Coronavirus presents new challenges for business leaders in the autumn and beyond
When people discuss organisational change and the adoption of new technologies, companies are often compared to a ship that turns very slowly. Change is considered particularly difficult in large organisations.
However, something surprising happened last spring during the corona crisis. Many large companies were able to adapt very rapidly to changes in demand and disruptions in supply chains and production. Companies adopted new digital technologies at a pace that IT executives had only dreamed about.
I have studied organisational routines, particularly from the standpoint of competitive strategy. Academic literature on organisational routines provides valuable tools to understand why organisational change suddenly became easier during the corona crisis last spring. At the same time, this research suggests that – in the autumn and beyond – we shouldn’t expect the coronavirus to continue to catalyse organisational change in the same way as it did in the spring.
Much of what organisations do is based on routines. Organisational routines develop and change when an organisation deals with the challenges of its operating environment. Organisations often face similar problems repeatedly, allowing the development of routinized ways of addressing them.
In everyday language, “routine” implies something boring and repetitive – something comparable to a computer program that always works the same way, or a large ship that changes direction slowly.
However, research has shown that organisational routines are complex, constantly evolving structures. At their best, organisations can adapt quickly to change by combining existing routines and their components in new ways. Looking back, this is arguably how many companies created new ways of operating – seemingly from scratch – to meet the demands of exceptional circumstances.
Organisational routines are tacit agreements between people that enable collective action despite the inevitable differences between the involved individuals. Each individual brings to an organisation their own beliefs and goals, professional identities, career ambitions, competences and an understanding of what is ethical and what is not. Organisational routines reflect temporary compromises – what routine scholars call ‘truces’ – between diverging beliefs and interests within the organization. Routines thus enable the organizational members to work together to address the challenges facing the organisation.
Change makes differences visible and causes latent conflicts to manifest. Organisational change is difficult because the disruption of routines causes unspoken agreements, or ‘truces’ to be broken. Individual competence and professional identities may come into question, and the balance of power is likely to shift. Change reveals differences in beliefs and values – what is good quality, or what is right and wrong. Resistance to change often comes as a surprise because routines have enabled collective action without the differences in opinion ever coming to surface.
Companies delivered equipment to their employees' homes. Colleagues showed understanding when meetings were interrupted by a toddler marching into an office set up in the family sauna. Cats were welcome guests at sales meetings. Customers didn't expect the impossible. I proposed that we all cut ourselves and each other a little corona slack.
The crisis made it possible to modify an organisation’s routines and quickly combine them in new ways because the people's differences and conflicts seemed small in comparison to the magnitude of the shared crisis. We were facing an existential crisis – a common enemy that threatened companies, industries and society as a whole. This made the conflicts and obstacles associated with organisational change seem quite insignificant. The ability and willingness of people to compromise and be flexible provided unprecedented space for creating and adopting new things.
The corona crisis proved that the ship and in fact all other mechanistic metaphors provide a misleading picture of the challenges involved in organisational change. Above all, mechanistic organisational metaphors don’t help understand the speed at which organisational change occurred during the spring. A large ship cannot turn quickly even if it’s about to run into a huge iceberg.
Looking forward, the pandemic will in many ways present an even greater management challenge. Although health concerns remain real and significant, corona is no longer the same mysterious boogieman that it was in the spring. Corona has become a manageable risk and a nuisance. People are tired of being flexible, balancing family and working life, cancelling vacation plans and lining up for corona tests. They also have to deal with the fear of lay-offs and the constant sense of urgency that is typical of emergency conditions. Customers are becoming impatient.
The uncertain autumn requires that organisations demonstrate the same agility and readiness for change that was needed in the spring, but this time the external threat is not scary enough to bring people together. The coronavirus has become too familiar to us.
Rather than framing the situation as an existential crisis, leaders need to develop and communicate positive and inspiring visions of the future for their organizations, which enables rebuilding and reconfiguring organisational routines once again.
Our recent article on organisational routines in competitive strategy is available free of charge here.