Tuesday, September 16, 2008

Time to rescue "corporate change" from cliché bucket

Every company recognizes the need to change, correct? There are so many failure stories describing the terrible consequences of companies standing still that no executive in her right mind would ignore the need to reinvent the business on a continuous basis. We hear this all the time:

"The only constant in our business is change."

Yeah, right. Even if the idea is understood on its surface, companies worldwide are doing a terrible job of implementing it. If you read the newspaper, outside of mergers and acquisitions, change occurs only when companies are in crisis.

In other words, only when the situation is so bad that it can no longer be ignored or rationalized away do companies take on the hard work of reinventing themselves. What does this mean? As Gary Hamel wrote in 2007's best business book:

...In recent years, entire industries have been caught behind the change curve. Television broadcasters and newspaper publishers, record companies and French vintners, traditional airlines and giant drug companies, American carmakers and European purveyors of haute couture--all have been struggling to rejuvenate seriously out-of-date business models. Sure, many of the companies in these industries will regain their footing--eventually. But in the meantime, billions of dollars and millions of customers will be lost. Such is the price of maladaptation. (p.42)

No CEO wants to squander billions of dollars of lost opportunity--not least because of the primordial urge to save one's own skin. Yet it doesn't happen. This week's series of posts takes on one large reason why change rarely happens without crisis, and a way to start a fundamental culture change that can help instill the ability to recognize opportunities and threats and move more quickly to address them.

The root of this thinking is John Kotter's great new book, "A Sense of Urgency." Kotter takes his lifetime of study of organizations and wonders why so many organizations are so complacent, or worse, running around frantically accomplishing nothing. I'd like to focus on one reason why:

...Organizations of any size or age tend to be too internally oriented. Even people who know this fact often underestimate the size of the problem and its consequences. The disconnect between what insiders see, fee, and think, on the one hand, and external opportunities and hazards, on the other, can be astonishing at times--even in organizations that are producing very good short-term results. (p.67)

Kotter's prescription for companies is to "bring the outside in." To inform their people and thinking with a knowledge of the environment outside the company's walls. That's what we'll elaborate on in our next post.

Other posts in this series:
Part 2 Part 3 Part 4 Part 5

Related posts:
Best business books of 2007
On "A Sense of Urgency"

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