Why can firm decision makers, at different levels, become reluctant to change?
Especially in times of disruption, being proactive or inactive towards change is key in determining winners and losers in the competitive arena. This is also why addressing this question has always been, at least for me, one of the most engaging debates with students and colleagues both from academia and industry.
Through a quite recent conceptual framework, I attempted to offer a theoretical contribution to the debate. In principle, the framework suggests that resistance to change can derive from the co-evolution of 3 items: the surrounding environment, the decision makers’ socio-demographic and personality variables, and their heuristics.
As we know from the vast literature about decision making, heuristics can be considered as cognitive shortcuts that our minds tends to use when there is time scarcity (decision-making needs to happen quickly) and information asymmetry (one party has better information than the other). In other words, heuristics are an approach to problem solving employing a practical method that is not guaranteed to be optimal.
In terms of entrepreneurial, managerial, and policy making implications, three takeaways from the above can seemingly merit further discussion.
1. Reset the clock
Not rarely, entrepreneurs and senior managers become almost totally resistant to change due to feelings of invincibility deriving from periods of past positive performance. For example, some corporate crises occurred to industry leaders in the 90s (e.g. Kodak, Nokia) are the result of a lack of product innovation following large, previous product success. Think about the famous Snake game with the Nokia 3310! Although excellent, how many years has it remained the same without a new version?
2. Open your mind
Who says that creativity is an enemy of rationality? When practicing problem skills with the students of my decision making courses, we also devote attention to the well known lateral thinking techniques developed by Edward De Bono in the 1970s.
As an application from my teaching experience, when approaching a problem from the practice of business, I first ask the students to produce a totally rationality driven SWOT analysis. I then ask them to generate a series of problem solutions starting from the SWOT they have produced. But, finally, I also ask them to apply lateral thinking. In this case, this means reversing the logical order of the items in the SWOT and wondering whether additional decisional alternatives might come to their mind thanks to this new, supposed order. Overall, the number of decisional alternatives emerging generally increases a lot!
3. Be inclusive
Related to the above, at a certain point it seemingly becomes almost impossible, for a manager, to be open to hearing feedback on changing a decision. To avoid this, during his lectures about planning, budgeting and forecasting, my colleague Stefano Lombardi, senior manager in the Strategy & Consulting Department of Accenture Italia, stresses the importance of scheduling seasonal, workgroup reviews of the goals planned, and of the actions cascaded to achieve them as well. Inclusiveness matters!
What do you think about the 3 highlights introduced above? For example, can they result effective to combat resistance to change in every cultural context, market form, or industry age? Or do they vary?
I would love to hear your thoughts.
Thank you!
Gianpaolo
Relatedly, if interested, you can also read the full research article Untangling Self-reinforcing Processes in Managerial Decision Making. Co-evolving Heuristics?, published in Management Decision.