-confidence, opportunity, freedom, authority and resources to manage themselves in a change programme and be accountable for their performance. The chapter discusses issues that arise in seeking to empower people. It reviews key findings from research into empowerment that have implications for sustainable change.
• Effective leaders of change engage people in the change effort by influencing, motivating and inspiring them to want to do what needs to be done. Engaging people in a change effort is perhaps the most difficult part of leading organizational change but of critical importance to its success and sustainability. Managers and employees who are engaged with an organizational change initiative devote discretionary effort to it willingly, even eagerly. The ability to engage people requires the appropriate use of power, which in turn requires an understanding of human motivation and satisfaction. It also requires behavioural skills, in particular the skills of inspirational speech.
• Engagement of employees encourages creativity, and innovation is a potential and desirable outcome of creativity. The key to success in encouraging creativity and thereby enabling innovation is learning from failure and then putting the lessons into practice.
• Transformational leadership research and theory have much to offer leaders of change, particularly with respect to empowerment and engagement of themselves, managers and employees in the change process.
• The chapter concludes with a brief comment on applications of the leadership model, implications and questions for leaders involved in organizational change and transformation, and how leading change and managing change are different but mutual processes: each is necessary, but neither is sufficient alone. 

M&S’s serious decline in the late-1990s from its pre-eminent position in the retail industry is an example of poor strategic leadership and management. When Luc Vandevelde took over as chairman and CEO in 2000, he identified the major problem as a lack of understanding of the company’s fundamental strengths – what customers valued most about the business – and then using that information to develop its brand.^[6] He said:

Once you lose your confidence, the tendency is to spread your risks and then you start becoming average in everything you do – and your customers know that.

His strategy for recovery was two-phased. The first phase, for 2001–2002, he says was ‘simple, radical and all-encompassing’:

• To focus on the heart of the business – the retail and financial services operations in the
• UK and to get back to the fundamental strengths that had made Marks & Spencer (M&S) great in the past.
• To stop all activities which were non-core or making a loss.
• To achieve the right capital structure to make the balance sheet more efficient and to generate greater value for shareholders.^[7]

This strategy was carried out successfully: within two year the fortunes of M&S had turned around. The cover of the annual review for 2002 declared: ‘things are looking up’. Phase two, from 2002, addressed future growth, looking at ‘how we deliver value, both for our shareholders and for the communities in which we operate’:

• Regain our leadership in clothing and speciality food by translating our scale and authority into superior quality, value and appeal;
• Build on our unique customer relationships through new products and services, particularly in Home and Financial Services;
• Shape our store locations, formats and product offer to meet the changing needs of our customers;
• Reassert our position as a leading socially responsible business.

By early-2004, however, improvements had reversed in certain areas and the company announced that Vandevelde was stepping down as Chairman because of ‘personal commitments’ once a successor was appointed. Having become part-time Executive Chairman in September 2003, Vandevelde now was being criticized for not spending enough time on M&S, which he accepted (other commitments included Vodafone, a private equity fund and Carrefour). It was said that ‘the miracle he is credited with performing is nothing more than a mirage’.^[8] Sales of food, clothing, general merchandise and homewares had fallen, the company’s teenage fashions were failing, and M&S shares plummeted. Critics also pointed to a failure to respond to a trend towards low-carbohydrate food.

At this point in 2004 Stuart Rose was drafted in to fend off a takeover attempt from Philip Green, owner of BHS and Top Shop. Rose had an M&S pedigree: he had started his career at M&S in 1972, spent 17 years there, and then left because of bureaucracy and internal politics.

He joined the Burton group as CEO for ten years and then Argos as CEO with a brief to defend the company from a takeover, where he did in fact sell the business but in a good deal several months later. He then joined Arcadia, owner of Topshop and Burton, which was in trouble with over £250m in debt. Having turned around the company, he sold it to Philip Green for £855m, with a substantial reward for himself too.

Rose’s initial approach on rejoining M&S was to lead a turnaround strategy based on ‘retail housekeeping’.^[9] This entailed cutting prices, smartening up shops, and enhancing fashions.

Then Rose introduced Plan A (‘There is no Plan B’) in January 2007. Plan A comprised 100 commitments to achieve over five years, extended in 2010 to 180 commitments to achieve by 2015, with the ultimate goal of becoming ‘the world’s most sustainable major retailer’.^[10] At the heart of Plan A are five pillars: combating climate change, reducing waste, using sustainable raw materials, ethical trading, and helping customers to lead healthier lifestyles.

