Please read the case Chipotle needs to change so you can answer the questions .

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1. What is the underlying problem in this case from CEO Brian Niccols perspective? (2marks)
2. What type of change Niccol need to inspire- reactive or proactive? Explain

(1 mark)

3. Using Fig 10.1 on page 380, describe what forces for change exist both inside and outside Chipotle. (1 mark)
4. Utilize Lewins change model (Fig 10.2 on page 384) as a blueprint and describe how Niccol can inspire change at Chipotle? (1 mark)

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2017.153 10.4 Organizational Innovation characteristics. (2) change agent characteristics, and Innovation is the creation of something new and (3) the change agent-employee relationship. useful that gets commercialized, Ten reasons employees resist change are as follows: Crossing the types of innovation with the focus on the (1) individuals' predisposition toward change. (2) surprise and fear of the unknown, (3) climate of innovation results in four approaches to innovation. mistrust, (4) fear of failure. (5) loss of status or job Innovation can produce new products or new security. (6) peer pressure. (7) disruption of cultural processes and can vary in focus from improvement traditions or group relationships. (8) personality to new directions. conflicts. (9) lack of tact or poor timing, and (10) An innovation system's seven components are nonreinforcing reward systems. (1) an innovation strategy: (2) commitment from senior leaders: (3) an innovative culture and climate; 10.6 Career Corner: Managing Your Career (4) required structure and processes: (5) necessary Readiness human capital: (6) appropriate resources; and There are two key methods for improving your (7) human resource policies, practices, and procedures. openness to change: self-affirmation theory and self-compassion 10.5 The Threat of Change: Managing Self-affirmation theory reveals that openness to Employee Fear and Resistance change is enhanced by replacing negative thoughts or beliefs about yourself with positive affirmations. Resistance to change is an emotional/behavioral You can increase self-compassion by practicing response to real or imagined threats to an established work routine. Resistance can be considered to be self-kindness, reminding yourself that you are not the interaction of three causes: (1) employee alone, and practicing mindfulness Understanding the Chapter: What Do I Know? 1. What are the two principal types of change? 6. Explain four approaches to innovation. 2. Describe the four kinds of external forces of change 7. What are four steps for fostering innovation? and two kinds of internal forces of change 8. Employee resistance can be considered to be the 3. How does Kurt Lewin's model of change work? interaction of what three causes? 4. What is the organizational development process? 9. There are 10 reasons employees resist change. What 5. What's the difference between a product innovation are they? and a process innovation? 10. How can you increase the career competency of openness to change? Chipotle Needs to Change never recovered as shares fell nearly 60 percent between 2015 and 2018.156 Let's examine what led to the burrito Chipotle Mexican Grill started in 1993 with a single maker's fall from grace. restaurant and now operates in 2,400 locations, includ- ing in Canada, England, France, and Germany. The fast-food chain had AS CHIPOTLE GREW, SO DID ITS PROBLEMS and revenues of $4 billion in Chipotle rose to greatness because customers were offered Steve Ells founded Chipotle and served as its CEO a straightforward set of options, food was prepared on site until 2018. Ells wanted to differentiate his brand from in an open kitchen, and diners felt they were eating that of other fast-food chains, so he focused on fresh, something healthy. The company had success with this high-quality raw ingredients free of antibiotics and pesti- model early on, but the system started to crack as Chipotle cides. Meals were prepared using classic cooking meth grew. Inconsistent food preparation was the first first stressor ods and were served in choose-your-own style so diners The open kitchen proved a difficult model to scale, and could get the individual ingredients they preferred. 154 poor food handling most likely led to the outbreak of food- Then the company's growth and profitability were borne illness. According to the Chicago Tribune, "Chipotle stunted by outbreaks of foodborne illnesses. Customers has been growing too quickly, and without a game plan. were sickened by E. coli, norovirus, and salmonella at The restaurant chain was plagued by inconsistency and dozens of Chipotle restaurants around the United inefficiency.157 Foodborne illnesses continued to haunt it States between 2015 and 2016.155 The restaurant's stock almost two years after the initial outbreak. In 2017. "The Management in Action Organizational Change and Innovation CHAPTER 10 405 storante un out a whole new thing up of such as Other and really rate of food poisoning reports attributed to Chipotle con- tinues to be multiples higher than peers," said Business Insider.156 These statistics are especially troubling for brand that prides itself as providing "Food with Integrity. The restaurant's menu reflects another crack in its vision and strategies. Chipotle offers burritos, tacos, bur- rito bowls, and salads. This simple menu attracted custom- ers for over a decade but is now seen as "stale," according to an analyst with the Tribune. 159 Ells began offering queso in September 2017 in an attempt to spice up Chipotle's menu. The results were not pron were not promising. Only 15 percent Orders included queso, compared to the 40 percent orders that included guacamole. Business Insider reported that queso-related traffic died off after peaking the first 160 week the new item was available. These problems have created opportunities for other fast-casual as Qdoba and Moes, which are opening locations all over the United States. According to a UBS analyst, these concepts are exhibiting signifi- cant growth rates while also increasing competition for attractive market/site selection." Chipotle's once unques- tionable market leadership is on shaky ground. CHIPOTLE'S NEW CEO WAS SUCCESSFUL AT TACO BELL Chipotle named Brian Niccol CEO in 2018. Niccol had been Taco Bell's chief marketing officer from 2011 to 2015 before taking over as its CEO. He was hired at Chipotle because of the successful turnaround he had overseen at Taco Bell. alleging Taco Bell's taco mixture was more filler than A disgruntled customer had filed a lawsuit in 2011 heef. The suit was later withdrawn, but it took a toll on il's reputation and sales. Niccol's change efforts on repositioning the chain as a youthful lifestyle brand. He did this by welcoming ideas from restaurant employees and introduced new menu items, including breakfast. 