Page 60 - MS Year in Review 2020

sense, corporate identities are derivative; that is, they are derived from the firm’s

defined role vis a vis its customers and market. If a market changes, a firm may
(and probably will) need to change its business concept or identity. If, in spite of
evidence that its identity no longer fits its market space, a firm resists change, it

will inevitably experience difficulties and possibly a crisis. This is what happened to
IBM, Kodak, and Sears, and led them down a path to inexorable difficulties.

A Culture of Fiefdoms or Silos

Over time many companies develop silos or fiefdoms within. Although these can be

tolerated when things are going well, they can become problematic. They can lead
to a lack of cooperation across the organization which can contribute to or
exacerbate a crisis. Fiefdoms or silos can also be a significant inhibitor or source of

resistance to proposed solutions to a crisis.

This problem with fiefdoms was recognized by Lee Iacocca at Chrysler, and he took

steps to root them out.

Resistance to Change

Having a culture that resists versus embraces change can be a contributor to the
initial crisis, as well as a significant barrier to the effective resolution of the crisis. A
reluctance to change “how we do things” as a company grows can result in a crisis,

even when the company is not faced with challenges from its
environment. Resistance to change when a company is losing customers to

competitors can be even more deadly. A version of this problem was in evidence at
Kodak, which moved slowly while competitors introduced innovative products that
undermined the company’s leadership position. This problem was also encountered

by the leaders at Sears and Unite Airlines in their efforts to deal with their crises
and revitalize those organizations.

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