Institutional Inertia

 In Articles, Business, Compliance, Process Development, Process Development & Improvement

Organizations can develop inertia for many reasons. In the same way, projects within an organization tend to develop increasing inertia as they move closer to completion. In the case of an organization that fails to take the corrective action recommended by the team that conducted the investigation, some of the reasons for inertia may be:

  • The perception of cost. In other words, the cost of taking action appears to be high, compared to the cost of doing nothing. Of course, that disregards the potential for the issue under investigation to become public, resulting in lost sales, damaged reputation, and potentially penalties and litigation. Change in direction of any project of course is more costly the further along the project is towards the conclusion.
  • The complexity of the issue. In the manufacturing context, passing through capital intensive milestones such as final tooling and Start of Production (SOP) makes changes to design far more more complex and expensive. SOP also complicates scope determination immensely, and it may trigger regulatory and customer reporting. Post SOP changes may also involve a number of other departments such as Corporate Communications, Risk Management, Finance and Legal (claims, Sarbanes-Oxley, and the litigation hold process are all potentially impacted). An issue escalation process is particularly critical for issues that have gotten past the SOP milestone.
  • The increasing number of stakeholders involved. Resistance to change increases proportional to the number of stakeholders involved. For instance, product management, design & quality, finance & marketing, intellectual property, customers, regulators, suppliers, tooling vendors, profit and loss ownership, legal, etc.).
  • Promotion and compensation mechanisms. Frequent promotions and lateral transfers can effectively undermine accountability measures. These forces tend to postpone problem-solving and remediation. This happens even when the procrastination will only cost more later. Excessive focus on and rewards for short-term achievements can tend to be inconsistent with the long-term interests of the organization.