Page 44 - The Resilient Organization

Parts More Resilient than the Whole 31

There are a number of reasons corporations struggle to adapt to new
market realities. Like Polaroid, their strategies may be obsolete and not
engaged with the needs and desires of the market anymore. Commitment
may be escalating to an irreversible course of action that turns out to be
risky (John F. Kennedy’s Bay of Pigs—an embarrassing overture to Cuba) or
costly (losing lives as in the war in Iraq). Management may be malfunction-
ing, lacking the fortitude to lead effectively (like the state of California’s
budget negotiations). Structural inertia in the form of established organiza-
tional structures (such as business units that operate as silos) and rigid oper-
ating processes may prevent any change from taking hold. There may be
(relative) incompetence—an industry-regulating body may be at a relative
disadvantage compared to an investment bank when it comes to recruiting
the best and brightest, for example.
More dynamic explanations suggest that under severe threat, an organi-
zation is likely to resort to well-rehearsed routine behaviors, even if they are
totally inappropriate to the emergent situation. For example, it is easy to
resort to cutting costs when what’s really needed is a new product innova-
tion. There are also a number of performance traps that companies may fall
into myopically. Failure traps occur when the organization lacks the
patience to wait and see if a particular strategy works, and thus keeps
changing the strategy prematurely (Levinthal & March, 1993). Success
traps are the seductive consequences of overconfidence and hubris, or sim-
ply continuing to do what the organization does well until it is no longer
relevant to the changed market realities.
In the article “Boundary-Setting Strategies for Escaping Innovation
Traps,” with Michael Gibbert in the MIT Sloan Management Review in
2005, I discussed performance, commitment, and business model traps as
antecedents of the lack of innovation and hence ultimately the lack of
resilience. The performance issue has been discussed above as success and
failure traps. The commitment trap results either from continuous experi-
mentation where no commitment can be produced or maintained to a par-
ticular course of action (a sort of weakness-of-will situation) or from
excessive self-confidence that leads to a belief in a particular Big
Opportunity that is not adequately understood or prepared as a business
opportunity. The business model trap follows the neglect of the signals of
change in the environment or the forcing of emergent innovation to