In a rapidly changing world, more and more companies and their business models are at risk of becoming obsolete – especially if they tend to think and work traditionally or are part of a non-essential industry.
To remain relevant in such a competitive environment, businesses often have no choice but to adapt and evolve with the market. And to do that, they need to initiate organizational change – an essential component of any transformation within a company.
The need for organizational change is not only caused by larger-scale market developments. It can also arise out of situations like new leadership systems in the company, shifts in executive team structure, or the implementation of new business models or new tools and technologies.
With this in mind, three main concepts can help companies adapt: organizational change, organizational learning, and organizational forgetting.
Harvard Business School defines organizational change as
“the actions in which a company or business alters a major component of its organization, such as its culture, the underlying technologies or infrastructure it uses to operate, or its internal processes.”
To implement new innovations, businesses need to dedicate their efforts to organizational change management. This means leveraging the planned changes to achieve desired results. While we won’t go into detail on this, organizational change management typically consists of three phases: preparation, implementation, and follow-through.
The key to organizational change is understanding how a company can work more effectively by embracing change as a whole unit, not only on an individual employee (or department) basis. Ultimately, a strategy of organizational change should target the entire organization – from C-level executives and management, to operations teams and frontline staff.
Organizational forgetting gives an immediate impression of being negative – why would someone want to forget the knowledge, procedures, and operational guidelines of the company they work for?
In the context of transformation and change, though, organizational forgetting is essential to make space for new growth. So, how and why may companies lose or forget knowledge as processes and individuals evolve?
On the one hand, it could have negative outcomes: for example, a business unit or department becoming incapable of performing something they had previously been able to do as a result of a changing business environment.
On the other hand, processes and knowledge often become outdated, especially in a dynamic business landscape. So to be able to adjust to modern trends and developments, companies need to rewire their thinking and change their approach to work.
Organizational forgetting can be classified into two categories: accidental and intentional.
As the term suggests, accidental organizational forgetting occurs unintentionally. For instance, when certain guidelines are lost or some processes fail to be recollected by members of the organization.
But losing knowledge by accident can mean that companies are no longer capable of performing what they could previously do. This might cause them to become less competitive and struggle to remain prominent in the market.
On the contrary, if elements of past knowledge were interfering with the development of new capabilities and shifts, it could actually be beneficial to “forget” outdated information. In such cases, organizations deliberately choose to omit older knowledge and procedural guidelines, turning to international forgetting.
Similarly, there are two categories of organizational learning: entrenched learning and new knowledge accumulation.
In general, organizational knowledge consists of the following:
Entrenched learning and knowledge include conventional, long-standing information about the organization, its operations, and procedures.
Meanwhile, new organizational learning involves acquiring new capabilities, assets, and updated information. To make space for these changes, companies may need to forget old knowledge that slows down their progress. This is where intentional and strategic organizational forgetting occurs to enable organizational learning.
In other words, effective organizational learning often relies on organizational forgetting to enable companies to transform themselves and shift to new ways of thinking and working. However, this highlights the need for organizations to effectively “manage” forgetting.
To effectively carry out organizational change, companies need to have a workable strategy in place and ensure all team members are on the same page.
In terms of scope, organizational change can be adaptive or transformational. Depending on the scale of change, businesses can adjust their approach to organizational change and its management.
Adaptive changes are small, progressive adjustments that businesses can make step-by-step and which have increasing impact as they gradually accumulate. Such changes are especially useful to solve issues that might evolve over time. For instance, this can be something like switching to a new productivity platform or updating the OS on all company laptops.
Transformational changes are much more extensive in their scope – and can even be disruptive. On a larger scale, they might involve shifts in a company’s entire strategy or structure, affecting several departments and potentially changing business processes and tools. They take more time and effort to implement and, consequently, have higher stakes and more impactful results. It could be shifting to flexible or remote work company-wide (like our transition to a 4-day work week), or changing the hiring strategy and team structure.
Some changes can fall in between adaptive and transformational, so managers should be prepared to be flexible and make adjustments based on the unique situation, needs, and challenges of their organization.
When Mäd switched the whole team over from Asana to our own project management and productivity platform, Blue, it was a learning curve for all – team members were expected to not only grasp but also consistently use the system for work. While this seems like a minor change at first, it actually required adaptation and input from the whole team. Eventually, though, this turned out to have a lasting impact that benefitted the company both financially and operationally.
Embracing organizational change is essential for businesses to succeed and grow.
For this to happen, companies first need to identify the need for change, and then master organizational change management – the driver of successful transformation. This helps optimize the time and resources spent on company-wide shifts, reduces the likelihood of failure, and ensures that all relevant departments are set up for success.
Part of carrying out organizational change is expecting and welcoming both organizational learning and organizational forgetting. Discarding certain older processes and information might be necessary to make space for new knowledge and practices.
The strategy of change management may depend on the scale of change. Adaptive changes are smaller, incremental adjustments, while transformational changes have a significantly larger impact – but are also more challenging and all-encompassing in their implementation. Companies need to have a detailed roadmap for change and be prepared to accept and mitigate certain risks.
On a final note, change management doesn’t end once the planned shift has been implemented. To ensure sustainable, successful, and lasting transformation, business leaders must continue to keep track of the outcomes of change, its effects on the organization’s performance, and employee feedback. Then, be ready to readjust goals if needed.
