Why companies need to change the way they change

April 22, 2013: 5:00 AM ET

The only thing that can be safely predicted is that sometime soon your organization will be challenged to change in ways for which it has no precedent.

By Gary Hamel

mix-cipd-hr-banner-square(TheMIX) -- We live in a world that seems to be all punctuation and no equilibrium, where the future is less and less an extrapolation of the past. Change is multifaceted, relentless, seditious, and occasionally shocking.

In this maelstrom, long-lived political dynasties, venerable institutions, and hundred-year-old business models are all at risk. Today, the most important question for any organization is this: are we changing as fast as the world around us?

For most organizations, the answer is no. In industry after industry, it's the insurgents, not the incumbents, who've been riding the waves of change -- it's Google (GOOG), not Microsoft (MSFT); Hyundai, not Chrysler; Apple (AAPL), not Nokia (NOK); Air Asia, not JAL; and so on.

The vanguard, though, are just as vulnerable to change as their victims. Strategy life cycles have been shrinking, and success has never been more fleeting -- a 2005 McKinsey study indicated that market leaders (defined as being in the top quintile by revenue in a given industry) stand a 30% chance to be "toppled" within 5 years. This probability is over three times what it used to be a few decades ago.

The only thing that can be safely predicted is that sometime soon your organization will be challenged to change in ways for which it has no precedent.

Problem is, our organizations were never built to be adaptable. Those early management pioneers, a hundred years ago, set out to build companies that were disciplined, not resilient. They understood that efficiency comes from routinizing the nonroutine. Adaptability, on the other hand, requires a willingness to occasionally abandon those routines -- and in most organizations there are precious few incentives to do that.

That's why change tends to come in only two varieties: the trivial and the traumatic. Review the history of the average corporation and you'll discover long periods of incremental fiddling punctuated by occasional bouts of frantic, crisis-driven change. Why should an organization have to lose its way and surrender billions of dollars in market value before getting serious about change?

A turnaround is a poor substitute for timely transformation. That's why we need to change the way we change. The goal should be change without trauma -- automatic, spontaneous, and reflexive. In a world of mind-flipping change, what matters is not merely a company's competitive advantage at a point in time, but its evolutionary advantage over time.

We believe HR can play a positive role in helping companies to become adaptable at their core. HR is already a partner to business in many change efforts, but HR's impact would be many times greater if it played a lead role in eliminating the barriers to adaptation and in building new capabilities that facilitate change. This is particularly true for aspects of the management model that HR controls, such as change management, organizational design, talent acquisition and deployment, learning and development, and performance review.

To this end, we've launched the "Building an Adaptability Advantage" management hackathon. Over the next few months, we'll be working with hundreds of other progressive HR and business leaders to identify, develop, and eventually implement new ideas for making proactive change a reality in our organizations.

Now it's up to you. By participating in this hackathon, you can help to reinvent management for a new age. The ultimate prize? Organizations that can change as fast as change itself.

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The Management Innovation eXchange is a site dedicated to sparking conversation and progress around the most critical challenges that managers face today: How to create organizations that are fit for the future -- and fit for human beings. The MIX seeks to enlist as many in-the-trenches innovators, progressive leaders, and adventuresome thinkers as possible in pursuit of that goal. Users can submit, rate, and build on each others' ideas -- creating an open platform for management innovation. The MIX is supported by several leading institutions, including McKinsey & Co., Dell, HCL, Red Hat, London Business School, HSM, and the Human Capital Institute.

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