Abstract

What distinguishes between success and failure as organizations respond to turbulent environments? This article demonstrates that the most successful firms evolve through periods of incremental change, punctuated by discontinuous, organization-wide transformations. While the most successful firms initiate these strategic reorientations prior to competition, mediocre firms initiate these changes only after performance crises, and failing firms are caught by inertia and never initiate reorientations. This article discusses the roots of organization inertia, the necessity for both convergent and frame-breaking change, and the role of the senior management team in initiating and implementing frame-breaking change.