Companies grow by entering into new competitive space, attaining a complex mix of financial, material and knowledge assets, expanding market scope, and replicating and standardizing their wins in similar market spaces. Competitive spaces undergo change, new technologies emerge, and customers change. But companies sometimes fail to change and make the most of new opportunities because they are still trying to get the best out of the old opportunities. They find this convenient and less risky.
Steering mechanisms1 in organizations grow as the organizations get involved in more complex activities. These steering mechanisms are essential to make meaning out of the innumerable activities that happen inside the organization. Steering mechanisms are created to align the organization with the founder's vision, and also to align the company's vision with changes in the marketplace. But these objectives may come into conflict. The founder's vision might not be relevant in the new market scenario. While most of organizations have mechanisms that are aligned with their vision, there are a few organizations in which mechanisms are aligned to the realities in the business environment. Only those organizations which steer in line with business realities can remain tuned to change.
Obsolete steering mechanisms downgrade or ignore market signals. Rigid steering mechanisms ignore complaints and turn down feedback, which can be valuable if put to the right use. As managers rely on steering mechanisms, whenever an unexpected circumstance arises, they tend to ignore any information that does not fit into the existing mechanism. Mechanisms have a limited period of validity; they may have served the company well in the past when a particular strategy was successful. But the usefulness of the mechanisms may be limited when managers address new problems. In such situations, managers are often perplexed as to why their decisions go wrong.
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