Leading Innovation and Change: M&S Case Study and Analysis Report

This report provides a comprehensive analysis of innovation, change management, and leadership at Marks and Spencer (M&S). It begins with a company overview, followed by SWOT and PESTEL analyses to assess the internal and external environments. The report then delves into innovation models, specifically incremental innovation, and applies them to M&S's introduction of gluten-free pastries. It evaluates the merits and drawbacks of this innovation. The report also explores change management, focusing on the McKinsey 7S model, and how it is applied to M&S's transformational changes, including restructuring and technology integration. The report concludes with recommendations for M&S's continued success in leading innovation and change, emphasizing the importance of effective leadership in navigating the evolving retail landscape.

LEADING
INNOVATION AND
CHANGE

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Company overview.................................................................................................................3
SWOT analysis.......................................................................................................................4
PESTEL analysis....................................................................................................................4
Innovation...............................................................................................................................5
Change....................................................................................................................................7
Leadership..............................................................................................................................9
RECOMMENDATIONS...............................................................................................................12
CONCLUSION..............................................................................................................................13
REFRENCES.................................................................................................................................14

INTRODUCTION
Ensuring smooth implementation of change is one of the main concerns of business environment
in the current world. This is because innovation and changing external environment result in
changes in the organisation. Businesses focus on continuously innovating business process and
products in order to meet needs of consumers. Effective leadership plays an important role in
implementation of change and development of innovative. Innovation and changes in British
retail chain Marks and Spencer is the basis of this report. M&S is one of the leading members of
the British retail industry. The firm is located in more 29 international markets along with Hong
Kong. Suitable innovation, change management models and leadership styles are applied to
innovation and change in Marks and Spencer. The annual revenue earned by Marks and Spencer
in the year 2020 was equal to 10.2 billion GBP, with 67.2 GBP million group profits before tax.
The company captured 22.5% of UK clothing and home sales online (OUR YEAR IN REVIEW
2020, 2021). The present report analyses changes and innovation at M&S with suitable change
management models. In addition to this relevant innovation models are described and applied to
innovation at Marks and Spencer. In addition to this suitable leadership styles are applied to
M&S. This report aims to evaluate the effectiveness of innovation model, change management
model and leadership style applied to M&S for handling change and effective leadership.
MAIN BODY
Company overview
M&S is headquartered in headquartered in London, United Kingdom. The company was founded
in the year 1884 and offer wide range of own label food, homeware and fashion products along
with banking services. The company has been leading voice of change and innovation in British
retail sector. The firm was the first retailer in UK to create food technology department in 1940's
and introduce fresh chicken by developing cold chain process with their suppliers in the 1960's (
M&S FOOD TO SUPERCHARGE DISRUPTIVE INNOVATION WITH THE LAUNCH OF
DEDICATED NEW TEAM, 2020).
Sale of own label gluten free pastry line is an innovation in the product portfolio of M&S
introduced in the year 2018. In addition to this the company is aiming to integrate more flexible
management structures into its store operations. This change will provide clearer leadership
accountability and free their retail teams to focus on the consumers (M&S ANNOUNCES

PROPOSALS TO ACCELERATE THE TRANSFORMATION OF ITS RETAIL MANAGEMENT
STRUCTURE)
SWOT analysis
Strength Weaknesses
 M&S offers wide variety of products along
with own label brands.
 M&S has a strong digital presence with
accessible e-commerce portal (Lavorata and
Sparks, 2018).
 M&S regularly recalls products reduce
consumer loyalty and trust.
 M&S is highly dependent on UK retail
market to generate profits.
Opportunities Threats
 M&S has the opportunity to expand to new
regions with the help of digital technology
and e-commerce.
 M&S has the opportunity to gain new
income sources by expanding banking
services provided by M&S Bank.
 Intense competition in retail segment
from online and offline firms.
 Shift of young consumers from fast
fashion due to sustainability (Krause,
2018).
PESTEL analysis
Political factors: The implementation of fair trading policy by the British firm affects M&S as
the company sources their own label products from more than 70 nations.
Positive effect: This policy allows M&S to ensure ethical and sustainable sourcing.
Negative effects: Fair trade tariffs increase the cost of M&S.
Economical factor: Depreciation of British currency affects M&S as it is dependent on UK
market for income.
Positive effect: The firm gains the opportunity to expand their International presence due to slow
down in the UK market.
Negative effect: Decreasing sales of the company due to weak economic conditions of UK.
Social factors: Increasing health concern among consumers affects sale of food item by M&S.
Positive effect: M&S has the opportunity to introduce healthy variants of fast food items such as
gluten free food to attract consumers.