162 These changes produced impressive Taco Bell posted an average of 4 percent sales growth during Niccol's time as CEO 163 The fast-food chain also beat out Pizza Hut and KFC as the most successful res- taurant in the Yum Brands portfolio, 164 NICCOL'S CHALLENGE AT CHIPOTLE Niccol faces three challenges at Chipotle. The first is the menu and potential resistance to changing it from the company's senior leadership. The second is increased competition taking advantage of the company's past prob lems, and the third relates to Chipotle's food preparation practices and their r contribution to foodborne illness. Niccol first needs to address Chipotle's menu prob- lem. According to a CNNMoney analyst, They need something that gets people talking about the brand again." The analyst says that Chipotle should consider adding new menu items such as nachos or frozen margaritas, Niccol may be positively disposed to this suggestion because he was also the architect of Taco Bell's positive move to offer breakfast and Doritos Locos tacos.165 Other analysts have concerns about the company venturing too far from its core offerings. 166 Those who are skeptical about changing the menu include Chipotle's founder and current executive chair, Steve Ells. Ells still yields significant power and is known as a hands-on leader and perfectionist, accord- ing to The Wall Street Journal 167 He told The New York Times, "It's not like you can put a on the menu board and-like at a typical fast-food place. "165 This view is supported by Ells's earlier strate gic failure of adding queso to the menu. Niccol is likely to experience resistance to some of his ideas because Ells does not believe Chipotle is like Taco Bell Chipotle is more vulnerable to suppliers changes in the price of items such as avocados and chicken. fast-food brands can push increased costs to franchises-something Chipotle does not have. Ells also refuses to compromise on quality as part of any change. I don't think you're going to see a situa- tion where someone says, "To hell with food with integ- rity. We're going to buy cheap commodity meat now turn this thing around," he told the Times.log Chipotle's second challenge is increased competi- tion, and the biggest threat here is Panera. Panera is outside Chipotle's cuisine niche, but it is competing with its promise of fresh, additive-free ingredients. It also has an exhaustive menu that rotates seasonally. Chipotle customers who are tired of its "big-four" menu arby: Business Insider reports that 87 percent of Chipotles compete with a Pancra Bread within a 10-minute drive. 190 Niccol will have to do more than change Chipotle's menu if he wants to compete with Panera. He needs to address his third challenge, which is stopping people from getting foodborne illnesses at his restaurants. The taccomplish this by this by slowing the chain's growth and focusing on safer operations. For example, each of Chipotle's approximately its own prep work, such as washing lettuce and chop ping tomatoes . 171 Although this practice is part of Chipotle's operational vision, an analyst from the Tribune suggested that "Chipotle managers have to keep to their core values . but need to find a way to be more consistent and efficient." The analyst recom- mended that Chipotle wash and prep food in a central location and send it out to nearby stores." Such a food preparation change will significantly alter restaurant structure. Customers may no longer walk into a restaurant and see employees grilling meat and chopping vegetables behind the food line. This setup has been part of the chain's vision and heritage and repre sents something Ells holds near and dear. "Niccol will likely face an uphill battle in uprooting some of that heri- tage, as he's stepping into a role occupied by a founder for the past 25 years," said an analyst to Business Insider.173 Can Niccol inspire change and save Chipotle? cuind a Panera focused ssive results. new CEO might hoximately 2.400 locations does Chipotle's 406 PART 4 Organizing The Forces for Change Outside and Inside the Organization How do managers know when their organizations need to change? The answers aren't FIGURE 10.1 clear-cut, but you can get clues by monitoring the forces for changeboth outside and Forces for change outside inside the organization. (See Figure 10.1.) and inside the organization Outside Forces Inside Forces Demographic characteristics Age Education Skill level Gender Immigration Human resources concerns Unmet needs Job dissatisfaction Absenteeism & turnover Productivity Participation/suggestions Technological advancements Manufacturing automation Information technology Managers' behavior Conflict Leadership Reward systems Structural reorganization Shareholder, customer, & market changes Changing customer preferences Domestic & international competition Mergers & acquisitions Social & political pressures War Values Leadership THE NEED FOR CHANGE FIGURE 10.2 Lewin's model of change Unfreezing Create the motivation to change Changing New information, models, & procedures Refreezing Support & reinforce the change 1. Unfreezing": Creating the Motivation to Change In the unfreezing stage, managers try to instill in employees the motivation to change, encouraging them to go of attitudes and behaviors that are resistant to innovation. For this "unfreezing" to take place, employees need to become dissatisfied with the old way of doing things. Managers also need to reduce the barriers to change during this stage. Example: Wireless handheld computers-personal digital assistants (PDAs)-are becoming established tools for health professionals, who use them to access patient records in hospital information systems. How well have they been accepted? Studies exploring nurses' perceptions about using PDAs in their daily patient practice found initial resistance, with some nurses concerned about the cost and short technological life cycle of these devicesthe unfreezing stage.70 2. Changing": Learning New Ways of Doing Things In the changing stage, employees need to be given the tools for change: new information, new perspectives, new models of behavior. Managers can help here by providing benchmarking results, role models, mentors, experts, and training. Change is more likely to be accepted if employees possess the career readiness competencies of proactive learning orientation and openness to change.71 Example: In the changing stage, nurses learning PDAs were allowed to continue their