Type 2 error occurs when...

• A. Leaders perceive the environment as stable when it is actually turbulent and they fail to take necessary actions
• B. Leaders overreact to perceived turbulence
• C. The environment is stable and leaders overreact
• D. Market data suggests a change that is unnecessary

Answer: (A)

Failing to detect a real change in the environment and not acting on it is a Type II error. In change management, if the environment is actually turbulent but leaders perceive it as stable and do not take the necessary actions, a real signal for change goes missed. That false negative—missing the change despite its existence—fits this error type precisely.

The other scenarios involve reacting to signals that aren’t real changes or acting when no change is warranted, which would align with false positives or misdirected actions rather than failing to detect a real change.