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The Great Wall

About Scaling Edges: A pragmatic pathway to broad internal change

Large companies that attempt to enact major change fail more often than not; in fact, only an estimated one-third of major change efforts accomplishing the goal they originally set out to achieve.

Resistance to change is an age old-phenomenon that goes back to some of the largest organizations in history. Qin Shi Huang, the first emperor to unify China in 221 B.C. viewed philosophies and academia from outside of the Qin kingdom as threats. Intellectuals frequently challenged his authority, and in an effort to preserve the core and maintain control, Qin ordered the burning of all books unrelated to his reign and executed more than a thousand scholars who dared to question him.

While core defense mechanisms in today’s corporate environment may be somewhat more civil that those in the Qin dynasty, the ‘great wall’ of organizational resistance to change still remains. Large companies that attempt to enact major change fail more often than not; in fact, only an estimated one-third of major change efforts accomplishing the goal they originally set out to achieve in today’s corporate environment.

The approach most corporate executives take in enacting large-scale change stems from a commonly held but misguided notion that ‘big change requires big bets.’ This mindset often leads them to tackle the core of the company head-on, which only serves to reinforce the very resistance they hope to avoid. This direct approach may occur for a variety of reasons.

Executives may feel that tackling the core head-on demonstrates commitment to stakeholders and market analysts or that a grand overhaul is the only way to accomplish change when the core of the company is too bureaucratic, slow or ingrained in its old ways. While the courage of these executives is admirable, this approach can lead to some harsh realities:

Changing the core has an uncertain return:
A company’s core business is what they know best, and making significant changes to this core can be a very risky endeavor for most firms. If the project fails, then the company’s core operations may be irrevocably altered. Even if a change agent within the firm strongly believes in the returns, other leaders unable to see past the uncertainty may push back, creating a cycle of resistance that can weaken or kill an initiative.

Changing the core requires a great deal of resources:
An overhaul of an organization’s core operations requires a large upfront investment and a willingness to accept substantial losses while the company reorganizes and refocuses. Even if an organization has sufficient resources for the project, such a large reallocation will threaten the status quo and usually raise ‘institutional antibodies’ to change within the core stakeholders. As the performance pressures continue to mount on firms and executives, we believe that summoning the resources to enact change within the core will only become more difficult.

The approach most corporate executives take in enacting large-scale change stems from a commonly held but misguided notion that ‘big change requires big bets.’

Changing the core requires a great deal of time:
The high risk and uncertain reward of significant change initiatives often leads to substantial resistance. The leadership teams’ natural inclination against change can take two forms: active or passive-aggressive resistance. Passive-aggressive resistance can be equally distracting and time-intensive to combat and can create the illusion of progress, where stakeholders “agree” during meetings but fail to take action after, or worse yet, work against the effort in the background.

These three factors can derail change initiatives and create unforeseen political and financial impacts within an organization. In the face of such factors, how can executives in large companies enact major change? As we will describe, each of these three issues can be avoided by following a “pragmatic pathway” to change, which can minimize resistance from the core and create the greatest odds for institutional innovation.

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