Organizational adaptation theory posits that organizations, in whole or just in part, will transform their structures or procedures to cope with a changing environment, such as a shifting economic landscape, new legislation impacting their field or the introduction of a new parent organization.
Organizational adaptation is necessary to correct imbalances and improve inefficient processes within an organization, and in how that organization works in the world at large. The adaptation can be reactive and come after a change in the external environment, or it can be preemptive. Managers may implement changes in an organization's procedures and culture in anticipation of a change in the market or legal landscape the organization operates in. Organizational adaptation theory generally refers to how a change in the environment dictates changes in groups of organizations, rather than how a specific organization changes to adapt.
One example of organizational adaptation at play is how banks adjust to new laws that affect the way they manage accounts and deal with customers. Some of the organization's processes must change in order to comply with the new laws. They will have to innovate new means of generating the revenue lost in the changes. Other aspects must remain constant. Customer service, for example, might be a core value that the bank has to uphold in order to retain their client base and reputation.
Organizational adaptations stands in contrast to the concept of organizational control. Organizational adaptation theory holds that in changing times, organizations fare better if they adjust their practices. Organizational control would have managers and members of an organization hold firm in their procedures, shielding themselves from the changing environment. In reality, both concepts play into organizational management. Some procedures must remain constant in order for work to be done efficiently. Other aspects of an organization must evolve in order to stay relevant.