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Harvard Case - Uniting Spirits: The Path to a New Culture at Diageo India

"Uniting Spirits: The Path to a New Culture at Diageo India" Harvard business case study is written by Chandrasekhar Sripada, Thomas J Menachery. It deals with the challenges in the field of Organizational Behavior. The case study is 20 page(s) long and it was first published on : Jan 4, 2022

At Fern Fort University, we recommend a multi-pronged approach to transform Diageo India's organizational culture, fostering a more inclusive, performance-driven, and innovative environment. This strategy focuses on leadership development, employee engagement, and structural changes, aiming to achieve a unified and high-performing workforce that reflects Diageo's global values and drives sustainable growth.

2. Background

Diageo India, a subsidiary of the global alcoholic beverage giant, faced challenges in unifying its diverse workforce under a shared culture. The company had acquired multiple brands over time, resulting in disparate work styles, values, and communication patterns. This fragmented culture hindered collaboration, innovation, and overall performance. The case study highlights the need for a cultural transformation to address these issues and create a cohesive, high-performing organization.

The main protagonists in this case are:

  • Deepak Roy: The Managing Director of Diageo India, tasked with leading the cultural transformation.
  • The Leadership Team: Comprised of senior executives from various acquired brands, responsible for implementing the new culture.
  • Employees: The diverse workforce of Diageo India, representing various backgrounds, experiences, and perspectives.

3. Analysis of the Case Study

This case study presents a complex organizational challenge, requiring a comprehensive approach to address the cultural fragmentation. We can analyze the situation through the lens of several frameworks:

Organizational Culture Framework:

  • Competing Values Framework: Diageo India's culture appears to be a mix of Clan (strong internal focus, collaboration) and Hierarchy (emphasis on control and stability) cultures. This creates conflict and hinders agility.
  • Organizational Culture Inventory (OCI): The case study suggests a lack of clarity in values, communication, and decision-making processes, leading to low employee engagement and a disconnect between individual and organizational goals.

Leadership Framework:

  • Transformational Leadership: Deepak Roy's vision for a unified culture requires transformational leadership, empowering employees, fostering innovation, and inspiring a shared sense of purpose.
  • Situational Leadership: The leadership team needs to adapt their styles to different departments and individuals, considering their needs and motivations.

Change Management Framework:

  • Lewin's Change Management Model: Diageo India needs to unfreeze the existing culture by highlighting the need for change, change by implementing new processes and values, and refreeze by reinforcing the new culture through ongoing communication and training.
  • Kotter's 8-Step Change Model: This model emphasizes the importance of communication, leadership, and employee involvement in driving successful change.

Other Relevant Frameworks:

  • Team Dynamics: Building high-performing teams across departments is crucial for effective collaboration and innovation.
  • Motivation Theories: Understanding employee motivations and applying appropriate strategies (e.g., intrinsic rewards, recognition) is essential for engagement and performance.
  • Decision-Making Processes: Clear, transparent, and inclusive decision-making processes are vital for building trust and ensuring buy-in from employees.

4. Recommendations

To achieve a unified and high-performing culture at Diageo India, we recommend the following:

1. Leadership Development:

  • Develop Transformational Leaders: Implement leadership development programs focusing on communication, collaboration, and vision-setting skills, aligning leaders with the new culture.
  • Create a Leadership Council: Establish a cross-functional leadership council to drive cultural change, foster collaboration, and ensure consistent messaging across departments.
  • Mentorship and Coaching: Pair leaders from different brands to share best practices, build relationships, and promote understanding across departments.

2. Employee Engagement:

  • Communicate the Vision: Clearly articulate the new culture's values, purpose, and benefits to employees through various channels (town halls, intranet, newsletters).
  • Empower Employees: Encourage employee participation in decision-making, problem-solving, and innovation initiatives.
  • Recognize and Reward: Implement performance management systems that align with the new culture, rewarding behaviors that promote collaboration, innovation, and customer focus.
  • Foster a Culture of Open Communication: Encourage open dialogue, feedback, and constructive criticism to address concerns and foster a sense of belonging.

