Creative Environment (CE)

Creative Environment (CE)

Introduction

The creative environment of an organization is crucial to the success of the company. Xiaomi, a China-based electronics company, uses its creative environment as part of its strategic planning to give it a competitive edge over its competition. Over the years, Xiaomi has learned to work with its environment. It ensures that the changes that take place around the company do not harm its profitability. Different drivers of change have affected the company leading to strategic changes. External drivers of change include globalization, the government, customers, investors, workforce diversity, and technological changes. Internal drivers of change include changes in employee expectations, resources, capabilities, desire, and dissatisfaction. The organizational change model and the model for the management of change and organizational readiness can be used to analyze Xiaomi Corporation and the strategic planning it involved to ensure continued profitability.

Theory Analysis

In the ever-changing business environment, businesses have to continually readjust their business strategies to remain relevant or face becoming obsolete. Mayne (2015) discusses the importance of understanding different theories of change to determine the most appropriate choice (Mayne, 2015 ). Mayne (2017) argues that a robust theory of change should be understandable, well-defined, plausible, and measurable (Mayne,2017 ). Sætren and Laumann (2017) discuss various theories of change and raise the question of whether applying these theories is still relevant to the modern market. Sætren and Laumann (2017) consider the organizational change model presented by Cummings and Worley, which focused primarily on effective change management. The model has five activity steps. These are motivating change, creating a vision, developing proper political support, effectively managing the transition taking place, and sustaining momentum. Driving change entails creating a platform that ensures readiness for the expected change and creating an enabling environment for the change recipients to address different forms of resistance to change. The second step entails creating a vision. It is a role of the leadership of the company where the leaders explain the reasons behind the upcoming change and the measures that will be taken to ensure the success of the implemented change. At the third stage, developing political support, the management or leadership of the company seek to gain the help of the employees to implement the change. They must also take measures to ensure that they do not have elements in the company blocking the move. The fourth step entails the management creating activity plans for the changes that need to take place.

Additionally, the management is tasked with the responsibility of ensuring that the employees remain committed to the proposed changes change activities. It is the management’s task to plan and provide the necessary structures for the implementation of the planned change. In the fifth step, sustaining momentum, the administration is tasked with the responsibility of providing the needed resources for the implementation of the change. At this stage, management must build a reliable support system for various change agents, facilitate the development of new competencies, and reinforce the necessary behaviours (Sætren and Laumann, 2017). All these stages must be completed effectively to ensure the success of the change process.

While managing change is crucial, it is imperative to ensure that the organization is ready for the proposed changes before any action to this effect is taken. Madsen et al. (2020) argue that modern businesses and organizations need to assist their employees and motivate them to prepare for any proposed change (Madsen et al., 2020). Andrew (2017) found that employee readiness for change in an organization affects employee performance (Andrew, 2017 ). Çalışkan and Işık (2016) argue that one needs to consider individual characteristics when assessing readiness for change (Çalışkan & Işık, 2016). Sætren and Laumann (2017) discuss Armenakis and Harris’ 2009 model for the management of change and organizational readiness for the proposed change. The model has five key components specifically designed to create the needed readiness for change. These are discrepancy, efficacy, appropriateness, personal valance, and principal support. The discrepancy involves the employees’ perception of divergence between the situation that exists presently and the future situation that is desired. Efficacy is the trust in one’s abilities to see the change process through and ensure its success. Thu (2019) emphasizes the importance of individual characteristics when planning for organizational change (Thu, 2019 ). Appropriateness refers to the perception that the proposed amendment is the best choice to ensure that the desired situation is achieved. Principal support is the support that the employees of the company provide during the process of change. Personal valence refers to the perceived benefits that the recipients will get from the proposed change. It ensures that the participants remain committed to the process of change.

