Why It's So Hard for Companies to Change

In 2013, Scott Brinker, Hubspot's VP Platform Ecosystem, and the author of the widely-read Chief Marketing Technologist blog, published a post that introduced Martec's Law. In essence, Martec's Law states that technology changes at an exponential (very fast) rate, but organizations change at a logarithmic (much slower) rate. (See Scott's graph below.)

The rapid development of marketing technology is well documented. The 2014 edition of Scott's marketing technology landscape supergraphic contained 947 technology providers. The 2019 edition of the supergraphic contained more than 7,000 technology solutions.

Scott argued that the core problem encapsulated by Martec's Law is that "technology is changing faster than organizations can absorb change." And it's clear that this problem extends far beyond marketing.

Over the past few years, digital transformation - which can be defined as the use of digital technologies to create new, or reengineer existing, processes, culture, and customer experience - has become an important strategic objective objective for many companies. However, the evidence indicates that most digital transformation initiatives have not succeeded.

In recent research by McKinsey & Company, only 16% of survey respondents said their organizations' digital transformations have successfully improved performance and also equipped them to sustain changes over the long term.

So why is change so hard? Hundreds of books and articles have attempted to explain why change is difficult for most organizations, and what business leaders can do to create a greater willingness and capacity to change. While many of these books and articles have contained valuable advice, it seems clear that no one has really identified the "silver bullet" that will consistently boost the capacity for change.

Clayton Christensen has developed a framework that can help us understand why organizational change is difficult. Christensen described this framework in an article in the Harvard Business Review (co-authored with Michael Overdorf), and elaborated on it in The Innovator's Solution (co-authored with Michael Raynor). Christensen developed this framework to help business leaders succeed at disruptive innovation, but it is equally useful for identifying the factors that determine how effectively a company can make any significant, far-reaching change.

According to Christensen, the ability of an organization to succeed with any significant transformation depends on three types of capabilities - resources, processes, and values.

Resources - Resources include people and tangible business assets such as cash, facilities, equipment, and technology solutions. Resources can also include intangible assets like intellectual property and relationships with suppliers and customers.

Processes - Processes are the activities that organizations perform to transform resource inputs into finished products or services.

Values - Values include the ethical principles that an organization "lives by," but the term has a broader meaning in this framework. It also includes the criteria or standards that people in the organization use to set priorities and make decisions. Therefore, values include the myriad of (mostly unwritten) cultural rules and norms that influence how people in the organization think and act.

Resources, processes, and values largely dictate what an organization can and cannot accomplish. And they both enable and constrain an organization's capacity for change.

To understand why organizational change is difficult, it's critical to keep two points in mind about resources, processes, and values. First, any significant change or transformation will require changes in all three organizational capabilities. In other words, any successful transformation will likely require the organization to find or develop new resources (or redeploy existing resources), develop new processes (or reengineer existing processes), and modify its values.

The second important point is that the three organizational capabilities are not equally easy to change. Resources are usually the most flexible capability and are relatively easy to change. Processes are usually less flexible than resources and are therefore somewhat more difficult to change.

Clearly though, the most difficult capability to change is values. Values are difficult to change because they tend to develop slowly and over time, they become deeply ingrained in an organization's cultural DNA. When change initiatives don't succeed, it's most likely because company leaders have underestimated (a) the need to change core company values, or (b) how difficult those changes are to make.

Christensen's RPV framework doesn't make organizational change easier to accomplish, but it can help business leaders, including those in marketing, to identify where the greatest barriers to change are likely to exist.

Top image courtesy of R/DV/RS via Flickr CC.