3. Structural Changes:

  • Re-design Organizational Structure: Consider a more matrix-based structure to facilitate cross-functional collaboration and knowledge sharing.
  • Implement Technology Solutions: Utilize technology to improve communication, collaboration, and knowledge management across departments.
  • Promote Diversity and Inclusion: Develop programs and initiatives that celebrate diversity, promote inclusion, and ensure equal opportunities for all employees.

4. Continuous Evaluation and Adaptation:

  • Regularly Assess Progress: Monitor the effectiveness of the cultural transformation through employee surveys, focus groups, and performance metrics.
  • Adapt and Improve: Continuously evaluate the implementation process and make adjustments based on feedback and results.

5. Basis of Recommendations

These recommendations are based on the following considerations:

  • Core Competencies and Consistency with Mission: The recommendations align with Diageo's global values of diversity, inclusion, and performance excellence, supporting the company's mission to be a leading global beverage company.
  • External Customers and Internal Clients: The proposed changes aim to improve customer service, innovation, and employee satisfaction, fostering a positive impact on both internal and external stakeholders.
  • Competitors: By creating a more unified and agile culture, Diageo India can better compete in the dynamic beverage market, attracting and retaining top talent.
  • Attractiveness: The recommendations are expected to lead to increased employee engagement, improved performance, and enhanced innovation, ultimately contributing to Diageo India's financial success.

6. Conclusion

By implementing these recommendations, Diageo India can successfully transform its organizational culture, fostering a more unified, inclusive, and high-performing workforce. This will enable the company to achieve its strategic goals, drive sustainable growth, and maintain its position as a leading player in the Indian beverage market.

7. Discussion

Alternatives:

  • Ignoring the cultural issues: This would likely lead to continued fragmentation, low employee morale, and hinder Diageo India's growth potential.
  • Implementing a top-down approach: This could lead to resistance and lack of buy-in from employees, making the transformation less effective.

Risks:

  • Resistance to change: Employees may resist the new culture, particularly those accustomed to the old ways of working.
  • Lack of leadership commitment: The success of the transformation depends on strong leadership commitment and support.
  • Insufficient communication: Clear and consistent communication is crucial for ensuring employee understanding and buy-in.

Key Assumptions:

  • The leadership team is committed to driving the cultural transformation.
  • Employees are open to change and willing to adapt to new ways of working.
  • The company has the resources and support to implement the recommended changes.

8. Next Steps

Timeline:

  • Month 1-3: Develop the leadership development program, communicate the new culture's vision, and implement initial changes.
  • Month 4-6: Launch employee engagement initiatives, implement technology solutions, and begin restructuring the organization.
  • Month 7-9: Monitor progress, gather feedback, and make adjustments to the implementation plan.
  • Month 10-12: Continue to reinforce the new culture, celebrate successes, and build a sustainable foundation for future growth.

By following these steps, Diageo India can successfully navigate the challenges of cultural transformation, achieving a more unified, high-performing, and innovative organization.

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Case Description

The case describes the culture-building journey at Diageo India, formerly United Spirits Limited (USL). Diageo plc, a global leader in premium alcohol beverages, acquired a majority stake in Indian spirits company USL in 2013-14. The company manufactured, sold, and distributed a portfolio of premium alcohol beverage brands, some imported and others locally manufactured such as Johnnie Walker, Black Dog, Antiquity, Signature, Royal Challenge, McDowell's No.1, Smirnoff, and Captain Morgan. On taking over USL, Diageo made culture change one of its top strategic priorities. This was a challenging task since USL's close to 200-year-old history was marked by frequent cultural shifts resulting from a series of mergers and acquisitions. Anand Kripalu, the CEO of Diageo India, worked closely with Ivan Menezes, the chief executive of global Diageo, the HR function, and the leadership team to identify the four cultural pillars of the organization: breaking hierarchies, celebrating life, ensuring complete compliance, and fostering cross-company collaboration. Kripalu and Aarif Aziz, chief human resources officer of Diageo India, worked programmatically with other functions to deepen and institutionalize each of the four culture pillars. This case outlines Diageo India's initiatives and efforts in each of the pillars. Set in 2020, the case also looks at the extraordinary circumstances created by the COVID-19 pandemic, which prompted the company to accelerate its culture-building efforts. The case closes with Kripalu and Aziz discussing how the gains made at Diageo India thus far could be institutionalized and how to sustain the cultural transformation they had initiated.

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