Understanding the Causes and Types of Business Change

Causes of Change

Businesses experience change for two main reasons: internal and external factors.

• Internal causes are decisions made within the organization, such as:
• New management taking over
• Restructuring or de‑layering to cut costs
• Expanding into a new market or exiting an existing one
• External causes originate outside the firm and include:
• Technological advances
• Economic shifts
• Social trends (e.g., growing concern over plastic pollution)
• Regulatory changes

Internal Causes in Practice

• Large retailers like Waitrose, Tesco, and Sainsbury’s have recently flattened their hierarchies to stay competitive.
• Companies are re‑evaluating plastic use in products and packaging due to environmental pressure, leading to new material choices and recycling initiatives.

Types of Change

Change can be classified by its magnitude and speed:

Incremental Change

• Small, continuous adjustments made day‑to‑day, week‑to‑week, or month‑to‑month.
• Often invisible to employees but essential for long‑term strategic alignment.
• Typically encounters little resistance because it is a natural outcome of routine decisions.

Step Change

• A significant, rapid shift that occurs over a short period.
• Usually triggered by strategic drift—when a company’s existing strategy no longer fits the external environment.
• Requires formal change‑management support and faces higher resistance.

Disruptive Change (a subset of Step Change)

• Occurs when external forces—especially technological breakthroughs—upend an entire industry.
• Example: Traditional broadcasters (BBC, ITV, Channel 4) losing market share to streaming platforms like Netflix.
• Forces businesses to rethink core offerings, delivery channels, and customer engagement models.

Managing Different Types of Change

• Incremental change: Monitor performance metrics, encourage continuous improvement, and communicate minor updates regularly.
• Step change: Develop a clear change‑management plan, secure leadership sponsorship, and address resistance quickly.
• Disruptive change: Conduct scenario planning, invest in innovation, and be prepared to pivot business models.

Quick Recap

• Internal vs. external: Who initiates the change?
• Incremental vs. step vs. disruptive: How big and how fast is the change?
• Effective change management depends on correctly diagnosing the cause and type of change.

Recognizing whether change is driven internally or externally, and whether it is incremental, step, or disruptive, is the first step to applying the right change‑management approach and ensuring business resilience.