Negative effects: Decreasing sale of food items which have high sugar or salt content affects
profitability of M&S.
Technological effects: Global rise in online retail shopping impacts overall sales of M&S
(Thompson and McLarney, 2017).
Positive effect: The company is able to reach international markets without investing in physical
outlets.
Negative effects: The respective firm faces high competition from online retail organisations
such as Amazon and Ocado.
Environmental factors: Sustainable initiatives started by M&S due to rising consumer concern
about climate change affect the company (Watson, Wilson and Macdonald, 2018).
Positive effect: CSR initiatives of M&S towards increasing sustainability such as reducing
plastic and carrier bag usage have created an environment friendly brand image of M&S.
Negative effects: The sustainability initiatives of M&S increase expenses.
Legal factor: The changes in trade and taxation laws due to implementation of Brexit deal
affects M&S.
Positive effects: Compliance with these laws will help M&S conduct trade between UK and EU.
Negative effect: The Brexit deals increases complications in conducting trade between EU and
UK. This delays various activities conducted at M&S as the supply chain of the firm is
dependent on EU based suppliers.
Innovation
Innovation is defined as creation and utilisation of ideas in order to enhance business processes
or attain business goals. implementation of ideas or process, introduction of new products in
order to increase net profit is considered business innovation. Businesses firms seek innovation
in order to gain competitive advantage in their industry or adapt to changes in the external
environment of the company (Alrowwad and Abualoush, 2020).
Innovation models
Incremental innovation: This is one of the most commonly seen innovation in the corporate
world. Incremental innovation is utilised by business firms when present technology is used to
provide additional value to the. consumer in existing market. Every business firms indulges in
incremental innovation by enhancing their products with the help of existing technology.
Disruptive innovation

Businesses firms utilise new technology for their present market as part of disruptive innovation.
Application of new technology to existing market is not favourable at the start due to its
complicated nature. After some iterations, the disruptive technology attains mainstream
popularity and disrupts competition in the industry (Anning--Dorson, 2017).
Architectural innovation: As per this innovation, business firms utilise existing technology and
knowledge and apply it to different market from the market in which it is being currently used.
The risk associated with architectural innovation is reduced by the technology being proven in a
particular market.
Radical innovation: Revolutionary technology is used by business firms in order to create new
market or dissolve existing industries in order to utilise radical innovation. Radical innovation
not only impacts the industry of the business firms but affects other industries as well.
Implementation of radical innovation is high risk as the reaction of consumer is difficult to
predict but positive consumer reception provides high rewards to business firms (Fontana and
Musa, 2017).
Application of innovative model on M&S
The incremental innovation model can be applied to the M&S . In the year 2018, M&S
introduced their own label line of gluten free pastries. This new product utilised existing
knowledge and technology to provide new products to the existing consumer base of the
company. This gluten free product line was a part of the Made Without Range of the company
and M&S became the first retailer in UK to seek own brand gluten free pastry products. This
product range includes food items such as croissants, chocolate twists and apricot pastries which
are made with French butter. This innovation of the company utilises incremental innovation as
the needs of the consumer base and market trends form the basis of usage of existing technology
to enhance product. M&S sells own brand pastry range but utilised the knowledge of making
gluten free pastries and mass production technology to produce variety of gluten free pastry
items. These items are produced after considering the emerging social trend of increasing
concern about health. The firm used existing knowledge and technology to create a product
range which gives consumers additional value.
Evaluation of innovation
M&S utilised incremental innovation in order to produce gluten free range of pastries which
utilised existing technology and knowledge.

