The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organizations (Brown & Eisenhardt, 1997) In strategy and organisation theory, change has traditionally been modeled as a punctuated equilibrium process. Explain what is meant by this process! This research study by Brown and Eisenhardt challenges this traditional view. Explain how the new view is different from the traditional view! How and why is the new view better? Group 9: Matilda Akkola, Reetta Arokoski, Lauri Kokkila, Miikka Laitila

AGENDA THE CONTEXT OLD MODEL: PUNCTUATED EQUILIBRIUM MODEL OF CHANGE THE NEW VIEW “Semistructures” “Links in time” “Sequenced steps” COMPARISON CONCLUSION

The context: Multiple-product innovation In multiple-product innovation companies innovate several products parallel The study focuses to computer industry 1993-1995 Rapid changing environment Coping with change is key to competitive success Research Design Multiple-case study Dataset includes 6 companies

The punctuated equilibrium model of change Change happens in two different ways Long periods of small, incremental change are interrupted by brief periods of radical change In the model, radical change is the focus of interest It fundamentally changes the industry: for example DNA cloning, laptops Radical change occurs in a stable environment, usually catalyzed by a crisis or a problem* The disruptional phases represent opportunities for innovation and creativity Radical change happens unpredictably and can’t be managed beforehand The disruptional phases represent opportunities for innovation and creativity Radical change happens unpredictably and can’t be managed beforehand *References: Flat World Knowledge: Punctuated-Equilibrium Model. Organizational Behavior, Chapter 9.

The punctuated equilibrium model - Structure In the incremental phase, change happens without affecting the deep structure of the system “deep structure” is the set of fundamental choices that the organisation has made of how the units are organized and which basic activity patterns it will maintain * The radical phase disrupts the deep structure and allows to recreate it At this point, the organization has the opportunity to learn and create new structures that are better aligned with current realities The radical phase can close for example when a dominant design for a new disruptive technology has been found *Gersick, C.J.G. (1991) Revolutionary Change Theories: A Multi-Level Exploration of the Punctuated Equilibrium Paradigm, Academy of Management Review, 16(1), 10-36.

The new view Instead of focusing on radical changes, the new view is about continuous change. Rapid and continuous change is vital for firm’s survival in high-velocity industries with short product cycles. The continuous change and innovation become core of the company culture. Key factors to success in new view: Semistructure Future probes Past - Future linking

The new view - Semistructure Key is to balance between mechanistic and organic structure Mechanistic structure = really structured, a lot of rules and tight processes Organic structure = no formal structure, a lot of freedom Article finds similarities between successful multiple product companies that are: Clear responsibilities Sharply defined project priorities Extensive cross-project communication Another success factor are the non-structured parts: i.e. no strict design process → lets the designers to develop products iteratively and flexibly Makes it possible to change the product when the market/requirements change

The new view - Future probes By looking into future, company can create a vision and multi-view strategy. Low cost probes used to investigate future: Experimental products and markets to give options for future. Strategic alliances with potential and current customers. Senior board members and long-range planners as futurists. Informal and formal strategy meetings. Companies not just react to the future, but they try to anticipate and create it.

The new view - Past & Future linking Transition and linkages between the present and future projects have to be carefully managed. Predictable intervals between projects: No unexpected endings -> no issues with excess or lack of skilled people Still room and time to fine-tune processes Choreographed transition procedures: Specific responsible persons for transitions Simultaneous working of projects with old and new team members Routine is synced to the rhythm of environment - no interruptions in the “flow”

The comparison OLD MODEL NEW MODEL Industry change Incremental change interrupted by radical change Continuous, relentless change Company react Disruptional phases represent opportunities Continuous change and innovation become part of company DNA Structure Deep, mechanical structure in incremental phase, which is recreated during radical periods of change Semi-structure Industry example The introduction of automobile The continuous change in the computer industry

Comparison: Why the new view is better? Structure Enables continuous change, easier to match the changing requirements Nowadays many innovations are created by combining things → this requires extensive communication and freedom within organization Future probing Probes, especially several ones, give managers several options for future Probes are also effective learning devices Past - Future linking Effective transition procedures and directs management focus to past/future Systematic intervals create a rhythm, which is easy to follow

Critique According to the article, continuous change is vital for firm’s survival in high-velocity industries with short product cycles Article focused on computer industry, but we see that many other industries are facing similar situation as well We think that the “new” model has become increasingly popular, because of the fast paced change in several business environments However, although this case study supports the new model of change, for example in 1994 another case study showed that a large number of organizational transformations were accomplished via rapid and discontinuous change* After that, a lot of studies supporting also the equilibrium model of change has been published *Romanelli and Tushman, 1994. Organizational transformation as punctuated equilibrium: an empirical test. Academy of Management Journal, Vol. 37. No. 5, 1141-1166.

Conclusion The punctuated equilibrium model focuses on the rapid change happening in a stable environment. The new model consists of the continuous change in a changing environment. The new model has three main aspects: Semistructure Future probes Past – Future linking The new model of change could be thought as an dynamic capability Dynamic capabilities are described as “the firm’s ability to integrate, build, and reconfigure internal and external competences to address rapidly changing environments” * *Reference: Teece, D.J., Pisano G., & Shuen, A. (1997). Dynamic Capabilities and Strategic Management. Strategic Management Journal. Vol.18:7. p. 509-533.