Generic Toolkit for Implementing a Web-Based Product Innovation Strategy for Zara Fashion Retailer

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Table of Contents

Introduction
Background to the Company
Brief Description of Pressures Faced by Zara
Generic Toolkit for Achieving Web-Based Product Innovation for Zara
Strengths & Weaknesses of the Proposed Tools
Improvement Suggestions & New Directions
List of References

Introduction

Sweeping demographic changes, technological advances, increased competition, geopolitical realignments and other related pressures are combining with concerns for security, changing customer preferences and expectations, expansion urges, and shifts in organizational governance to generate momentous pressure for organizational change (Kotter, 2007; Howard, 1994).

A multiplicity of studies (Haveman, 1993; Amburgay et al, 1993) demonstrate that organizations need to continually change and reinvent themselves to maintain profitability and competitiveness in the ever shifting and continuously more complex business environment.

In this regard, effective management of change becomes a critical constituent in the organization’s attempt to meet and even surpass its goals and objectives (Johns Hopkins, 2008).

It is against this background that this report seeks to detail a generic toolkit that will be used to initiate a web-based product innovation strategy that will assist the company to deal with changing customer preferences in the fashion industry through customer integration

Background to the Company

Headquartered in Corona, Spain, Zara Fashion Retailer’s main interests revolves around the manufacturing, distribution and retailing of various fashion products, which include clothes, footwear, designer bags, children’s wear, designer glasses and other fashion and beauty accessories (Zara, 2011).

With an estimated 1,500 fashion retail outlets, 92,000-strong workforce and € 6.26 billion in 2007 annual sales, Zara is not only one of the leading fashion retailers globally, but it has also become one of the most treasured and respected apparel brands worldwide, in part due to its impressive financial growth and stability in recent years (Caro et al., 2010).

According to these authors, “…the success [of Zara] is widely attributed to its fast-fashion business model, which involves frequent in-season assortment changes and ever-trendy items offered in appealing environments and at competitive prices” (p. 71).

Zara has a market presence in over 70 countries dispersed around the world (Zara, 2011).

Brief Description of Pressures Faced by Zara

The impetus for change arises from certain key drivers originating from the external environment (social, legal, economic and technological) as well as drivers originating from the internal business environment (Oakland & Tanner, 2007).

Zara pressures for change originate from the external as well as the internal business environment.

In the external environment, the fashion industry’s consolidation, shifting customer preferences, and new market entrants has heightened competition, implying that Zara has to come up with a way to outperform its major competitors.

Internally, the need to improve the quality of Zara’s fashion products to beat competition is fueling the impetus for change, making Zara’s management to single out product innovation as one of the top-most strategic objectives of the company.

Zara has in the past largely relied on the traditional approach of product innovation, whereby the drive to develop new fashion products is initiated from within the company.

The convergence of technology, however, has availed to organizations new and enticing web-based product innovation strategies that rely on customer integration in the process of designing products that will appeal to them as end users (Franke et al., 2009).

According to Prandelli et al (2006), “…customer integration leads to improved performance of product development, in terms of both better fit with market needs and faster time to market” (p. 109).

In this regard, the recommended change of embracing a web-based product innovation strategy is necessary since it will enable Zara to systematically interact with its customers in the pursuit of developing products that meet customer preferences, hence sustain competitive advantage.

Generic Toolkit for Achieving Web-Based Product Innovation for Zara

To transform Zara Fashion Designer from relying to the traditional approach of product innovation to a more focused web-based product innovation strategy, an 8-step generic toolkit (outlined below).

The toolkit will make use of multiplicity of management tools, including: the Force Field Analysis; TROPICS Test; Case for Change Analysis; Change Success Assessment; Stakeholder Analysis; Lewin’s Change Management Model, and; Impact Analysis.

Figure 1: The 8-Step Generic Toolkit

The 8-Step Generic Toolkit

Adopted from John Hopkins (2008)

Identifying the Challenges Facing Zara

To comprehensively identify the challenges facing Zara, this toolkit proposes the use of the Force Field Analysis, which is a management tool developed by Kurt Lewin for diagnosing organizational problems and situations for change (Cameroon & Green, 2004).

The basic premise of the approach is that in any given scenario there exists both driving and restraining forces that to a large extent manipulate any change that may transpire within the organizational context (McGahan, 2004).

Here, this management tool will be used to discover that driving forces for Zara include intense competition from new market entrants, changing customer preferences, and industry consolidation, thus the need to develop a new product innovation approach to beat competition.

Restraining forces may arise from Zara’s management uncertainty about the proposed web-based product innovation strategy and hostility from employees and managers who may be unhappy about changing the status quo or unhappy about the security of their jobs.

This resistance will be overcome through maintaining an open-door policy where employees can seek for clarifications about the intended change and training.

Identifying Options & Possible Solutions

The TROPICS Test will be used as “…an early warning device to assess both the impact and magnitude of the impending change” (Paton & McCalman, 2000 p. 23). More importantly, this tool has the capacity to determine the possible solutions and optimal route forward for engaging the change process.

