Do You Have Organizational Sclerosis?

By Jim Whitt

A friend of mine who was attending the South by Southwest festival in Austin emailed this summary of one of the sessions he was attending: “Blockbuster had it all figured out. Kodak was America’s favorite company. Tower Records was the place to be. Cunard was the fastest way to travel. Alas, no more. Each of these companies were blindsided by innovation. In the blink of an eye, their entire reason for being disappeared into thin air. Every day companies new and old, small and large, start down the path to obsolescence. Some have no idea that they are in trouble, others are fully aware and are begging for help. It’s a challenge that can only be addressed by changing culture and behavior, and by a mix of traditional and digital thinking. 1) Identify the opportunity (brand, consumer, behavior, competition) 2) Convince the right people that they have a problem (get thee to the CEO) 3) Build things for consumers and internal audiences (useful things). This session will train people to think differently about how they approach problems, to look at fixing the big picture instead of tactical problems, and to see the opportunity in change.” The session was appropriately entitled Congratulations! Your Brand Is About to Become Obsolete.

This summary substantiates what I experience in my work with organizations. Brand obsolescence is just a symptom of a much more serious disease — what I’d call organizational sclerosis. In medical terminology sclerosis is the hardening or stiffening of any tissue. As an adjective, sclerotic can be defined as “becoming rigid and unresponsive; losing the ability to adapt.”  When any organism loses its ability to adapt extinction is the next step in its evolution.

The economic meltdown we witnessed in 2008 revealed that many seemingly healthy companies suffered from undiagnosed organizational sclerosis. And size does not offer immunity. In fact, the bigger the organization, the more susceptible it is. Giants such as AIG and General Motors — whom politicians deemed to be too big to let fail — would have gone the way of the dinosaur had it not been for a massive taxpayer transfusion.

The first symptom of organizational sclerosis is blindness. When organizations fail to see a need to change they fail. They fail to see the need to change because they fail to see the big picture. An organization that has been successful in the past tends to keep doing what made them successful in the past, which keeps them from doing what will make them successful in the future. Wal-Mart’s supercenters, which were responsible for the company’s phenomenal growth for many years, are now suffering from slumping sales. Ironically, some of their stiffest competition is coming from the much smaller “dollar” stores which are rapidly dotting the retailing landscape. I think Sam Walton would find humor in this since he launched his retail career in what we used to call 5&10¢ stores, the forerunner of today’s dollar store. Wal-Mart is now focusing on opening more of their Neighborhood Markets which range from one fourth to half the size of the average supercenter.

Some sclerotic organizations have no idea they need help. Others do but don’t know what to do. After all, if they did they would already be doing it. Organizational development is the most effective treatment plan for organizational sclerosis. True organizational development is a process that changes culture and behavior. It is not just about planning. It’s about looking far enough into the future to create the organization of the future, then working your way back to the present. It’s not just about a new marketing scheme or a catchy ad campaign. It’s about identifying opportunities and capitalizing on them. And it’s not just “training.” Think of organizational development as organizational rehab. And just like any rehab program, recovery depends on the patient being motivated. Everyone in the organization has to be engaged in the process of organizational development. Purpose is the key to employee engagement. To beat organizational sclerosis you must have a powerful purpose or there is no motivation to change.

Organizations which are diagnosed in time and seek treatment can expect to live long and productive lives. But organizational sclerosis is never permanently cured, it merely goes into remission. Whenever an organization sees no need to change relapse is inevitable. Remember, blindness is the first symptom.

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