HBR - Change for Change's Sake

Change for Change’s Sake

by Freek Vermeulen, Phanish Puranam, and Ranjay Gulati

Change for Change’s Sake - Harvard Business Review, from the June 2010 issue of HBR, is a good article on how to decide it is time for organizational change in a company, and how to ask whether the persistence of any one organizational structure is fostering the growth of silos and entrenched networks, stifling of innovation, and adaptability.

A short series of questions, grouped into three sets can help companies get started on assessing the need for change.

"Collaboration across units has all but disappeared" is one such question, but it is important to note that there can be communication across units that gets mistaken for collaboration. Regular meetings mandated by the need to coordinate work, releases, and products do not necessarily impute collaboration.

"There's a persistent failure to spot new developments and opportunities in the market;" - this is in some ways the precursor to what Christensen called the threat of "disruptive innovations". It is not sure whether a simple reorganization will be enough to stave off changes in the marketplace. Remember again that copycat steps can often enough be confused for agility and responsiveness. True innovation is by its very nature scary - because it is unknown, untried, and disruptive - and therefore invites the temptation to suppress. Microsoft and the Internet, IBM and the personal computer, Detroit and the small car are all examples of ignoring new markets to preserve the old. In each case, the entrenched incumbent did wake up, but in all three cases it was a classic case of too little, too late.

But perhaps the single biggest challenge is that of "breaking up entrenched interests", which changes how resources are allocated. As anyone who has worked in any organization will know, more often than not, the most visible determinant of success and power in an organization is the control over resources. And while "At first, a unit’s power may accurately reflect its importance, but over time that power may no longer be justified. The company may be better off assigning a larger proportion of its resources elsewhere." That, unfortunately, is easier said than done! Indeed, turnover of senior executives may become an issue when "when their authority, budgets, and number of direct reports declined sharply".

Change for the sake of change can often become counter-productive, where employees end "up exchanging one set of deficiencies for another" - clearly undesirable. Addressing this challenge however by changing the compensation system to "emphasize individual rather than group performance" in one year, or "rearranging office space" seem rather cosmetic, and without true organizational buy-in is unlikely to deliver.

The "Corporate Cholesterol Test" can help companies ask the right questions. The answers however are quite another question.

© 2013, Abhinav Agarwal (अभिनव अग्रवाल). All rights reserved.