Jack Welch's famous statement “If the rate of change on the outside exceeds the rate of change on the inside, the end is near” applies today more than ever. Many once successful companies have long since disappeared from the scene, including Kodak, Nokia Mobile Phones, Arcandor, Credit Suisse and Beate Uhse. Regardless of whether we use the acronym VUCA or BANI to describe the environment, one thing is certain: It is changing fundamentally. How are companies responding to this massive, unavoidable change? Are they now sufficiently prepared for the battle for survival and prosperity? The alarming answer is: Only to a limited extent!
In a global study of 600 executives conducted by Economist Impact 2023, 85% of respondents stated that their company's ability to adapt to change was inadequate. The German Change Readiness Index 2022 study delivered similar results: The owners and leaders surveyed attested to a slight increase in the ability of their 360+ companies to adapt and change compared to 2017 and 2019.
At culture & company, we see this hesitant behavior above all in traditional companies. These have generally been in existence for several decades and have established their modus operandi over a long period of time. They tend to be rigidly and bureaucratically organized and find it difficult to change in any way. But why is that?
A study conducted by the Otto Beisheim School of Management in 2022 puts it in a nutshell: The adaptability of companies stands and falls with the corporate culture and the organizational framework conditions. However, the culture of traditional companies is primarily geared towards stability and preservation and far less towards flexibility.
We also recognize this in our culture workshops. We like to start with a doomsday scenario tailored to the company in question. The participants are asked to discuss what contribution they have made to the demise of their company. This is not only fun, but also provides a good transition to the topic of culture! Unfortunately, however, we often find that the participants are self-critical, discuss things intensively and formulate lessons learned, but then wave them off at the end: “Yes, it's a bit concerning, but it will never happen to us. ”That's what you think when you come across an accident, serious illness or other strokes of fate. Basically, we all know that it can happen to any of us at any time.
The inability of traditional companies to change has a negative impact on their efforts to take the initiative individually and collectively and work sustainably on cultural development. In part 2 of our article series, you can find out which patterns of thought and behavior are slowing down traditional companies.
