Strategic Transformation and the Problem of Inertia

The Achilles heel of strategic transformation is the tendency of organizations to resist change. Richard Rumelt’s (1995) chapter on “Inertia and Transformation” catalogs the critical sources of firm inertia, considers how firms can overcome inertia and develops a formal model of the process of strategic transformation. I first discuss the sources of inertia that Rumelt identifies, which is what his chapter is best known for. Then I discuss his competence-based model of strategic transformation, in which cross-departmental coordination plays a prominent role, and suggest ways to augment his analysis of the relationship between task skills, coordination, and strategic transformation. As part of the discussion, I situate Rumelt's examination of inertia in the context of the literature at the time and draw links to subsequent research.