2 MIN. READ
When an organization suffers from internal or market difficulties, a change in operating model is often a necessity to keep it afloat. The ability to adapt is especially crucial in the IT industry where the need for changes comes not only from the nature of evolving technology, but also the market structure. Monopolistic practices of tech giants can force a company to quickly shift to another model of profit making when their stream of income is being cut or redirected. Unfortunately, the process of adaptation is proving to be extremely difficult, and in some cases impossible to overcome. Such thing may be counterintuitive, as, in theory, the management has full control over the company, and should be able to freely steer it in a desired direction. There are, however, multiple factors that resist change or even completely block it.
Single loop learning
To begin changing the organization, the areas where it malfunctions must be clearly identified. It is not an easy task, and time is of essence. Companies tend to focus on identifying and quickly improving their current operations in a process called single loop learning. The basic principle is to minimize the negative impact of a problem, and make the internal processes more efficient. The way it works is the following: we look at the results, and then assess the actions we’ve taken to achieve them. Then we see what actions could have been conducted in a better way, and we implement the change. However, this way of looking at problems is a little like only treating the symptoms of the disease, and lacks an understanding of underlying reasons of its occurrence.
Double loop learning
A more advanced approach is called double loop learning - it focuses not only on improving the current situation, but also on realising what is the fundamental cause of the problem, and resolving it. More questions are asked – not only do we ask what we can do better, but also why did we do it wrong in the first place. When we question the assumptions underlying our work we may find solutions to deeply rooted problems. The advantage coming from this is huge in comparison to single loop. A result may be for example discontinuing projects with no economic perspectives instead of investing large sums of money, which later become sunk costs, in hope that they will make a profit eventually. Double loop learning requires an external perspective, and is, unfortunately, time consuming. It may already be too late when quarterly financial reports start showing negative income or lack of liquidity. Chris Argyris, a professor at Harvard Business School, sums his study of double loop learning saying: “change usually comes long after its necessity has been realized by alert individuals or groups within the organization”.
After the identification
Identification of the problem is only the first step in achieving a change in an organisation. The next step is taking action and communicating the ideas to the people, yet they are often reluctant to change the ways they’re set in. In the next article I will study why that is and how to counteract it.
References: Argyris, C., 1977. DOUBLE LOOP LEARNING IN ORGANIZATIONS. Harvard Business Review, p.115.