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The early-warning signals of active inertia

In one of the most valuable business books written in recent years, The Upside of Turbulence: Seizing Opportunity in an Uncertain World published by HarperBusiness, Donald Sull describes what he characterizes as active inertia: “the tendency of well-established organizations to respond to changes by accelerating activities that succeeded in the past. As turbulent markets throw out new opportunities and threats, organizations trapped in active inertia do more of what worked in the past – a little faster, perhaps, or tweaked at the margin, but the same old same old.”

He identifies seven early-warning signs of active inertia:

1. Cover curse: The CEO appears on the cover of a major business magazine.

2. Guru jinx: Management gurus single out your company for lavish praise.

3. CEO writes a book: Executives write a book (or have a book ghostwritten) that associates them and the company with what succeeded in the past.

4. Edifice complex: Building a grand corporate headquarters with lavish accommodations to indicate that executives have declared victory and now celebrate their triumph.

Note: Percy Bysshe Shelley wrote this brief poem, Ozmandias, published in 1818:

“I met a traveller from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown,
And wrinkled lip, and sneer of cold command,
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed:
And on the pedestal these words appear:
‘My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!’
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.”

5. Name a stadium: Rather than build new monuments, some companies purchase the rights (for millions of dollars each year) to have their name on professional sports venues.

6. Competitors share the same zip code: Entire communities of similar companies can also fall prey to active inertia (e.g. Akron’s tire companies) and tend to reinforce shared commitments to what have become obsolete assumptions.

7. Top executives look like clones: A gradual but relentless process of “homogenization” can eventually include everyone throughout the given enterprise.

Sull then observes, “Shifts in the market can devalue once valuable resources [as well as business models, priorities, and strategies] and leave them hanging like millstones around a firm’s neck.”

 

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