In many companies, this catchphrase echoes through the halls reflecting a resistance to change, an attachment to the status quo, and a preference for familiarity over innovation.

While the “We’ve Always Done It This Way” mindset might seem to offer stability and reflect back to “the good old days”, it can be the undoing of even the most successful organizations. This resistance to change, over time, can and has led successful companies to miss opportunities, inefficiencies, and not be able to adapt to new challenges. For top executives and board members, this mindset can be catastrophic, stalling innovation and competitiveness.

Several once-great companies have faced significant decline due to this mindset. Toys “R” Us, Nokia, BlackBerry, and Blockbuster remain examples of organizations that lost their edge by holding on to their ways and failing to adapt to market shifts.

Even Internal Audit departments can be guilty of such a mindset and when viewed primarily as a “compliance police,” they will likely reinforce existing processes rather than challenging them to evolve. For organizations to thrive, leadership must empower Internal Audit to evolve and help drive continuous improvement and a culture of agility and innovation.

The Root Cause of the Status Quo Mindset

The “we’ve always done it this way” mentality doesn’t come from nothing. It often grows from a combination of cultural and structural factors that become ingrained over time. Understanding the root causes of this mindset is the first step toward combating it.

1. Fear of Failure or Uncertainty

Many organizations, especially those that have experienced prolonged periods of success, become risk averse. They become entrenched in their past successes, fearing the potential risks of experimenting with new ideas or overhauling long-standing processes. This fear of failure leads to an aversion to change and reinforces the status quo. BlackBerry, once a dominant player in the smartphone industry, clung to its secure, keyboard-based design, believing that its core customers wanted continuity. Instead of evolving with the market’s demands for touchscreen smartphones and app ecosystems, BlackBerry remained focused on its past success which ultimately led to its market decline.

2. Comfort in Familiarity

People naturally gravitate toward what is familiar. Organizational inertia—the tendency to do what has always been done because it’s “comfortable”—can dominate decision-making, especially at the leadership level. This complacency spreads through middle management, who often mirror the behaviors of executives, creating a culture resistant to change. Toys “R” Us relied on its established brick-and-mortar business model for decades, even as e-commerce rapidly transformed the retail landscape despite clear signs that consumer behaviors were shifting online, largely because it felt familiar and stable. This comfort in familiarity led to the company’s eventual downfall.

3. Lack of Incentive to Innovate

In many organizations, the lack of incentive for employees to innovate keeps the status quo firmly in place. If performance metrics are tied strictly to maintaining established processes and achieving predictable outcomes, there is little motivation to think creatively or pursue innovation. This extends into Internal Audit departments, which may focus solely on compliance rather than assessing areas for improvement or risk. Nokia was a market leader in mobile phones but failed to encourage innovation within its ranks. Despite early warnings about the rise of smartphones the company decided not to update/overhaul their operating system and phone design. The absence of internal drivers for change led to its collapse in the smartphone market.

The Vicious Cycle that Spreads a Status Quo Mindset

The “we’ve always done it this way” mentality can take root at any level within an organization—be it at the executive level, middle management, or even within specific departments. While executive leadership plays a key role in setting the tone, this mindset can also spread organically, forming a cultural norm that is difficult to break. Once established, it can permeate the entire organization, affecting decision-making, innovation, and overall competitiveness through a combination of behaviors and attitudes:

1. Managerial Compliance: Mid-level managers observe the risk-averse behaviors of often emulate the behaviors of senior leadership or avoid pushing for change, reinforcing the idea that change is unnecessary among their teams.
2. Cultural Acceptance/Reinforcement: As employees see that innovation is neither rewarded nor encouraged, they internalize this mindset, becoming increasingly reluctant to challenge existing processes or suggest new approaches, creating a culture resistant to new ideas.
3. Institutionalized Resistance: Processes and practices that are left unquestioned eventually become ingrained in the organizational structure, making it increasingly difficult to introduce changes.

However, this can be disrupted with strong leadership and a strategic shift in how Internal Audit operates within the organization.

