In recent times, Detroit car manufacturers have reported tepid sales results even as Japanese car companies have continued to score gains. It is tempting to point to the usual causes: a reliance on profitable yet inefficient models and high-cost labour structures.
Similar conditions have eroded other once-dominant American companies in other industries, including Bethlehem Steel, which filed for bankruptcy in October 2001 and, more recently, telecommunications company Lucent Technologies, which was bought in by French telecoms group Alcatel.
But many troubled companies may be missing the boat when it comes to diagnosing their troubles. The so-called causes are actually symptoms of a deeper malaise: the reluctance or inability to embrace change management.
Resistance to change
Change management is a conscious leadership decision to reorganise and redeploy a company’s resources to new business realities. Change is crucial for a company’s survival, but many companies resist change until it’s forced upon them.
Steve Jobs rescued Apple Computer from collapse. By contrast, most transformations undertaken in non-crisis conditions end up failing: employees’ attitudes and behaviour remain unchanged, ambitious targets slip downward, and the programme is finally abandoned, leaving the company worse off than it was before.
At one time, companies were expected to have a nearly immortal lifespan. But research indicates that the average life of a Fortune 500 business is now about 14½ yrs and getting shorter, as indicated by the rise in mergers and acquisitions, and in bankruptcies.
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