The culture of traditional, hierarchical organizations does not allow for the scope and speed of learning, adaptation, and innovation that is needed to compete and be successful in today’s environment.
The rate of technological, economic, political, and sociocultural change is increasing, and organizations are, therefore, finding it more and more important to figure out how to adapt.
Adaptation in turbulent environments involves more than minor adjustments. It often requires genuinely innovative thrusts: new missions, new goals, new products and services, new ways of getting things done, and even new values and assumptions. Most important, adaptation involves managing perpetual change. Organizations will have to learn how to learn and to become self-designing.
The difficulty is that organizations are by nature, and often by design, oriented towards stabilizing and routinizing work.
Schein published those words in 2004. The rate of change and the pressure on organizations to quickly adapt to “technological, economic, political, and sociocultural change” has only accelerated since then.
Large, bureaucratic organizations, especially, have cultures that value consistency over variation, predictability over uncertainty, control over freedom, and practicality over creativity. These values become a barrier to individuals, teams, and whole organizations continually learning from what they do and re-designing themselves for success.
Examples abound of companies that were once household names and are now extinct because they did not learn, adapt, and innovate: Compaq; E.F. Hutton; PainWebber; Merry-Go-Round; MCI WorldCom; Eastern Airlines; Enron; Woolworth's; Pan Am; Standard Oil; The Pullman Co.; Arthur Anderson; General Foods Corp; TWA; and DeLorean Motor Co. Of course, many factors contributed to each of their demise but lack of a learning culture played a major role.
As Schein says, when things are not working right in an organization, you have to look at culture, digging down deep to find out why you do things the way you do them. Only then can you determine what needs to change in order to create a culture that supports learning, adaptation, and innovation.