Why Change Is So Hard for Established Businesses?
Small businesses and startups seem capable of changing all the time. With a small group of ambitious people, a startup can change direction multiple times before launch, and continuously allow their internal processes to evolve in response to new competitors, new market changes, and new ideas from the top. (Image Credit: Free-Photos/Pixabay)
But in bigger, more established businesses, “change” is almost a dirty word. Authorities within the company are reluctant to incorporate new technologies. They’re unwilling to experiment with new ideas. And they’re downright stubborn to avoid changing basic structures like team hierarchies or workflow processes.
Change is often a good thing for businesses, so why is change so hard for established businesses? And what can we do to change it?
First, it’s important to learn more about strategic change and strategic change management. Business performance is practically dependent upon multiple factors, including the interest of their target demographics, the competition they face within the industry, and their operational efficiency. Because all of these factors tend to change (i.e., interests change, new competitors emerge, and new technology renders old processes obsolete), businesses must change in order to stay relevant and competitive. It becomes a problem when businesses are too slow or too reluctant to change.
Let’s focus on the factors that limit change in a large organization.
Sheer Numbers and Bureaucracy
The sheer numbers of people working for a big organization can immediately be a problem for making a change. In a startup with two partners and a couple of employees, only two people have to agree with a decision to move it forward—and two additional people have to at least tolerate that decision for it to work. But in a big business, you’re often dealing with boards of directors with a dozen or more participants, dozens of C-suite leaders, and thousands of employees—not to mention thousands to millions of investors who are watching every decision with scrutiny. Even if several people agree on an idea for a new change, that idea may get filtered down to nothing by the time it gets incorporated, or it might be dead in the water.
History and Familiarity
Coca-Cola faced a full-on consumer revolt when it tried to introduce a new formula branded “New Coke” in 1985. The thing is, in a blind taste test, more people preferred New Coke to classic Coca-Cola. The problem was that so many people were familiar with the classic Coke taste, and Coca-Cola had such a prominent tradition and brand history, any change would have been accepted poorly.
Big companies got big by doing something for a long time, and doing it well. Any change to that long tradition could be seen as a problematic deviation from a successful approach, both by insiders and customers.
Novelty and Risk Tolerance
In some ways, businesses are more risk-tolerant than startups; they have access to more capital and resources, and have a longer brand history to fall back on. But in other ways, they’re actually less risk-tolerant. If they try to incorporate a major, company-wide change and it fails, that failure will have ripple effects throughout the entire organization. A single failure could mean millions of dollars of lost revenue, and thousands of lost jobs. Accordingly, the leadership within an established company is less likely to stake their future on a novel decision.
Locations and Scale
Incorporating change at a major organization can also be a problem. Big companies tend to have hundreds to thousands of locations, sometimes all over the world. If they decide to start doing something differently—like introducing a new uniform or changing basic procedures for onboarding new customers—there’s no guarantee all locations will immediately follow suit. Some might even openly rebel against the changes. It’s much easier to get a room full of people to agree to do something than a worldwide set of isolated teams.
Incorporating More Change
It’s no secret that big companies are resistant to change, and these reasons give us some insight as to why they resist change. So how can we use this to inspire more change in organizations, or keep businesses as nimble as possible for as long as possible?
One idea is to identify and address these sticking points. Why, exactly, is your boss resistant to listening to this idea? Is there a way you can circumvent the problem? For example, if they don’t like the idea of rolling out at scale, can they start with one team and then spread it to others if successful?
Another approach is to form more partnerships. Major companies like Google often buy or partner with more startups and younger, smaller corporate partners to retain their agility. It’s a way of compartmentalizing risk and maintaining autonomy within small teams. Whatever approach you choose, most organizations benefit from being more open to change over time.