Page 121 - The Resilient Organization

108 Part Three: Step 2. Building Resilience into the Organization

claim timely change as the primary management goal; population ecologists
suggest that this is unlikely and organizations should focus on what they do
best, reliably. Stick to their knitting rather than seek to change with the
times. Natural selection then decides which organizations can survive (or
have market demand). This may, as presupposed, be economically efficient,
yet the CEO and the employees must then of course try to get new jobs
(which may be occasionally fine too). This calculation however leaves open
the costs of corporate failure. (Yet everyone agrees that the most expensive
alternative has the ineffective corporations continuing to operate subopti-
mally indefinitely, and not failing.)

Vulnerabilities of Change

At stake is what it costs to change including how much this changing
creates distraction in the running of the business. In a well-known frame-
work, March (1991) juxtaposes exploitation—the capacity to focus on core
business—with exploration—the capacity to create something new.
Presumably, exploration carries a cost, while exploitation brings in the revenue.
A case in point, BP, the British energy company, recently reversed course
from renewable energy (“beyond petroleum”) back to its core oil and gas
business. The new CEO, Tony Hayward, suggested in the Financial Times
(July 8, 2009: 7) that somehow the company “had lost track of” its busi-
ness fundamentals—that is, what it is good at: “finding oil: high-cost invest-
ments that can create big increases in value” (according to a former BP
executive). BP had invested substantially in renewable energy during the
former CEO Lord Browne’s tenure; yet the effort now appeared like a dis-
traction to operational safety. BP’s until-then stellar reputation suffered
from a number of industrial accidents.

Arguments for Change
• Survival depends on responding to changes in the marketplace.
• It is important to be proactive.
• By changing, a company may be able to avoid obsolescence.
• Change is fun and helps decrease the boredom of routine.