The theory of performance feedback developed in the previous chapter can be used to understand when and how organizations change their structures and behaviors. According to the theory, performance relative to the aspiration level affects organizational search, risk taking, and change. This broad impact makes performance a “master switch” that controls a range of organizational responses to problems. Because so many kinds of organizational changes involve search and risk taking, we can examine each form of change individually and compare it with others. The theory poses few limitations on what behaviors can change in response to performance feedback, so we expect rather similar results when studying different forms of organizational change. If the results differ, they should do so in ways that the theory predicts. For example, the role of organizational search and risk-taking in the theory suggests that performance will predict strategic changes better than everyday activities. The role of inertia in the kinked-curve relation suggests that this curve should be seen for major organizational changes, such as changes in market strategy or organizational technology. It is less likely for changes in peripheral parts of the organization, where inertia is lower.

Most organizational changes require that managers search for solutions and are willing to accept risk. This means that we cannot separate the effects of performance on search and risk as cleanly as we would like, but comparison of different types of change can yield useful insights.