Question

Describe the Punctuated Equilibrium of change, and what are the drivers of change under this model?

Use a company you are familiar with or invent your own to explain your answer.

Answer 1

Punctuated Equilibrium of Change, in business context is a theory where an organisation evolves through a long period of stability and shorter periods of revolutionary changes. These changes define a new stability pattern for the organisation, until disturbed by the next change. These changes may be internal or external to the organisation.

The various drivers of change are:

1) Political : Where the political environment in which the organisation operates change, coup, change in ruling governments, etc leading to change in priorities, rules, etc.

2) Environmental: Change in natural/environmental factors may also lead to change in organisation's models. Example: Pollution emission standards, or banning single use plastic, CFC free refrigerators

3) Economic: A country's GDP growth rate, per capita income, inflation rate, Rate of raising capital, play a huge role in designing an organisation's strategy

4) Technological: The ever evolving techology has kept the businesses on its toes, thanks to heavy investments in Research and Technology and new inventions.

5) Legal: There may be changes in the regulations, laws of a country/state from time to time, which the organisations have to comply with.

Example: A camera manufacturing company SmilePleaseTech, for a long time manufactured the conventional Roll based cameras and enjoyed a heavy market share. Everything was going good for them(equilibrium), when suddenly the world saw the digital technologies emerge. The SmilePleaseTech was woken up from their slumber and realised they also had to make a shift. This techonological change led the SmilePleaseTech to revisit their strategies, revamp their products and hence had to embrace the digital technologies.This was the punctuation of change for them after a long equilibrium period.