No one disputes that firms have to make organizational changes when the business environment demands them. But the idea that a firm might want change for its own sake often provokes skepticism. Why inflict all that pain if you don’t have to?
That is a dangerous attitude. A company periodically needs to shake itself up, regardless of the competitive landscape. Even if the external environment is not changing in ways that demand a response, the internal environment probably is. The human dynamics within an organization are constantly shifting—and require the organization to change along with them. Over time, informal networks mirror the formal structure, which is how silos develop. Restructuring gets people to start forming new networks, making the organization as a whole more creative. It also disrupts all the routines in an organization that collectively stifle innovation and adaptability. Finally, restructuring breaks up the outdated power structures that may be quietly misdirecting a company’s resource allocation.
All these processes—silo formation, the accretionof deadening routines, and the emergence of corporate baronies—take place all the time. But when everything is going well, you tend not to notice them, just as many seemingly fit people don’t realize that their arteries are dangerously clogged.