Merits of this innovation
The main merit of application of incremental innovation to introduce gluten free line of pastries
is that it is based on consumer trends if the firm (Fontana, 2019). This innovation reduces risk of
negative consumer reception as the innovation directly responds to changing consumer needs and
increasing health concern.
In addition to this, gluten free pastries are not complicated innovation and involve changing
product with existing technology and knowledge to provide additional value to the consumer.
This further increases the possibility of success of this innovation.
The target consumer base for gluten free food items is growing because of the rise in fitness
culture. The rise in fitness culture and health concern is depicted through the better health
campaign of the UK government which aimed at reducing Obesity.
The better health campaign of the British government imposes restrictions on sale and
promotions of food items which have high sugar and salt content and lead to obesity (Obesity:
Unhealthy 'Buy one get one' free deals targeted, 2020). Gluten free pastries of M&S utilise
incremental innovation as it is based on changing market conditions.
Drawbacks of innovation
The primary drawback of this innovation is that it makes minor changes into exisiting products
available in the market which can be used by other organisations easily.
Change
The act of taking a business firm from its current position to a position which the business firm
aims to attain. Adaptive and transformational changes are two types of changes which take place
in an enterprise. Shift in leadership, change in organisational structure, usage of new technology
or changes in the business models are some of the factors which lead to change in a business firm
(ORGANISATIONAL CHANGE MANAGEMENT: WHAT IT IS AND WHY IT'S IMPORTANT,
2020) . All the images which take place in an organisation are implemented with focus on
attaining business objectives. Smooth implementation of change helps business firms gain
success in their endeavours and puts them closer to achieving their business objectives.
Change management model
McKinnsey 7S change management model
This change management model provides a list of 7 vital factors which need to be considered by
business firms during implementation of change. These factors are provided below:

Strategy: This refresh to change management plan which includes stepwise guidelines about
implementation of change.
Structure: The structure followed by the firm is part of this element of the change management
model.
Systems: The systems which are utilised by the company to complete daily operations are part of
this element.
Shared values: The main values understood and followed by the employees of the firm and play
a role in smooth functioning of the organisation are part of this firm.
Style: The manner of adoption of the change is highlighted in this part of the change
management model.
Staff: The workforce of the company is focus of this element of the model.
Skills: The competency and skill set of the workers recruited by the company are part of this
element of the company (Johannessen, 2019).
Application of the change management model to M&S
M&S is conducting transformational change in their company. The change includes
transformation of the change management structure. This change focuses on reducing
management layers, utilise technology to gain better insight so that store management roles are
focused in the consumer.
McKinnsey 7S change management model is applied to transformational change ate M&S
below:
Strategy: The strategy of M&S is effectively communicated to each employee. The focus of the
change management strategy is to create consumer focused store roles.
Structure: M&S focuses on creating more flexible management structure at store level. This
involves reduction of management layers.
System: Marks and Spencer has created well defined systems so that the process of change
implementation and management is completed effectively. This includes finance, marketing, PR
management and others.
Shared values: The shared values which make up M&S include creativity, sustainability,
transparency and accountability. The company has taken steps to increase inclusivity and
accountability in management.

Style: The leadership style adopted by the company is participative leadership style. This
leadership style is effective for adoption of this change as it focuses on employees.
Staff: The total number of staff members which are affected by implementation of this change
include 950 roles across central support functions in field and central operations and property
and store management. M&S provides adequate training to staff members to increase this skill
according to requirement of the company.
Skills: M&S conducts training sessions and provides rewards to talented employees so that
competitive workplace environment is created. This drives employees to increase their skill set.
Effectiveness of change
The transformational change in the store management structure of the company seeks to enable
managers at stores to become more consumer centric.
Merits
With the help of McKinsey 7S change management model M&S will be able to develop
effective strategy and utilise system of to implement change smoothly.
As the company utilises participative leadership style, the change management process which is
centred around store management will be implemented smoothly.
By decreasing management levels the company will be able to free store level employee to
interact with consumers and ensure that each consumer gains positive consumer experience.
In addition to this the company will be able to increase consumer connection with the firm which
will ensure quick change implementation of change and employee performance will remain
unaffected.
Leadership
The term leadership is defined as the ability to set future goals for the company, make quick and
effective decision during emergency and act as an inspiration to other employees so that they
enhance their performance level (Klaic, Burtscher and Jonas, 2020). Effective leadership helps
business firms create dedicated workforce, attain goals in timely manner, implement change
smoothly and ensure continuous growth.
Leadership style
Autocratic leadership style
This leadership style does not involve employees in decision making and employee opinion are
not considered in any type of decisions. The leader is tasked with making important decisions.