The five core components can be achieved using seven strategies. The first strategy is the management of information. All information relating to the proposed change should be communicated effectively to ensure that all the parties involved play their parts. It provides the success of the project. The second strategy is persuasive communication. It entails choosing the best language that will motivate the employees to play their part in bringing about effective and enduring change. Formalization activities and diffusion practices are also crucial to the process of change. The company should also address its human resource practices to ensure that it has the right people for the job. Other strategies include rites and ceremonies that are in line with the proposed changes and active participation (Sætren and Laumann, 2017). These strategies must work together with the five core components to ensure the success off any change process.

Companies must take steps to endure successful change management. Sætren and Laumann (2017) noted three crucial steps. The first is to get organized in preparation for change. Companies must make the necessary preparations to ensure that they have what they need to begin the process of change. It involves having strong policies to govern and manage the proposed changes. Senior-level managers should also be accountable and committed to the success of the proposed changes. A change management procedure should also be spelt out to ensure clarity of vision. The processes and activities that various parties will be involved with should be made clear from the beginning of the project to ensure that everyone plays their roles as expected. Clear communication is crucial to ensure the success of this stage. Internal and external experts should also be called into the company to review the process and challenge it where necessary. Secondly, the company should assess all the possible risks that could arise from making the proposed changes. It involves identifying the relevant people in making the changes as well as those who are most likely to be affected by the proposed changes. It also includes identifying all the changes that must occur and the associated complexities that could pose risks to the company or its employees in any way. It includes all the changes that could hinder the smooth progress of various processes. It is imperative to consider multiple human factors to ensure that tasks and responsibilities do not overlap, and those vital roles to the implementation of the change are not overlooked. It is crucial to consider the training that may be required for the success of the project. The final step is to implement the change and monitor its progress continually. The action involves providing the necessary resources to ensure that the needed changes are made as planned.  Underestimation of the need for training could lead to the reduced quality or poor implementation of the change process. The number of staff should not be reduced during the transition period as it could affect the overall quality of work. It is also crucial to provide the needed support throughout the transition period as the company embarks on the journey of change. All the plans should be continuously reviewed, and the management should track all actions relating to the proposed changes. The company should also monitor the performance of the process strictly. The overall performance after the implementation of the proposed amendment must also be considered. In cases where serious risks are noted, measures should be taken to reverse the actions and decisions that had been made. The company should finally review and revise if necessary, the change policy of the company based on the success of the process. 

Case Application

Xiaomi Corporation

Xiaomi Corporation was founded in 2010 by Lei Jun. It is one of the biggest companies in China and is listed on the Hong Kong Stock Exchange. It is an electronics and internet company that offers smartphones, smart hardware, laptops, and other computer-related accessories. The company strives to be the biggest name in the industry by producing the most user-friendly devices (Xu, 2015). The company is committed to innovation and creativity and has an unwavering focus on efficiency and quality. It strives to provide the highest quality of products at the lowest possible prices, which has made it very popular with its customers. Currently, the company sells its products to over 90 countries globally (Mi Global, 2020). Its global reach has made its brands increasingly popular all over the world.

For many years, Xiaomi Corporation enjoyed continued success. Lately, however, the company has been facing numerous challenges. The company’s low pricing strategy that involved selling high-quality products at low prices has been successful in China in the past. It led to the aggressive growth of the company and its expansion to other markets. In 2015, the company sold more than 70 million phones. The company projected a sale of 80- 100 phones the following year, which was not forthcoming. The company faced increased competition from other companies, which affected its overall sales at home. It led to an increased interest in its markets abroad (Burgelman, Guo, and Zheng, 2016). Expanding Xiaomi Corporation’s appeal to its international markets would lead to increased profitability.

The poor performance of the company over the past few years has led to a significant loss in its value. The company which was once compared to Apple in China has been having a difficult time maintaining its leadership position in the Chinese market. The company is facing difficulties in the international market as well. In 2019, Xiaomi stock lost 25% and plummeted to an all-time low. The company traded below ten Hong Kong dollars for the first time at the beginning of 2019 (Salinas, 2019). The loss has been devastating for the company’s bottom line.

