Businesses need to adapt as environmental changes occur so they can stay relevant in a competitive landscape. Change is 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 numbing routine can follow. These developments can be likened to cholesterol. While everything is going well, organisations tend not to notice them, just as seemingly fit people do not realise their arteries are dangerously clogged.

Silo Formation

Typically in an organisation, once people become comfortable in their existing groups, they stop communicating and coordinating 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 harm an organisation’s ability to innovate and identify new opportunities. One way to overcome this is to reorganise the organisation’s structure.

From 1997 to 2001, a technology company called Cisco Systems 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.

The Impact of Routine

Organisational stability is great unless the market shifts; 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.

References:

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

 

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