This type is effective in situations which require quick decision making and handling a team of
inexperienced members. This leadership style is ineffective in increasing employees engagement
or satisfaction (Koyuncuoglu, 2021).
Participative leadership style
This leadership style encourages every employee to participate in the decision making process
and make decisions as a collective group. This type of leadership style creates positive working
while the decision making process becomes time taking.
Transformational leadership style
This leadership style is focused on pushing employees out of their comfort zone so that they are
able to reach their full potential. This type of leadership style helps in motivating employees to
maximize their performance and create a growth minded working environment. This style is only
effective if employees are given coaching to take new responsibilities.
Coaching leadership style
This leadership style is centred on increasing employee’s engagement and performance. The
main focus of this leadership style involves determining and. understanding specific motivations
of individual employees and weakness of each employee are identified so that learning initiative
for employees can be created and implemented. This leadership is not effective for every
business scenario as specific situations require particular coaches.
Application of leadership style to M&S
The leadership style adopted by Marks and Spencer is participative leadership style. Under this
leadership style each employee of the company is invited to take part in the decision making
process. In addition to this, the opinions of every employee are considered in the decision
making process (Jenkins, 2021).
This leadership style is used by Marks and Spencer to ensure that the structural change in store
management is implemented effectively. Under this leadership style the process of reducing
management layers in the company are conducted by considering opinions of each employee of
the company.
The usage of this leadership style during introduction of the incremental innovation of gluten
free pastries involves gaining employee opinions, taking their suggestions and feedback about
various aspects of the project.

With the help of this leadership style M&S will be able to gain employee support for activity
conducted during implementation of structural change and introduction of new product.
This leadership style is suitable for Marks and Spencer as it encourages employees to participate
in every initiative.
Effectiveness of leadership style
Participative leadership style has various merits and demerits which affect business operations of
firms which adopt this leadership style. Merits and demerits of this leadership style in context of
retail firm Marks and Spencer are provided below:
Merits
The main merits of this leadership style for Marks and Spencer is that it increases employee
involvement in various tasks. As the change implemented by the company is focused on
employees this leadership style will be helpful in ensuring that there is low resistance from
employees regarding change management (Milley and Szijarto, 2020).
Another benefit gained by Marks and Spencer with the help of this leadership style is that it
allows the company to understand employees viewpoint about change implementation. This will
help the company create a strategy which smoothly implements change so that employee
performance remains unaffected.
Demerits
The primary demerits of this leadership style which affects business processes and change
management at Marks and Spencer is that it hinders the speed of decision making. The decision
making process under this leadership is time consuming. This affects change management and
innovation at M&S as these process often require quick decision making process which is not
possible under this leadership style.
Another demerits of this leadership style it increases likelihood of disputes within the company.
The process of change management could be delayed or negatively affected due to disputes. It is
also difficult to foster innovation in an enterprise which has high level of disputes.

