How Caterpillar Applied the Cycle of Change

How Caterpillar Applied the Cycle of Change 
Direct the Change
In 1982, Caterpillar Inc., an international manufacturer of large earth-moving and construction equipment, power systems, and engines, was almost going out of business by an unanticipated stiff competition. However, it did not take long before the management team realized the scope of the change that was needed. In particular, Caterpillar noted that there was a problem in its building block and the decision-making process. Although the organization did not explicitly state the expected outcomes after the transformation, it was clear that its building block was to be realigned and address things that hindered the company from gaining a competitive advantage despite having been profitable for a long period. Based on Gary Neilson and Bruce Pasternack, the primary organizational building blocks are information, decision making, structure, and motivators (Neilson & Pasternack, 2005). For Caterpillar to complete its transformation successfully, the company used the cycle of change. Changes were well articulated.
Drive the Change
Caterpillar’s highly centralized process of making decisions manifested in hierarchical bureaucracy led to a gradual inward-focused firm that was getting increasingly away from core market essentials (Neilson & Pasternack, 2005). In particular, the organization had strong functional divisions that were known as General Offices (G.O.s). Each G.O. was responsible for a specific business process, such as marketing, engineering, pricing, and manufacturing. The G.O.s had reached a point where they never communicated with each other, which made it difficult to make proper decisions in the company. Caterpillar made a new vision known to everyone through effective communication. Stakeholders were energized to facilitate organizational transformation. Employees knew that something had to be done since Caterpillar was making losses and it was on the verge of declaring bankruptcy. That created the urgency that something had to be done to save the company from the growing stiff competition of firms, such as Komatsu.
Deliver the Change
After Caterpillar realized that there were issues in the way information flowed and the decision-making process, a major reorganization or restructuring was required. On that note, it delivered the change by involving all stakeholders. George Schaefer, Caterpillar’s chief executive officer (CEO) by that time, started by inviting a rotating group of managers weekly for breakfast to brainstorm and understand the company’s weaknesses. Caterpillar’s senior management began inviting managers and other employees since the problem was that the team never allowed the participation of all primary stakeholders when making decisions (Bouchard & Koch, 2014). Various issues were noted, such as the pricing inflexibility and taking too long to respond to clients. In addition, there was no leadership accountability. By understanding the problems affecting the firm and its strengths, the management team was able to come up with strategies to turn things around for the better. For instance, the decision-making process was changed in a way that it involved all relevant stakeholders and did not take...