O R G A N I Z A T I O N A L C H A N G E
A QUESTION: Can you change an organization from within, or must change come from outside the organization...on a practical level.
An Answer: Depends on the organization.
(Hey, ask a really tough question and you're going to get either a simple but useless answer... or a 500-page book with a complicated but useless answer. *grin*)
Seriously, I think it depends to a significant degree on the organization in question, most particularly on that organization's size but also (in a related way) on its age.
Organizations are human systems. Like all human systems, organizations either grow, die, or petrify. And also like human systems, organizations that live demonstrate certain observable characteristics. One of the most basic of these common patterns is this: Given enough time and size, a system will begin to behave as if it has a will of its own. Over time, the original explicit mission of the system is replaced with an implicit mission which has a higher priority: survival as-is.
For example, say I start a company to produce narbles. Turns out there was a gaping need for narbles, and I do such a good job of providing them that I spend the next 15 years as the unchallenged market leader in narble production.
Suddenly technology takes an unexpected lurch in another direction; narbles are no longer "hot." What happens to my organization?
If it's like most organizations, not much. I keep producing narbles as though nothing had happened. The system behaves as if it has a will of its own; it is impervious to reality. (This is actually another systems-law: The System Defines Its Own Reality.)
Once competition forces layoffs, however--and perhaps a changing of the board--the next phase occurs. The organization remains the same; essentially the same people show up to do the same things they were doing. But now the production line or service provided is retooled to output something related to narbles that Marketing thinks has selling potential. The system is still trying to do its own thing, regardless of external reality. It "wants" to survive as it is.
Eventually one of two things will happen. Either the company will fold completely, or else it will shrink down to such a size that it becomes virtually a new company... at which point it is once again capable of growth, innovation and success.
(And I would like to point out, if I may, the importance of competition in this process. Without it... say, if we're talking about a government bureaucracy, since the government brooks no competition... you get systems which can't be killed despite long outliving their original missions.)
So again, I think the answer to your question boils down to whether or not the organization in question is so big and old that its "will to exist as-is" overpowers all compteting agendas, or whether reality still matters. If the former, it won't make any difference what you do. You can bring in every ISO 9000 consultant or "reengineering expert" on the planet, or fire the entire board, the president, the CEO, the COO, and any other top exec you like--doesn't matter. If there are more than 50,000 employees, many of whom over the years will have established their own petty fiefdoms under the Ancien Regime, your chances of any real "change" are virtually nil.
If, on the other hand, we're talking a small company, then you've got a chance. Above a certain size, change has to come from the bottom up, because reality still matters there. The problem is that this is very unlikely (despite labor unions), because businesses are not democracies; they are hierarchical command systems. As such, they can't be driven from the bottom up, any more than you want the tires of your car to control your steering wheel.
Below some size, though--call it something less than 10,000 employees--it's still possible for a few dynamic, authoritative individuals to produce meaningful change from the top down. And the odds get better as you have fewer and fewer employees.
Obviously a company with one employee is the Perfect Company. *grin*
But the difficulty of changing even that organization from within should give you a clue as to the difficulty of altering the course of anything bigger.