ADAPTING TO A NEW ENVIRONMENT: How A Legacy Software Organization Copes With Volatility and Change

Many of the key players in the telecommunications industry produce legacy products, software systems that were designed ten or even twenty years ago but also serve as the underlying basis for new products. A key challenge facing these firms is how to remain innovative and adaptive despite their ties with the past. This paper describes how one successful U.S. company coped with such a problem. Based on interview data, we identify three key transitions this organization underwent during the product’s twenty year lifetime and test their effects using data from internal company databases. We found that environmental pressures to radically restructure the software system were inhibited due to certain inertial legacy factors. Instead, the organization coped by making more incremental adjustments to the product, organizational structure, coordination and control systems, and processes. A key proposition emerging from the study is that displacing change in this way increases the degree of technical and organizational interdependencies the firm is required to manage.