Change Management

What causes Resistance to change?

• Imprinting
1. Stinchcombe (1965) observed that the founding
conditions of an organization play a long-lasting role
in its future development.
2. At founding, organizations are particularly sensitive
to adopting influences and characteristics from their
external environment.
3. Once adopted, these characteristics tend to persist.
In support of this assertion, Stinchcombe points to
the high degree of similarity in the structure of
organizations founded during a similar histori-cal
period.
What causes Resistance to change?
• Structural inertia.
Hannan and Freeman’s (1977) gave the concept of
structural inertia.
Organizations,from “strong inertial pressures on structure
arising from both internal arrangements (for example,
internal politics) and from the environment that
contribute to inertia
External inertial forces are commonly known in strategic
management and include access to resources, barriers to
entry, and competitive pressures.
Collectively, these factors make organizational change
extremely difficult to accomplish.
What causes Resistance to change?
• Escalation of commitment.
1. The term escalation of commitment refers to a
well-established phenomenon in which actors (e.g.,
individuals, groups, organizations) continue with a course
of action despite accumulating negative outcomes.
2. Escalation of commitment refers to staying with a decision
even when there is clear evidence that it’s wrong.
3. Managers tend to stick with decisions once made because
that is what leaders are assumed to do.
What causes Resistance to change?
• Escalation of commitment.
1. The term escalation of commitment refers to a
well-established phenomenon in which actors (e.g.,
individuals, groups, organizations) continue with a
course of action despite accumulating negative
outcomes.
2. Escalation of commitment refers to staying with a
decision even when there is clear evidence that it’s
wrong.
 DISRUPTIVE COMPANINES
• “Disruption” describes a process whereby a smaller company with fewer
resources is able to successfully challenge established incumbent
businesses.
• Incumbents focus on improving their products and services for their most
demanding (and usually most profitable) customers, they exceed the
needs of some segments and ignore the needs of others.
• Entrants that prove disruptive begin by successfully targeting those
overlooked segments, gaining a foothold by delivering more-suitable
functionality—frequently at a lower price.
• Incumbents, chasing higher profitability in more-demanding segments,
tend not to respond vigorously. Entrants then move upmarket, delivering
the performance that incumbents’ mainstream customers require, while
preserving the advantages that drove their early success.
• When mainstream customers start adopting the entrants’ offerings in
volume, disruption has occurred.
 Cases In Point
• Kodak
- Market leader for 100
years in photography
- Moved photography to
all- common man
- Invented the “Kodak
Moment”
- They came up with
digital photography but
failed to use it to their
own advantage
- 2012 filed for bankruptcy
 Case In Point
• Nokia
- Finland based (1871-1990)
- They were a historic company
- They started with rubber boots and tiers and
developed the mobile phone
- 1998 they sold 48 million phones and were the market
leader
- With the advent of the smartphones and then it is not
much of a success story
- Microsoft took over but that needs to be proven with
time
 Cases In Point
• Starbucks
- One of its kind coffee-shop
- Added new items on the menu such as
Frappuccino
- Very successful in adapting to “customer-facing”
innovation
- First ones to introduce the acceptance of mobile
payments
- “Business cant accept Status Quo”
 Cases In Point
• Starbucks
- One of its kind coffee-shop
- Added new items on the menu such as
Frappuccino
- Very successful in adapting to “customer-facing”
innovation
- First ones to introduce the acceptance of mobile
payments
- “Business cant accept Status Quo”
Successful Disrupted
adaptors Companies

IBM Kodak

Starbucks Nokia
 Examples of Disruptors
• Air bnb
-Disrupted traditional centuries old hotel
industry by providing alternate accommodation
-Traditional lodging did not face many major
changes
-It’s the largest network without any owned
physical property
-customers are young , they look for authentic
experiences.
 Examples of Disruptors
• Uber
-Taxi industry was also a very traditional industry
-Over 100 Years old and strongly regulated
-Uber is an on-demand transport service
-Major CHANGE: pricing structure is based on
Dynamic demand based pricing- with overall pricing
being cheaper
- Payments are easier , handled by the app itself
 Large = Slow?
• Larger companies can be less agile in adapting
to change
• Though they are good at optimizing existing
structures
• For example IBM: Enjoyed success in 80’s but
struggled in the 90’s
 IBM- Too huge to change?
1980’s 1990’s
• Successful in selling mainframes and • Record loss of $8 billion in 1994
their maintenance

• Later entered the market for “personal • There was a change in customer
computers” by introducing them preferences and purchase decisions,
Large organization structure was also
not helping

• Made heavy investments in Research • Struggle began as change was not

anticipated well
• Quality of research led them to win • Slow ADAPTATION and LOW AGILITY
Nobel Prize