Leadership’s Role: Breaking Free from the Status Quo

Leaders hold the key to breaking free from the status quo mindset. Executives have the power and the responsibility to cultivate a culture that embraces continuous improvement and agility. Here are three critical steps they can take:

1. Lead by Example and Champion Innovation

Executives set the tone for the entire organization. If leadership demonstrates an openness to change and actively encourages innovative thinking, it sends a powerful message to the rest of the company. Leaders must be willing to question long-standing practices and empower employees to take calculated risks in the pursuit of improvement by:

• Promoting a growth mindset: Encourage experimentation by rewarding innovative ideas, even if they don’t all lead to immediate success.
• Challenging old processes: Regularly review organizational processes and question whether they remain effective or efficient.
• Creating incentives for innovation: Tie performance metrics to outcomes that include continuous improvement, creative problem-solving, and efficiency gains.

2. Empower Internal Audit as a Strategic Partner

While compliance is crucial, internal auditors are uniquely positioned to assess processes across the organization and, when empowered by the leadership and the Board, can play a pivotal role in the fight against the status quo.

The 2024 International Professional Practices Framework (IPPF) highlights the importance of a forward-looking Internal Audit function that supports business transformation, rather than merely reinforcing the status quo. To achieve this, executives must empower Internal Audit to challenge outdated processes, identify inefficiencies, and provide insights that add value to the organization’s strategic goals.

• Give Internal Audit a seat at the table: Involve Internal Audit in the decision-making processes, so it can proactively contribute (able to ask questions/provide insights) to growth and process improvement.
• Encourage a value-driven audit function: Encourage Internal Audit to focus on emerging risks and business areas that need transformation and assess whether the organization is operating efficiently, innovatively, and in line with its strategic goals.
• Hold departments accountable: Use Internal Audit findings to hold departments accountable for updating outdated processes and improving efficiencies based on recommendations and action plans agreed with Internal Audit.

3. Foster a Culture of Continuous Improvement

Finally, leaders must instill a mindset of continuous improvement throughout the organization. More than simply reacting to change, it means creating an environment that welcomes questioning assumptions, seeking new efficiencies, and finding innovative solutions as part of the daily routine. Blockbuster’s eventual downfall could have been avoided if leadership had embraced continuous improvement and the need for digital transformation. Instead of dismissing the growing trend of online streaming. In contrast, companies like Netflix and Amazon have built continuous improvement into their culture, regularly experimenting and innovating to stay ahead of market trends by creating processes that include:

• Feedback loops: Systems that allow employees at all levels to share ideas for improvement and innovation.
• Investing in training: Providing ongoing learning opportunities that teach employees and managers to identify areas for efficiency, innovation, and process optimization.
• Celebrating innovation: Publicly recognizing and rewarding teams that challenge the status quo and contribute to positive change within the organization.

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Conclusion

The “we’ve always done it this way” mindset is a silent killer for many organizations. From Toys “R” Us to Nokia, BlackBerry, Blockbuster, and several others we’ve seen the devastating effects of failing to innovate and adapt to change. As leaders, breaking free from this mindset requires a commitment to fostering innovation, empowering Internal Audit, and creating a culture of continuous improvement.

By embracing change and leveraging Internal Audit as a strategic partner, executives can position their organizations to thrive in a rapidly evolving business landscape, avoiding the fate of those who clung to outdated practices.

References:

1. Breaking Down the Demise of Toys “R” Us – by Brian Misamore / Harvard Business School
2. From Titan to Tragedy: How Nokia’s Refusal to Adapt Led to Its Spectacular Fall – by Steven Tucker
3. Losing The Signal: The Spectacular Rise And Fall Of Blackberry – by Jacquie McNish and Sean Silcoff
4. Blockbuster Becomes a Casualty of Big Bang Disruption – by Larry Downes and Paul Nunes
5. The Power of Status Quo: Why We Cling to Familiarity – by David Elikwu / The Knowledge
6. How to Challenge Your Organization’s Status Quo — Productively – by Timothy R. Clark / Harvard Business Review