Chaning pace of business – implications


Organizations sometimes compelled to make drastic changes for their betterment or aligning with the changes taking place in the market. In the process they may be losing knowledge at least partially and even making employees uncomfortable. If the organization can make the changes without the aforesaid negative factors then the implementation can be considered as the best.

A professor of management at Columbia Business School suggests that changes must be ‘without pain’. He calls the changes with the negative implications as “creative destruction�. The idea that companies can adapt best to the changing pace of business is by overhauling everything they know and continually looking for change is not right. His idea is of “creative recombination� is better.

An abrupt change, he points out, can cut off an organization from the knowledge it has acquired. Implementing a new “culture� can leave everyone scrambling to reinvent the wheel. That is not to say that abrupt change is always wrong, just that it can be demoralizing, inefficient and expensive.

An extreme example is how Citibank tried to reengineer its check-processing system over one weekend in 1971 and predictably found itself in chaos.

“Creative recombination�, by contrast, is the notion that change can come from ideas and processes already present in an organization. It requires flexibility and creativity, but the rewards can be significant. Suffering from the back lash against New Coke, Coca-Cola was able to repackage its old formula as “Coke Classic,� rather than jettisoning it altogether. An army might re-imagine the brigade’s orchestra as the unit responsible for defending the command post—they work together closely and can improvise, after all.

Here are more generic examples of how “creative recombination� might work. A division that ought to be shut down, and its hundreds of employees laid off, might flourish as a spun-off company. Or if layoffs are the best course of action, it might be in the company’s interest to invest heavily in re-training and net-working, keeping in close touch with the former employees so that re-hiring them in better times remains an option.

An approving example is of the Chief executive of Nokia, shaking things up in 1998 by moving each member of his top management team to a new position so the former head of handsets, for example, could bring knowledge and a fresh eye to customer relations. Even if it turns out that wholesale change is the way to go, it’s best to have a period of stability afterwards to allow employees to catch their breath and reassess market conditions.

The idea of “creative recombination� remains fairly vague. It is easier to say what it should not produce new business plans every six months, top-to-bottom re-engineering, constant changes in a company’s mission statement than what it should. For that reason, “creative recombination� will probably never catch on the way “creative destruction� did.