Organisational Change Management Volume 1

Problems with Past and Present Success

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General

"...successful organisations are prone to believing in their hype, becoming delusional......they attribute successes to themselves and failures to circumstances..."

Sydney Finkelstein as quoted by Fiona Smith, 2007

"...Yesterday's winning formula ossifies into today's conventional wisdom before petrifying into tomorrow's tablets of stone. Such organisational cirrhosis prevents companies from adjusting to new market realities or emerging to strategic opportunities..."

HBR, 1998

"...For currently successful organisations, change is about risking the comfortable present for a powerful future..."

HBR, 1998

"...past wisdom must not be a constraint of something to be challenged. Yesterday's success formula is often today's obsolete dogma. The challenge is to have the organisation continually questioning the past so that we can renew ourselves every day..."

Maruta Koa in HBR, 1998

"...There are far too many leaders who keep doing the same old thing with an increasing desperation and fear..."

Margaret Wheatley in HBR, 1966

"...a world of dynamic, quantum change where the patterns of the past become a hindrance rather than a help..."

HBR, 1998

"...The formula for success now is no guarantee for success in the future..."

HBR, 1998

"...Yesterday's winning formula quickly becomes today's conventional wisdom, and without vigilance, can eventually ossify into tomorrow's sacred cow..."

Sumantra Ghoshal et al, 1997

"...Change is, by its very nature, disequilibrating - even terrifying. It is completely understandable that a successful company would resist it, preferring to stick with proven formulae..."

Lila Booth, March 1999

"...One of the biggest challenges for an organisation that sees itself as successful is HUBRIS - believing that they are invincible?..."

AFR, November 2001

Fortune 500 (they are the largest firms in the world)

"...In USA, 116 firms of the Fortune 500 list in 1983 were off the list by 1993 - either beaten by change or overtaken by new players..."

HBR, 1998

"...one third of the Fortune 500 companies are not even there 7 years later..."

HBR, 1998

"...Only 26 % of organisations in the 1980 Fortune list were still there in 2001..."

Peter Capelli et al, 2005

"...over 40% of the businesses listed in the 1985 Fortune 500 are not in business today..."

Karlson Hargroves et al, 2005

"...the lifespan of S&P ASX 500 companies plummets to just 15 years today, from 67 years in the 1920s..."
Richard Foster as quoted by Patrick Durkin 2016

"...9/10 of 500 companies had appeared in the inaugural list (Fortune 500) in 1995 have gone bust, merged with all were acquired by a competitor, will still exist that no longer rank among America's top 500 companies by revenue..."
John Stathis 2019

One organisation that has defied the trend is Walmart (retailer). It has topped the ranking for the last seven years, easily beating its retail rival Amazon which is number 5 in 2018. Walmart still remains a traditional retailer but it has invested heavily its future, eg in online  retail businesses, technology (including artificial intelligence, automation and self-driving delivery vans) and innovation in retail concepts. On the other hand, Digital Equipment Corporation (DEC) is an example of a company making a habit of missing opportunities. DEC started in 1957 and was regularly in the Fortune 500 after 1974 but faltered in the 1990s. In the mid-90s it was the second biggest computer manufacturer the world after IBM. Then it made a series of strategic mistakes. One of these missed the move to personal computers; another was missing the value of its IP, eg AltaVista

"...DEC revolutionised business computing with its VAX minicomputer and was a market leader in the 1970s and 80s. In 1991 the company reported its first annual loss. By this time DEC had launched AltaVista, one of the first Internet search engines in 1995, but the company was flailing. DEC was sitting on the intellectual property of the future - the Internet - but didn't understand the value of what it had..."  
John Stathis 2019

Furthermore, DEC was acquired by PC maker Compaq in 1988; with AltaVisa valued at zero!!!!!!

Then in 1999 Compaq sold AltaVisa to CMGI

More statistics
- 44% of the top 100 Fortune listed US companies disappeared between 1995 - 2014.
- the average lifespan of a US company has fallen from 60 years (1960) to less than 20 years (2016)
- assuming current churn rate, 75% of the S&P 500 will be replaced by 2027

Nearly 2,000 companies have appeared on the list since its inception, and most are long gone from it. Just because you made the list once guarantees nothing about the ability to endure.

Some of the most powerful companies on today's list - businesses like Intel, Microsoft, Apple, Dell, and Google - grew from zero to great upon entirely new technologies, bumping venerable old companies off the list. Robert Noyce invented the integrated circuit in 1958, three years after the first Fortune 500 list. Dozens of companies on this year's list did not even exist in 1955.

Some of the most celebrated companies in history no longer even appear on the 500, having fallen from great to good to gone from the list - companies like Scott Paper, Zenith, Rubbermaid, Chrysler, Teledyne, Warner-Lambert, and Bethlehem Steel..."

Jim Collins, 2008

 

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