Strategic Inertia and Renewal: Contrasting Responses to Market Changes

Abstract

The academic, consulting, and practitioner-oriented literatures present many examples of companies that have failed to adapt their strategy in the face of a changing competitive arena, even when their top managers and executives acknowledged the need for change—and had a reasonable idea of what ought to be done. By means of an in-depth study of two polar cases of large companies from the fast-moving consumer goods sector, we shed light on the complex intertwined causes that might lead some companies into strategic inertia, while others engage in strategic renewal. Our findings suggest that strategic inertia is a multilevel phenomenon, which extends beyond the “usual suspects” presented, in isolation or in combination, in the literature (i.e., cognitions, power and politicking, emotions, and communication). We found that encouragement of divergent judgments and a participative planning process, as well as propensity to experiment, may lead a company to jettison the drivers of its past success and embrace novel pathways with serenity to deal with short-term uncertainty and anguish.