Says Rose:

We aim to engage all of our 21 million customers with Plan A. Our new commitments will mean Plan A is built into every one of the 2.7 billion individual Marks & Spencer products our customers buy from us each year. We also aim to help 3 million of them develop their own personal Plan A by 2020. Despite the recession, our customers are still concerned about social and environmental issues, but believe that business and government need to do the ‘heavy lifting’ by taking the lead, driving change and making it easy for them to get involved when they can make a difference.^[11]

Underpinning how the company does business, M&S says, are its core values of quality, value, service, innovation and trust, for which, it says, it has ‘an unrivalled reputation’.^[12]

Rose became Executive Chairman in 2008, combining the roles of CEO and Chairman. This caused controversy among shareholders and commentators as out of line with best corporate governance practice and especially in the light of a profit warning that caused a plunge in the company's share value of over 30%. M&S’s progress stalled during the recession and profits tumbled from £1bn to around £600m. However, with better-than-expected fourth-quarter performance in early 2010 and trading improved generally, Rose quit his CEO role to make way for a new CEO, Marc Bolland, from Morrisons, the supermarket chain, but staying on for a year as non-executive Chairman. Meanwhile, Rose agreed to a 25% pay cut during his remaining months with M&S.

In April 2010, Rose gave out an £80m ‘farewell bonus’ to M&S’s 78,000 staff, reflecting the company’s ‘outperformance against expectations at the start of the year’.^[13] Yet its market value at £5.8bn, was still below the £9.1bn offered by Green in 2004. Says Rose: ‘When I came here in 2004, you couldn’t get a team on the pitch that didn’t have either a broken leg or a Rooney ankle. Now we’ve got lots of strong people on the bench.’^[14] In the words of retail analyst Philip Dorgan:

[Rose] was neither the messiah many thought when M&S’s profits stormed through £1bn... [nor] the pariah many have painted him as. He oversaw the company through the worst recession in living memory... There are things that Rose did right and things that he did wrong, but he leaves M&S in a much healthier position than he found it.^[15]

Rose was named the ‘2006 Business Leader of the Year’ by the World Leadership Forum for his efforts in restoring the fortunes of M&S, knighted in the 2008 New Year Honours and appointed Chairman of Business in the Community in January 2008.

This case study of M&S provides the opportunity for students to combine a case study analysis with an activity as a basis for answering questions about the leadership of change in the company.

• Together with colleagues, research what has happened at M&S since 2010.

The story begins in 1997 and progresses to 2010, when Sir Stuart Rose retired from M&S. Students need to organize themselves to research personalities, activities and events in M&S, in particular since 2010 but also before then, drawing on relevant published practitioner literature, media reports (radio, television, newspapers and magazines) and the internet. The focus of their research should be on the topics in the questions below.

• Comment on how sustainable the change at M&S has been and discuss the reasons why.

Students should be guided first to summarize the changes since 2010 and then to analyze these changes in relation to the company’s declared intentions or objectives and to criteria of effectiveness and sustainability and identify reasons for the degree of their sustainability in the future.

• Drawing on the theories, research and good practice discussed in the chapter, comment on (a) how well you think that change at M&S has been led and (b) in what specific way/s the leadership of change could have been better.

How well change at M&S has been led can be reviewed from 1997 to the present with a succession of CEOs. Change leadership in the company can be analyzed using Gill and Hodges’ definition of change leadership and Gill’s model of six core themes and practices – vision, purpose, values, strategy, empowerment and engagement, with each one analyzed using information and evidence from the case study and research findings by the student groups.

An alternative approach can be taken, using other theories of leadership instead or, or in addition to Gill’s model, drawing on wider reading beyond this chapter, such as transformational and transactional leadership, situational leadership, etc. Using the information and evidence the students have gathered, the reality of change leadership in M&S can be compared with lessons from leadership theory and best practice to identify ways in which the leadership of change could have been better.

Some specific issues may be introduced, for example:

• Enabling innovation by accepting failures as learning opportunities and ensuring that lessons are learned from them and put into practice and monitored;
• To what extent change has been successful or unsuccessful as a result of the extent of distributed leadership in the company;
• What specific aspects of change leadership have been particularly influential in impacting – both favourably and unfavourably – on the sustainability of changes.

• ‘Speed of change is the driving force. Leading change competently is the only answer’ (John Kotter, 2012: ix). Critically analyze this statement.
• ‘Leading change is about showing the way and helping or inducing others to pursue it’ (Julie Hodges and Roger Gill). Explain and critically analyze this statement.