The inherent weakness in any Brittle Organization is always the link between the past and the present in that organization. The exceptional book the Blue Ocean Strategy points to finding a way to get away from competition to break out of the Red Ocean and move the organization forward. That is very easy to say but really hard in the end to implement in an organization.
Strategists denote organizations fit into categories (A being a innovative quick moving company, B less quick moving all the way to C not moving fast at all and D a company at steady state). Companies in the D category don’t have to innovate as they have a steady state market. Or do they?
As market’s change companies in the C and D range can’t reorg to create new market’s. They have to look towards acquisition in particular finding A companies that aren’t too far away from their culture. You can’t bring an A culture into the center of a D culture company – the clash would destroy one or the other.
The thing that moves towards A companies is innovation. The thing that moves away from D companies is innovation. D companies are at the bottom end of the BCG experience curve. They are looking to build operational efficiencies into the solution to reduce the cost. They are however in a fixed price market that isn’t volatile. Where A companies are in a new, expanding market that has variable pricing and may have operational issues in the startup process.
Where are D companies brittle? Normally the core of their business – so they launch into reorgs attempting to regain their footing. It won’t work because they are doing things the same way in a collapsing market.
Where are A companies brittle? In the reality of operations usually. They build something – it takes off and in the end there was no way to prepare for the reality of the new market. So there are no operational processes or procedures to manage the reality.
B and C companies are also Brittle and interestingly also fall into the reorganization bottleneck as well. B companies normally do well integrating and are successful in their integration efforts. They purchase a number of smaller A companies and take the innovation forward. IBM and Microsoft are good examples of B companies that have developed a strong ability to integrate and stay in the B area. They tend however towards frequent reorgs to address perceived needs that can be market confusing. They also tend towards strategies that are on the innovative end of the market which at times can lead to operations and delivery issues. Frequent reorgs in the B space cause a loss of market momentum.
C companies also have reorg issues but they have moved more towards the D issues (you can’t shed reality to create innovation). Their markets are maturing so they seek operational efficiencies as ways to reduce cost. They have issues integrating A companies (culture shock) and are often the edge of markets that cause brain drains (people leaving because they have an innovative idea that is just outside the company market). So where A and B companies confuse the market with reorgs, C companies lose their ability to react to the innovation component by brain drain and eventually move towards D companies.
So knowing that everyone fails why does everyone reorg? Its easier to reorganization your company than face the bleak reality of a declining market.
more to come…