Large, established organizations evolved to succeed in a particular context. As a result, they tend to be invested in maintaining those conditions for which they have already been optimized. This means that that they resist change. From top to bottom, members of the organization are incentivized to maintain the status quo.
This creates inertia: these long-term habits are deeply entrenched, and come to be seen as entitlements. Inertia describes the organization's unwillingness to adapt to change; this, in turn, creates embedded narratives about "the way things are done" that filter perceptions and limit action. (See Narrative helps the human mind make sense of events on how narratives inform our sense of events.) To correct inertia, Rumelt advises, it may be necessary to pursue an agenda of simplification, removing unnecessary administrative layers.
Inertia may often be seen with its companion, entropy.
- Loss aversion creates tension between the need to innovate and the need to protect the status quo in large organizations
- Organizations have become primarily focused on short-term results