Winning Through Innovation: A Practical Guide to Leading Organizational Change and Renewal.

• Author: Holtzman, Henry

Here's a little self-test. How many of 1975's leading integrated circuit manufacturers are still among the top 10 in the industry? If you said four, you're right. According to authors Tushman and O'Reilly, the other six were overcome by a form of commercial Darwinism.

Were the managers of those six companies corporate dinosaurs waiting for their inevitable extinction? The authors believe so, and the reasons they offer form the philosophical foundation of the book.

Drs. Tushman and O'Reilly, business professors at Columbia and Stanford respectively, believe that most companies can survive incremental change, but that when sudden changes in markets or technology occur, they can't evolve quickly enough to survive.

The authors see two reasons for this: "structural inertia" and "cultural inertia." When the two are combined the results are generally fatal to an organization. As Tushman and O'Reilly note: "The process of making small changes is familiar and tolerable and often provides learning opportunities. The overall system adapts. But there is a dark side to this success. As firms grow they develop structures, processes and systems to handle the increased complexity of their work. Structural inertia sets in. Quite different in form and significantly more pervasive than structural inertia is the cultural inertia that comes with organizational age and success. As organizations mature, part of their learning is embedded in shared expectations.

In relatively stable environments, a firm's culture is a critical component of its success. Yet, when confronted with discontinuous change, the very culture that fostered success can quickly become a significant barrier to change.

The book also points out that a corporate culture that's content with incremental change can also stifle necessary innovation when the...