It is imperative to note that the TROPICS Test take into consideration a number of factors, which include time scales, resources, objectives, perceptions, interest, control, and source (Paton & McCalman, 2000).

Under the TROPICS Test framework, Zara’s change management team will be able to evaluate if to employ a hard or soft solution methodology to implement the web-based product innovation strategy depending on whether the goals and objectives of the intended change are clearly and objectively defined or are subjective, wide-spread, and ill-defined (Paton & McCalaman, 2000).

It is proposed that Zara adopts a hard solution approach to ensure quick implementation of the change process since the goals and objectives are clearly defined and reasonably fixed.

A soft solution approach may ultimately delay the much needed change especially on the account that the company needs to react swiftly to the external environmental pressure of competition from new entrants.

Establishing a Sense of Urgency

First, a Case for Change analysis will be conducted to help employees and customers to feel a sense of urgency for the proposed change, develop trust and confidence, and clarify what Zara’s management hopes to accomplish with the change initiative (John Hopkins, 2008).

This stage will analyze competition from new entrants and shifts in customer expectations to form the groundwork for the expected change. In addition, the stage will entail “…presenting long-term projections and leading indicator analyses to fortify the case for change” (Lima, 2009 p. 15).

Here, industry benchmarks will be used to evaluate if other fashion retailers are outperforming Zara and the methodologies used by these competitors to get a foothold on the fashion market.

It is prudent to employ the Change Success Assessment tool to aid in conducting a market survey to evaluate the perceived likelihood of success for the intended change effort (Johns Hopkins, 2008).

In addition, the feedback received from the survey will aid in demarcating the possibility of resistance, evaluate the employees’ perception of the change effort, and also evaluate if the customers are ready to embrace the intended change.

Developing a Powerful Guiding Coalition

The next step entails assembling a group with enough power and leverage to lead the intended change (Johns Hopkins, 2008). The intended strategic change for Zara cuts across various departments, which include research and development (R&D), IT, customer care, and senior management.

Developed by Rick Maurer, the Stakeholder Analysis will be done to explicitly determine the individuals and departments that will be affected by the change so as to include them in the guiding coalition (John Hopkins, 2008).

The analysis will also assist in quantifying both the needs of the guiding coalition and their likelihood of offering the much needed support.

It is proposed that a panel be formed consisting of two members from each department who will then be tasked with the responsibility of strategizing how to implement the intended change. The panel will be led by the change agent, who will strive to encourage interactive forums to assist the group reach a consensus.

The change agent should however guard against turf protection and passivity that may be exhibited by some members of the panel who may be averse to change (John Hopkins, 2008).

Creating and Communicating the Vision

According to Lima (2009), “…people must clearly understand the rewards for changing” (p. 16).

Here, the panel should be tasked with the responsibility of not only developing approaches that will serve as a bridge from the current state to future state, but also of packaging the future state into a visual language that promise new valuable benefits (Johns Hopkins, 2008).

It is important to employ Lewin’s Change Management Model to unfreeze the current state of affairs, move to learn new behaviors and, lastly, refreeze equilibrium to facilitate the reinforcement of new behaviors (Medley & Akan, 2008).

As such, the new vision of promoting competitiveness through web-based product innovation must be continually communicated to all employees and willing customers to make them discover the needed new end state necessary to sustain the new organizational dispensation.

Systems or structures that fundamentally undermine the vision of switching to a web-based product innovation approach should be reformulated.

Planning for and Creating Short-Term Wins

Zara’s change management team must understand that real transformation takes time to achieve and, as such, they must develop short-term goals that can be met and celebrated by employees as well as customers so as to sustain the needed momentum (Johns Hopkins, 2008).

As such, they should plan for visible performance improvements, create those improvements, and recognize and reward employees who are committed to achieving the improvements.

Here, the Impact Analysis tool should be used to identify and evaluate the impact that the short-term goals are making to the company in addition to evaluating the degree of difficulty involved in meeting the short-term goals (Johns Hopkins, 2008).

The team, for instance, can develop a monthly sales report schedule to demonstrate to employees how the proposed change effort is assisting the company to beat competition. Milestones should be reviewed frequently to identify challenges as they present, allowing for punctual corrective action to be taken (Lima, 2009).

Consolidating Improvements and Generating More Change

By now, the change effort should have gained adequate credibility to alter the traditional systems and structures of product innovation that do not align with the new vision of product innovation.

The company may consider hiring, training and developing employees who are in a position to implement the new vision for purposes of consolidating the gains, not mentioning that it can undertake to re-energize the change process by relying on the credibility of short-term gains to tackle arising challenges, therefore occasioning more change (Johns Hopkins, 2008).

Institutionalizing the New Approach

The web-based product innovation strategy should then be embedded in Zara’s strategic policies as the new way of beating competition and ensuring that customer preferences are satisfactorily met.

Here, the change management team should engage in articulating the connections between the web-based product innovation approach and corporate success in terms of increased sales, increased customer satisfaction levels, and satisfied employees.

