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Is your organization suffering from inertia?

Brain circuits

Is your organization suffering from inertia?

Published 22 February 2022 in Brain circuits • 2 min read

We have studied companies that stand the test of time and have discovered they share some key qualities that allow them to succeed even in rapidly changing times. These companies display what we call strategic incumbency, which refers to their ability to dynamically convert the liabilities of age, size, and tradition into key advantages of market power, trusted relationships, and deep insights. This requires a fundamental shift from a passive to an active enactment of incumbency. In a previous Brain Circuit, we looked at how to identify if your organization has become too passive. If it has, you may want to check if you are facing the biggest barrier to strategic incumbency – Inertia.

In theory, organizations are characterized as adaptive systems that evolve in response to environmental changes, threats, and opportunities. However, in practice the starting condition for most incumbents is resistance to change, entrenched legacy systems, and a stuck-in-the-past mindset.

The exercise

Ask yourself the following questions:

  • Are you/your leaders falling behind in observing and interpreting cues from the external (or internal) environment to adapt your company’s response?
  • Even when you/your leaders do take action in response to contingencies, is it too little too late with half-hearted commitment, inefficient/ineffective deployment, or deficient in other ways?
  • Do you spend the majority of your time on internal processes, bogged down by outmoded structures, operating practices, and policies?
  • Is securing approval for alternative models, capital outlay, and resource reallocation an uphill battle in your company?
  • Is organizational learning fragmented across hierarchical, divisional, and functional silos?
  • Is the typical organizational response to change, “We have always done it this way – with success!”?

If the answer to any/all of these questions is yes, your organization is probably suffering from inertia. The biggest roadblock to active incumbency is costly inertia, not only in financial terms but also in terms of consuming an inordinate amount of time, human resources, and intellect. The larger and older the company, the bigger the challenge of both structural and psychological inertia.

However, we find that by proactively overcoming inertia at pace with the contextual changes, organizations can convert the very disadvantages of size and age into significant advantages of market power and trusted relationships that enable strategic incumbency.

Further reading: The Strategic Advantage of Incumbency by Thomas Malnight and Ivy Buche

Authors

Thomas W. Malnight

Professor of Strategy and General Management and Faculty Director of the Business Transformation Initiative (BTI)

Thomas W Malnight is Professor of Strategy and General Management and Faculty Director of the Business Transformation Initiative (BTI) at IMD. His fields of interest are strategy, leading and accelerating transformational organizational change and the role of purpose in redefining businesses and their impact on society.

Ivy Buche

Ivy Buche

Associate Director, Business Transformation Initiative

Ivy Buche is Associate Director of Business Transformation Initiative at IMD. She works with faculty on organization transformation projects for large companies.

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