What Is The Cost Of Organisational Inertia?

by Kaarle Parikka


Like for us individuals, it’s sometimes easy for an organisation to become complacent and relax into established norms. Even in this time of rapid volatility, uncertainty, complexity and ambiguity, it is easy for a company to fall victim to organisational inertia.

By doing so, organisations forfeit growth opportunities and might even go out of business. This blog post will tell more about inertia, and why it matters for organisations.

What Is Inertia?


The word ‘inertia’ means different things to different people. To scientists, it is the phenomenon described by Newton’s first law – that an object will remain at rest or move at a constant speed unless acted upon by an unbalanced force. To others, it might be used to describe an inability to start a task.

All understandings of inertia have one thing in common: a resistance to change. When an organisation is unable to make internal changes despite changes happening in the world around it, this is called organisational inertia.

Organisations tend to remain stuck in established norms, even though markets are constantly changing. No organisation plans to resist change and innovation. However, inertia creeps in. This is often attributed to negativity bias.

Negativity bias describes our psychological tendency to place more importance on losses than gains. Imagine you receive a gift, only to have it stolen the next day. You are in the same position you were in before you received the gift. However, you will come out of the experience feeling worse off than you did before.

This bias makes us risk-averse. In a company setting, this can cause inertia.


Why Does It Matter For Organisations?


We live in a VUCA world – one characterised by volatility, uncertainty, complexity and ambiguity. The world is changing at an unprecedented pace.

Ten years ago, BlackBerry dominated the cell phone market. Now, they don’t even manufacture their own cell phones anymore. We’ve also seen the downfall of seemingly indestructible giants like Polaroid and Blockbuster.

No matter how established your organisation is, if it does not adapt to changing circumstances it runs the risk of going out of business. Organisational inertia could prevent you from changing with the times and if left unchecked, it could even cause the downfall of your business.

However, this VUCA world also provides endless possibilities. If you allow inertia, you could miss out on incredible opportunities for development and growth.

These opportunities could be essential to gaining new customers and retaining old ones, as well as improving the businesses brand and eventually bottomline.

In today's world, change is the new normal. Don't concentrate on what your organisation risks when it makes change, but focus on the cost of inaction.

By allowing inertia, you not only miss out on opportunities for innovation but you also risk going out of business. This is the cost of organisational inertia.


Final Thoughts


The world we live in is changing faster than ever before. In order to survive, and thrive, organisations must adapt to these changes. Organisation inertia has emerged as one of the biggest obstacles to change, and overcoming it could be the secret to success in the 21st century.

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Kaarle Parikka

Head of Marketing