Change is a process used by organizations that seek to achieve greater competitiveness and profits. Change is believed to be a relevant response to the changing environmental demands. Through change, organizations enhance their flexibility. They use change to adjust to the emerging demands of the market and business environments. Still, the idea that organizations might pursue change for its own sake remains an object of skepticism. In their article, Vermeulen, Puranam and Gulati (2010) discuss the reasons for which organizations might want to change themselves. The authors provide recommendations to facilitate organizational change, when it is made for its own sake. These recommendations are based on the assumption that change, or restructuring, “gets people to start forming new networks, making the organization as a whole more creative” (Vermeulen et al., 2010). In other words, organizations should constantly monitor and capture change opportunities, even when they are not related to any environmental shifts.
Vermeulen et al. (2010) are convinced that all organizations tend to fall into the trap of deadly routines, which eventually reduce the efficiency of resource allocation and make outdated power structures even more powerful. The researchers describe and analyze three main situations, when changing for change’s sake can be relevant and justified. First, silo formation becomes a problem to the organizations, whose units are organized around a single criterion (Vermeulen et al., 2010). In most contemporary organizations, business units are organized to deal with one aspect of business performance, be it market, geography, or product. As a result, the communication lines are shaped around the same criteria, leaving out other aspects of the organizations’ performance. For example, an organization whose business units are organized around functions may find it particularly difficult to consider new product opportunities (Vermeulen et al., 2010). This is why Vermeulen et al. (2010) believe that firms need to shake themselves periodically.
Theoretically, organizations can resolve their silo complexities through the development and implementation of a matrix structure. However, according to Vermeulen et al. (2010), matrix organizations are surrounded by numerous practical complexities, one of them being poor accountability across units. Change is a better solution to this problem, and the authors use the example of Cisco Systems to illustrate their point. In brief, Cisco used to organize its units around various types of customers, but only until it faced one of its major losses in 2001 (Vermeulen et al., 2010). The company’s units were subsequently reorganized around function (Vermeulen et al., 2010). The discussed change eventually empowered the organization to promote more cost-effective and rapid technical innovation, while eliminating overlapping product offerings and achieving considerable economies of scale (Vermeulen et al., 2010).
Silos are not the only problem requiring organizational change. Deadly routines exemplify a serious barrier to continuous learning and performance improvements in organizations. Vermeulen et al. (2010) assert that, the longer organizations perform their functions in a particular way, the more difficult it is for them to adapt to the new demands of the business environment. Here, addressing the silo problem may not suffice to bring the organization to the desired result. Vermeulen et al. (2010) suggest that even relying on the same kind of change may itself become a routine. The example of GE Healthcare proves the point: it is better to undertake a series of changes rather than focus on a single shift. For example, GE Healthcare was restructured in 1997, followed by another restructuring after it was taken over by Hogan (Vermeulen et al., 2010). The authors imply that it is due to a series of various changes that the organization eventually managed to survive the competition and achieve great successes in its service business.
The third reason why companies should pursue change is because they can get entrenched into conflicting interests. As a result of slow or ineffective changes, organizations face difficulties with allocating their resources (Vermeulen et al., 2010). At times, organizational groups or departments acquire more power than they actually need to solve their routine problems; these groups or departments need to be restructured or dissolved, in order to create a new balance within the firm (Vermeulen et al., 2010). Here, the researchers refer to Jones Lang LaSalle, a global real estate organization that had to redesign itself in response to the emerging imbalances in its power structures (Vermeulen et al., 2010). Certainly, no change is possible without losses. Jones Lang LaSalle had to reconcile with the loss of some of its executives. Still, at the end, the company became much more competitive and productive as a result of change.
All these recommendations may become irrelevant, if companies do not know when to initiate change. That the company is performing well does not mean that there is no need for change. Vermeulen et al. (2010) have developed a simple questionnaire to assist organizations in accomplishing their change endeavors. The questionnaire is to be used by senior managers, who want to evaluate their companies’ readiness for change. It is what Vermeulen et al. (2010) call “a test of corporate cholesterol”, which provides relevant hints as to when it is the best time to restructure the organization. The questionnaire is divided into three sections. Each section includes a few questions, and each positive answer is worth one point (Vermeulen et al., 2010). Still, in no way should the questionnaire be regarded as a static instrument of organizational evaluation. Senior managers can use it in a variety of ways, such as the source of important organizational information or a set of propositions to be used in the pursuit of productive organizational change. The questionnaire will hardly make change easier for managers and their organizations. However, as Vermeulen et al. (2010) suggest, change is something every organization can dodge, thus turning it into a major source of organizational benefits.
- Vermeulen, F., Puranam, P. & Gulati, R. (2010, June). Change for change’s sake. Harvard Business Review. Retrieved from http://hbr.org/2010/06/change-for-changes-sake/ar/1.
