Environmental changes require businesses to make organisational changes in order to stay relevant in a competitive landscape, as changes are inevitable.
But the idea that an organisation might want change for its own sake often provokes scepticism. Why inflict all that pain if you don’t have to?
It has been suggested that organisations need to make internal changes, regardless of the competitive landscape. Even if the external environment is not changing, the internal environment probably is. Dynamics within an organisation are constantly shifting and require the organisation to change along with them.
When organisations avoid making changes for too long, problems such as silo formation and the creation of a deadening routine can follow. These developments can be likened to cholesterol. When everything is going well, organisations tend not to notice them, just as seemingly fit people do not realise their arteries are dangerously clogged.
Typically, in an organisation, once people become comfortable in their existing groups, they stop communicating and co-ordinating with others outside their department and fail to see others’ perspectives. Collaboration tends to get trapped in silos. Over the years, employees will only identify with others in their units and their networks in the firm will be dominated by those people. Gradually they will become insular and this can have a negative effect on an organisation’s ability to innovate and identify new opportunities. One way to overcome this is to reorganise the organisation’s structure.
Cisco Systems, a technology company, from 1997 to 2001, was organised into three units, representing three lines of business, each focused on a distinct customer type. In a major reshuffle following the company’s first ever loss, in 2001, Cisco was reorganised by function. This was a success, until 2004, when the organisation decided to revisit the organisational structure again.
The Impact of Routine
Organisational stability is great, unless, the market shifts, and then it is more difficult to make the required changes. So too, the less people in organisations explore and search for new opportunities, the less capable they are of doing so. As James March of Stanford University famously explained: Exploitation (doing what works today) drives out exploration (seeking out risky but potentially valuable new ways of doing things). It is also important to experience different kinds of changes.
For years Hewlett-Packard oscillated between reorganising the structure from centralised to decentralised. These periodic changes initially yielded benefits but eventually became a familiar process. Hewlett-Packard ended up exchanging one set of deficiencies for another. Ultimately, the company’s performance suffered.
In undertaking periodic change initiatives, it is important to vary the focus by choosing a different category and zoning in on a different aspect for each round of change.
Bright, J. (2017). Change for change’s sake may be a powerful intervention. Retrieved from https://www.smh.com.au/business/workplace/head-20170404-gvcyb4.html.
Vermeulen, F. (2011). When to change for change’s sake. Retrieved from https://www.london.edu/lbsr/when-to-change-for-changes-sake.
Vermeulen, F., Puranam, P., & Gulati, R. (2010). Change for change’s sake. Retrieved from https://hbr.org/2010/06/change-for-changes-sake.