Managing purposeful organizational misfit: Exploring the nature of industry and organizational misfit to enable strategic change

Abstract

The article argues that organizations need to seek and effectively manage purposeful ‘misfit’ to traditional industry and organizational norms and behavior, if they are to develop unique new value and enable successful change in highly innovative environments. The complexity and uncertainty of the early 21st century business environment requires fundamental transformation in organizational thinking and practices. The ‘conventional’ competitive advantage envisaged in achieving a continuous ‘fit’ between the organization and the competitive environment, or attaining optimal ‘fit’ between an organization's resources and capabilities and market opportunities, is waning fast due to rapid changes in industry and organizational boundaries. Rather, organizations need to create new customer value and innovation through purposefully becoming a ‘misfit’ to traditional ‘ways of thinking’ and ‘ways of doing business’ in industries and business models, thereby ‘leapfrogging’ competitors instead of just out-competing them. This involves collaboration, experimentation and risk-taking, and ambidextrous managerial capabilities, in the search for application of business practices that transcend traditional industry boundaries and business models. The concept of industry and organizational ‘fit’ is reviewed critically and contested. The paper describes what is meant by creating ‘purposeful misfit’, and identifies five managerial implications in achieving purposeful organizational misfit: balancing the risks of misfit experimentation; co-shaping new value with supply and demand chain members; managing the paradox of fit and misfit simultaneously; implementing a redefined concept of ‘strategic fitness’; and measuring performance through systemic scorecards.