No way back?

Look down at your keyboard most likely you will see: QWERTZ. Our standard order of letters was necessary in the mechanical set up of typewriters. However, it never got questioned or changed in our digital age. This is an example path dependence.

Path dependence is a methaporical description of an organizational phenomena that leads to organizational inflexibility and inefficiency. It can be described in three steps.

First, organizations are in a preformation phase. Here there are plenty of options for taking action and setting up processes. As you can tell from your own life you are newer totally free in your decisions. Also the options for organizations are framed by the rules and culture that are already present. Within these choices some might sett off a “butterfly effect”. They can be triggered by small actions or also bigger events in the market or strategic choices.

Second, in the formation phase this choice becomes a process that is more and more irreversible. Options narrow down and self-reiforcing dynamics get unleashed. That might be based on various factors such as financial (i.e. getting good at something), emotional reactions (i.e. fear if the unkown), cognitive biases (i.e. bind spots) or poticial processes (i.e. maintating power).

Third, the lock-in creates a new main decision or action pattern that is fixed. Flexibility has been lost and this preferred action pattern makes new, potentially more efficient, options irrelevant. This will lead to inefficiency for the organizaiton in the long-term.

Below you can see a visual representation of this path dependence process. To break free from such a path dependce one needs to take a step back, reflect on what is happening and retrace the steps to recognize the self-reinforcing processes and the trigger event that set them off. This opens the perspective for new alternative paths.

Based on Jörg Sydow, Georg Schreyögg, and Jochen Koch, 2009: Organizational Path Dependence: Opening the Black Box. AMR, 34, 689–709, https://doi-org.vu-nl.idm.oclc.org/10.5465/amr.34.4.zok689

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