In the past, Xiaomi boasted an impressive market share. It competed globally with some of the largest companies in the industry, such as Samsung, Apple, and Huawei (Salinas, 2019). Its pricing strategy gave it an edge over its competition, enabling it to outdo many other companies in the industry. By providing comparatively lower prices, it was able to reach an even broader market than it otherwise would have done, which led to its continued success.

Recently, however, the smartphone industry has faced a reduction in demand. Global smartphone sales have reduced, and upgrade cycles have lengthened. It has not only affected Xiaomi but its competitors as well. In 2019, Apple announced that it experienced weaker sales than it had expected, which led to reduced stock values. Samsung also lowered its sales expectations, citing stiff competition in the smartphone market. For Xiaomi, smartphones account for 70% of its sales (Salinas, 2019). Therefore, a significant drop in the sale of smartphones affected the company significantly.

There has been a saturation in the smartphone industry. The industry has seen an overproduction of smartphones over the past few years (Salinas, 2019). Increased competition has led to reduced prices across the board, which has affected profitability for many companies in the industry, including Xiaomi Corporation.

Further compounding the problem for Xiaomi, China has been experiencing a slowing down in its economy. The economic growth of the country began to slow down in 2018, following efforts by the government to end debt, which consequently harmed domestic demand. The state also experienced economic strains in its relationship with the U.S., which led to a rise in tariffs on exported goods (Salinas, 2019). It compounded the problem with the economy, further affecting the country and Xiaomi Corporation.

Drivers of Change and Resistance to Change

In the ever-changing global market, organizations are forced to make the necessary adjustments to remain relevant or risk becoming obsolete. Changes can come in the form of closure, failure, acquisitions and mergers, and downsizing. Organizations that succeed must exhibit flexibility, adaptiveness, and the ability to respond appropriately to the changing environment. Different forces, both external and internal, could lead to changes in an organization. External drivers of change include globalization, the government, customers, investors, workforce diversity, and technological changes. Internal drivers of change include changes in employee expectations, resources, capabilities, desire, and dissatisfaction (Nelson & Quick, 2016). These factors determine the degree of acceptance of any proposed change.

Conclusions and Recommendations

In the past, Xiaomi Corporation focused on using the right pricing strategy to attract and retain customers. Xiaomi’s strategy of providing high-quality products for low prices may have worked for a while; it is no longer serving the company (Xu, 2016). Xiaomi needs to come up with a different strategy to cope with the changes that are taking place in the market currently, thereby ensuring continued profitability. It requires a different level of creativity that the company may not have been using in the past. Garcês et al. (2016) suggest that the creative environment dramatically affects the product and the creative process. According to their study, the context in which one works can affect how creative they become (Garcês et al., 2016). Xiaomi should focus on providing an environment that will encourage creativity to enable its employees to make the best choices for the company.

In the past, Xiaomi focused primarily on the Chinese market. However, with the world becoming increasingly connected, the company must expand its market. It can do so by extending its online stores to cover more extensive markets. Selling more products online will ensure increased sales. The company should try to capture markets in Africa and Europe. By applying the high-quality, low price strategy that is utilized in China, Xiaomi could effectively capture various foreign markets and increase the company’s profitability. Xiaomi should also ensure that its employees are well compensated for their work to ensure that they remain motivated. Highly motivated employees tend to produce better results, which would translate to greater creativity and higher profitability for the company. The culture of an organization dramatically affects the attitude of the employees (Robbins & Judge, 2013). Empowering employees increases employee motivation. Allowing employees some degree of autonomy not only encourages creativity but also increases employee motivation (Nickels et al., 2015). It also reduces resistance to change (Hughes, 2018). Xiaomi should create a working environment where employees can make decisions and share ideas with higher management. It would give the employees the impression that their opinions and ideas are essential to the company. It would also increase the chances of Xiaomi coming up with new ideas that could give the company a competitive edge in the market. Creating an environment where employees feel valued would be beneficial to the company in the long run.

References

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