To maintain competitive edge, organizations have to lead in market change and innovation. Organizational change occurs as a result of both external and internal factors. External factors are outside forces that influence inertia (external factors fall under dominant inertia category); while internal factors are internal forces that influence inertia in organization (internal factors fall under alternative inertia category). “Structural inertia is rooted in size, complexity, and inter-dependence in the organizations structures, systems, procedures, and processes” (Tushman & O’Reilly, 1996:18).
Typology of structural inertia: Author has subdivided dominant and alternative inertia types into two sub categories, they are as follows:
1. Dominant type:
· Spontaneous inertia (External): In this type of inertia there is low motivation for change in organizations. In spontaneous inertia organizations streamline their operations by collaborating and tolerating population conditions.
· Forced Inertia (External): In this type of inertia there is high motivation for change in organizations. In forced inertia organizations are obliged to meet their standards to fit their principal features across different organization environments.
2. Alternative type:
· Deliberate Inertia (internal): In this type of inertia there is low motivation for change in organizations. In deliberate inertia structural outcomes are initiated & embraced by the employees and the organization.
· Unobtrusive inertia (internal): In this type of inertia there is a high motivation for change in organizations. In unobtrusive inertia structural responses are supported & agreed by the employees and the organization.
This article focuses on internal factors that generate deliberate structural inertia in organizations.
Models of deliberate structural inertia: Article explains three layers of models for deliberate structural inertia. They are as follows:
1. Layer 1 of the model: Layer 1 is the attributed belief of a structural Inertia. This model explains how decision makers delineate belief in inertia.
2. Layer 2 of the model: Layer 2 is advocating structural inertia as a warranted choice. This model explains how decision makers defend inertia.
3. Layer 3 of the model: Layer 3 is legitimating structural inertia as logic. This model explains how decision makers legitimize inertia.
In my opinion all four inertia’s are significant and they influence organizations at various levels, even though the alternative (internal) types are viewed as a choice rather than an obligation. Sometimes the inertia themselves can become obligations and organizations will need to act according to it. Both internal as well as external factors play important role to make choices of structural inertia.
The best example of inertia is that of General motors, GM decided to go green by developing electric cars in 2007, however due to massive costs and falling sales led GM to abandon that venture altogether and focus on its core gasoline powered vehicles. In this case GM deliberately endorsed structural inertia for its survival. GMs management decision to accept changes (developing green vehicles) in the organization in the beginning and outcomes (when GM decided to abandon the venture) of these changes were different than predicted. Why these outcomes were different from the management’s decision? The answer to this question is if GMs management would have known and understood its internal factors (high pension cost) and external factors (sales revenue and recession) they would have got the desired outcomes for the changes they wanted in the organization.
Reference: Schwarz, Gavin M. "The Logic of Deliberate Structural Inertia." Journal of Management Vol 38.2 (March 1, 2010): 547-72.
Vijeta you bring up a good point about inertia. I think that GM was just reacting to the market demands and saw that all its competitors were in the electric cars R&D stages and wanted to follow along as well. At times this is the bad part because the firm may not be ready to take on that stage and must try to stick to what it does best. In Gm's case they should have first looked at all the factors that were in play before taking on such a new product development. Forced Inertia seems to be what mostly drove GM. Management saw that they were falling behind and forced themselves to create a new product. This was also bad because they didn't realize that they weren't ready to make a change yet.
ReplyDeleteJose, I agree with your point that GM should have looked at its internal & external factors before taking next step. This shows that for big corporations sometimes compared to its internal & external factors, innovation and new products carry less weight. To overcome such obstacles, they need to concentrate on their core strategy.
DeleteVijeta, you present me an unknown knowledge about structural inertia theory. I suppose it would help to understand the logic of key decision makers during the corporate change. The layers of the model how to delineate, to defend, and to legitimize the choice, strengthen my understanding of this theory. I think GA is a good example to think about the choice affecting eventual structural change of company. I believe any enterprise should face such issue during the choice of change, and this theoretical analysis would help.
ReplyDeleteGood article. I think inertia happens more than we think, especially when the times are good. Company's get into a place where they are comfortable and the money is just rolling in. GM was forced to make changes because they did not have the foresight to see where the market was going. The same thing is happening to Best Buy right now. After Circuit City went down, they did nothing to improve their business model. All forms of inertia can be damaging to a company.
ReplyDeleteMark, I agree that the Best buy may be the next after Circuit city. I think Circuit city would have saved itself from bankruptcy if they would have practiced some new innovation strategies in their organization to overcome their losses. The second reason is their top management didn't envision what will happen in next 5 or 10 years to their company.
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