Company Failure and Kotter’s Eight Processes of Leading Change

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Table of Contents

Introduction
Article Summary
Reflection
Conclusion
References

Introduction

Organizational change management has become a vital concept in today’s corporate survival. Notably, many organizations that were once industry giants have declined, while some have completely exited the market. This paper summarises an article on company failure, linking it to Kotter’s eight processes of leading change. Essentially, poor organizational structures, management choices and inability to adapt to industry dynamics have contributed to the collapse of many successful corporations.

Article Summary

The decline and disappearance of formerly prominent industry players have piqued the interest of many scholars and business analysts, presenting different theories to explain the trend. Doz (2018) presents three different propositions given towards corporate failure. First, an organization’s leadership plays a key role in influencing policy implementation. According to Doz (2018), management choices determine how well a company adopts new solutions, allocates resources, and develops new solutions. IBM’s Sam Palmisano, who focused on shareholder returns while ignoring industry dynamics, shows how biased leadership contributes to an organization’s failure (Doz, 2018). In addition to management, corporate structures also influence a company’s failure.

Second, a firm’s structure determines how well departments work and influences coordination among the workforce. Doz (2018) notes that ABB and Nokia are examples of companies that implemented an inappropriate company structure (matrix) that limited their abilities to implement critical objectives, leading to the firms’ decline. Notably, when the internal environment is not well structured, a company finds it more challenging to handle external environment changes. Third, as the industry experiences radical changes, organizations have to adapt quickly or be forced out of the market. According to Doz (2018), Nokia’s inability to adjust its operations following the shift from film to digital photography led to its fall. In summary, a firm’s leadership chooses the company structure, which determines its success or failure.

Reflection

An organization’s industry performance depends on its internal and external environment. Reflecting on Doz’s (2018) article, a poor internal structure is akin to a firm’s inability to compete or adapt to industry dynamics. This information can be linked to Kotter’s (2021) 8-step theory of leading change, particularly the first three stages. If the management does not create a sense of urgency, as shown in the case of Nokia’s photography sector, the firm eventually exits the market.

Although a company may have good policies, the absence of a guiding coalition due to poor internal structures leads to failure. Doz (2018) has shown how Kotter’s (2021) second step is vital for organizational sustainability. For example, if ABB had used a functional organizational structure, it would have achieved better collaboration among its different departments. The article presents valuable information for change management in today’s highly competitive environment. According to Kotter (2021), instituting change is the last stage, implying that an organization should evaluate its internal structure and align it to set objectives considering industry dynamics. Connecting the article to the eight-step change model, it can be concluded that a corporation’s management is the main factor that leads to company failure, followed by internal structures and, lastly, the external environment.

Conclusion

Conclusively, company failure is a critical issue that has piqued the interest of business analysts and scholars who have proposed several solutions regarding it. Corporate management, internal business structures, and industry changes are cited as the three main reasons for business failure. Kotter’s 8-step change model shows how these factors hinder the change initiation process. Notably, each of the three elements mentioned above is vital, but leadership choices play a more crucial role.

References

Doz, Y. (2018). Why successful companies usually fail.Insead Knowledge.

Kotter, J. P. (2021). The 8-Step process for leading change| Dr. John Kotter.Kotter.

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Company Failure and Kotter’s Eight Processes of Leading Change

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