Blockbuster, Dell, Kodak, Motorola, Sears, Sony, Blackberry and now sadly, my alma mater…Kraft Foods. All have now succumbed or are in the process of succumbing to market changes that were recognized but not appropriately addressed. How could this happen to companies that had everything going for them? Organizational inertia. It plagues small business and industry juggernauts alike. Fortunately, the script doesn’t have to play out poorly.
The literature is well-developed in the subjects of organizational inertia and change management. Some research shows that an imminent threat to an organization can become a catalyst for reducing inertia and spurring the company to action. That’s the good news. Unfortunately, the more common organizational responses tend to heighten rigidity and hasten demise as noted by Clark G. Gilbert in his seminal research at Harvard in 2005.
Gilbert’s study concluded that in many cases in which an organization was faced with substantive change, the organization goes into defensive mode. Rather than focus on ways to meet the change directly it retrenches as follows:
Contraction of authority that amplifies the rigidity of routines and processes.
Reduction of experimentation and heightened risk avoidance.
Increased focus on existing resources.
These are just fancy words for tightening of centralized control, risk avoidance and reliance on what’s worked in the past. In a larger company pin it on bureaucratization, in the smaller, the founder and the need to re-establish control if the ship starts to take on water.
1. Take the problem out of the purview of the existing organization. Set up a task team, new venture or division to deal with the threat. Give it structured autonomy allowing it to deal with the threat in new ways and alternatives.
2. Widen Your Metrics. What gets measured gets done. Broadening your market, competitor and product definitions will provide a different view, opportunities and potentially expose new threats. The opposite is also true. We used to joke that every time we lost our share leadership in a category of business, we’d just narrow the definition of the category to re-establish our leadership. Is Kool-aid really a powdered soft drink?
3. Increase Your Tolerance for Failure. Don’t seek silver bullet solutions. Play organizational small ball by seeding several initiatives. Swinging for the fences can reap large rewards but most often, large and costly failure.
The statistics on success of organizational change is quite sobering. 70% of these attempts end in failure. By following the steps outlined above, my hope is that you have increased the potential to be in that elite 30% that make it.