RECOMMENDATIONS
M&S needs to focus on using disruptive innovation model as it will help the company
gain competitive position in the industry.
The justification of this recommendation is that usage of disruptive innovation model allows the
business firms to enter the market and slowly capture the consumer base of incumbent firms
(What Is Disruptive Innovation?, 2015). M&S will be able to gain competitive advantage by first
capturing overlooked consumers of the retail sector and gradually moving upwards to gain
consumer base of incumbent firms and secure beneficial position.
M&S needs to ensures that there is low resistance from employees during change
management by constructing loyal employee base.
This recommendation will help M&S swiftly implement change and ensure that the performance
of each employee is not affected negatively in any way. In addition to this by ensuring that the
employees do not resist to change, the firm will be able to quickly adapt their workforce to
changing business environment.
M&S needs to ensure that senior leadership is able to make quick decisions in emergency
scenarios. M&S needs to train their leaders about ways to make quick decisions which are in the
best interests of the company so that diction making quality remains unaffected by the urgency
of any scenario.
This recommendation is useful for M&S as the company has adopted participative leadership
style. The main disadvantage of participative leadership style is that leaders are not able to make
quick decisions (Chan, 2019). This can hamper effective the diction making of leaders during
emergency situations. If M&S build quick diction making in leaders they will overcome main
demerit of participative leadership and gain various benefits.

CONCLUSION
From the above report it is determined that innovation is essential for growth of business firms
and helps the company gain competitive advantage in their industry. Change is the process
through which enterprises elevates their current position to secure position which they need to
attain. It is essential to use effective change management model so that the process can be
completed smoothly. McKinnsey 7S model is one of the most effective change management
model. Effective leadership plays an important role in smooth completion of daily activities and
progress of the company.

REFRENCES
Books and Journals
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variables among transformational leadership, transactional leadership, and organizational
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Anning-Dorson and et. al., 2017. Innovation and organizational development: the role of
organizational leadership. African Journal of Economic and Management Studies.
Chan, S. C., 2019. Participative leadership and job satisfaction. Leadership & Organization
Development Journal.
Fontana, A. and Musa, S., 2017. The impact of entrepreneurial leadership on innovation
management and its measurement validation. International Journal of Innovation Science.
Fontana, E., 2019. Pioneering environmental innovation in developing countries: The case of
executives' adoption of Leadership in Energy and Environmental Design. Journal of Cleaner
Production, 236. p.117675.
Jenkins, M., 2021. Expert Humans: Critical Leadership Skills for a Disrupted World. Emerald
Group Publishing.
Johannessen, J.A., 2019. Leadership and organization in the innovation economy. Emerald
Group Publishing.
Klaic, A., Burtscher, M. J. and Jonas, K., 2020. Fostering team innovation and learning by means
of team‐centric transformational leadership: The role of teamwork quality. Journal of
Occupational and Organizational Psychology, 93(4). pp.942-966.
Koyuncuoglu, D., 2021. An Investigation of Potential Leadership and Innovation Skills of
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Krause, E. L., 2018. Tight knit: global families and the social life of fast fashion. University of
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Lavorata, L. and Sparks, L. eds., 2018. Food retailing and sustainable development: European
perspectives. Emerald Group Publishing.
Milley, P. and Szijarto, B., 2020. Understanding social innovation leadership in universities:
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Online
M&S ANNOUNCES PROPOSALS TO ACCELERATE THE TRANSFORMATION OF ITS
RETAIL MANAGEMENT STRUCTURE, 2020. [Online] Available through <
https://www.google.com/amp/s/corporate.marksandspencer.com/site-resources/amp
%3fpid=5f156d207880b22340f7650e>
M&S FOOD TO SUPERCHARGE DISRUPTIVE INNOVATION WITH THE LAUNCH OF
DEDICATED NEW TEAM, 2020. [Online] Available through <

https://www.google.com/amp/s/corporate.marksandspencer.com/site-resources/amp
%3fpid=5f156d207880b22340f7650e>
Obesity: Unhealthy 'Buy one get one' free deals targeted, 2020. [Online] Available through <
https://www.google.com/amp/s/www.bbc.co.uk/news/uk-politics-53546151.amp>
ORGANIZATIONAL CHANGE MANAGEMENT: WHAT IT IS & WHY IT’S IMPORTANt,
2020. [Online] Available through < https://online.hbs.edu/blog/post/organizational-change-
management>
OUR YEAR IN REVIEW 2020, 2021. [Online] Available through
https://corporate.marksandspencer.com/annualreport
What Is Disruptive Innovation?, 2015. [Online] Available through https://hbr.org/2015/12/what-
is-disruptive-innovation