Thomas Kim sums up the problem of corporate inflexibility pungently. “There are companies that perform reasonably well, and are completely dysfunctional.”
But then the market changes. “In the companies that we see that hit the wall, that dysfunctional corporate culture really becomes a problem.”
Why do so many established and often well managed companies struggle with disruptive innovation? Many times it is simply because companies have been doing the same things, in the same ways, and for the same reasons for so long, that they struggle with the concept of change.
According to the theory of structural inertia, organizations are limited in their capacity to change because they’re selected – in evolutionary terms – for their highly reproducible behaviors. Stability is rewarded. Change, in fact, not only threatens to disrupt the current business but has the potential to lead to disaster. As a result, organizations continue to do as they’ve always done, even when it seems irrational to do so.
Most senior managers forget a critical principle of change management: Organizations don’t change; people do.
Our education system and the modern large company workplace seem to value similar things: conformity, standardisation and management-by-objective target setting.
High conformers do things better, not differently. Low conformers do things differently, not just better. Managers are mostly intrinsically expected to maintain; not to change, and are conforming because they gain advantage in doing so.
As an example we can use the small real world example.
The company’s innovation program rejects the suggestion for a complementary way of sales reporting by using visual information for better discovering patterns and trends.
The explanation was:
If it is that the innovation itself serves the improvement of the existing internal process, the benefits should be clearly stated and accompanied with objective measurements (KPI improvements).