Strengths & Weaknesses of the Proposed Tools

One of the major strengths of the Force Field Analysis lies in its ease of use since it only requires the establishment of driving and restraining factors.

Also, the analysis provides the change management team with a platform to evaluate the forces restraining the intended change and select the most strategic force to tackle first (Kotter, 2007).

This strength serves to align the intended change with the broader objectives of the company. However, this approach has been accused of not pinpointing how easy or difficult it is to implement the needed change.

The TROPICS Test major strengths lie in its ability to identify the various options that can be used to effect the intended change in addition to determining the most productive and cost-effective route, hence minimizing wastage (Paton & McCalman, 2000).

However, the approach has been criticized for its complexity in application. The Case for Change Analysis is beneficial in bringing all stakeholders to align with the intended change, not mentioning the fact that it creates a sense of urgency among all stakeholders to rally behind the planned change process (Hughes, 2007).

If not well executed, however, the analysis may trigger discontent, rebellion and resistance from stakeholders.

The major strengths of the Change Success Assessment lies in the fact that it not only assist to assess the perceived likelihood of success for the intended change, but it also aids in identifying the factors that may lead to resistance (Bridges, 1991).

The major weakness, though, is that the assessment tool does not provide remedies that could be used to curtail such resistance.

The Stakeholder Analysis, on its part, is beneficial especially in the establishment of the needs of all stakeholders in the change process as well as in the identification of a strong guiding team to lead the change process (Hughes, 2007).

Although the analysis plays a critical part in establishing strategies for organizing and mobilizing the intended change, it has been accused for marginalizing the unrepresented groups and playing into the hands of the dominant group (Hughes, 2007).

Lastly, Impact Analysis is beneficial in consolidating the gains achieved in the change process, but it can lead to more resistance especially in the event that the planned change fails to achieve quantifiable short-term successes (Bridges, 1991).

Improvement Suggestions & New Directions

The change management team should take necessary caution to ensure that the suggested tools and methods work in harmony and do not conflict each other.

Research into the practices of Zara’s competitors is mandatory to ensure the development and implementation of a strategy that will win the hearts of the company’s most valued customers (Mourier & Smith, 2001).

Lastly, the company’s management must come up with an adequate time-scale and pool adequate resources to ensure the successful implementation of the intended change.

The bottom-line is for the company to depart from its traditional approach of product innovation to an effective web-based customer-integrated product innovation strategy.

As such, the company is advised to make use of the convergence of technology, which promises a whole new range of possibilities that could be used to beat competition and maximize market share.

List of References

Amburgay, T. L., Kelly, D., & Barnett, W. P. (1993). Resetting the Clock: The Dynamics of Organizational Change & Failure. Administrative Science Quarterly, Vol. 38, Issue. 1, pp 51-73.

Bridges, W. (1991). Managing Transitions: Making the most of Change. New York, NY: Perseus Books Group.

Cameroon, E., & Green, M. (2004). Making Sense of Change Management: A Complete Guide to the Models, Tools & Techniques of Organizational Change. London: Kogan Page Limited.

Caro, F., Gallien, J., Diaz, M., Garcia, J., Corredoira, J. M., Montes, M…Correa, J. (2010). Zara uses Operational Research to reengineer its Global Distribution Process. Interfaces, Vol. 40, Issue 1, pp 71-84.

Franke, N., Keinz, P., & Steiger, C. J (2009). Testing the Value of Customization: What do Customers really prefer Products Tailored to their Preferences. Journal of Marketing, Vol. 73, Issue 5, pp 103-121.

Haveman, H. .A (1993). Organizational Size and Change: Diversification in the Savings and Loan Industry after Deregulation. Administrative Science Quarterly, Vol. 38, No. 1, pp 20-50.

Howard, A. (1994). Diagnosis for organizational change: Methods and models. New York, NY: The Guilford Press.

Hughes, M. (2007). The Tools and of Change Management. Journal of Change Management, Vol. 7, Issue 1, pp 37-49.

Johns Hopkins Medicine. Change Management Toolkit. Web.

Kotter, J. P. Leading Change (2007). Harvard Business Review, Vol. 85, No. 1, pp 96-103.

Lima, J. A. D. (2009). A Change Management Toolkit. Web.

McGahan, A. M. (2004) How Industries Change. Harvard Business Review, Vol. 82, Issue.10, pp 86-94.

Mourier, P., & Smith, M. R. (2001). Conquering Organizational Change: How to Succeed where most Companies Fail. Atlanta, GA: CEP Press.

Oakland, J. S., & Tanner, S. (2007). Successful Change Management. Total Quality Management & Business Excellence, Vol. 18, Issue 1/2, pp 1-19.

Paton, R., & McCalman, J. (2000). Change management: A guide to effective implementation. Thousand Oaks, CA: SAGE Publications, Inc.

Prandelli, E., Verona, G., & Raccagni, D. (2006). Diffusion of Web-Based Product Innovation. California Management Review, Vol. 48, Issue 4, pp 109-135.

Zara Website (2011). Annual Reports 2010. Web.

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