While we celebrate companies that pursue and succeed in radically changing the rules of the game, let’s face it, most organizations run on inertia.
For every company that redefines their little part of the world and changes our culture just a bit, there are plenty of firms that run on autopilot until the fuel runs out and the plane needs to be ditched in the ocean. The forces of globalization and digitization create storms and headwinds for some that are just too strong to overcome.
From Apple and Best Buy to Netflix, Starbucks, Zappos and Zipcar, there are firms and leaders that produce cultures and armies of people that thrive on redefining the rules in their own vision and along the way, they change our lives, habits, vocabulary and our view on the world.
These firms have dared to ask, What If? and Why Not?, and then they had the audacity to move forward and change the rules.
For the rest, there’s frustration, shock and amazement as their business models disappear. The CEO of Blockbuster describing how he likes how his moribund firm matches up with the competition is shocking, laughable and sad all at the same time. His $36 million or so in market capitalization versus the billion-plus of his disruptive competitor is all of the scoreboard that any of us need to see to know that there is no match.
I hear frequently from managers and owners about how their firms can no longer make money in their traditional businesses. In some cases, since they don’t know what to do, they’ve settled on trying to just lose less money. That’s equivalent to allowing yourself to bleed out slowly. The outcome is still the same, but the pain lasts a lot longer.
When I ask why they aren’t rethinking their businesses…whom they serve, what problems they are capable of solving and how they can position themselves in arenas where there are profits to be cultivated, the answers are shoulder shrugs mixed with looks of resignation and acceptance. If looks could talk, theirs would say, “Who is John Galt?”
I’ve noticed that no one in these firms is asking What If? and Why Not? Instead, they are filled with leaders and managers doggedly defending the status quo as if their lives hung on perpetuating what they know. Ironically, their business lives hang on what they don’t know but should be seeking.
The Bottom-Line for Now:
There’s no silver bullet, quick fix or sure-fire method to rethink and reinvent a business. In fact, many cannot be reinvented and the highest and best use of capital may well be to fold.
For some however, there’s a process that combines the speculative questions of What If? and Why Not? with the courage to ask and answer How Can We? and then to say, Let’s Try It!
If your plane is running low on fuel and the storm clouds look ominous, it may be too late. But before you decide to pull the ripcord and let the business plummet into the abyss, try asking and answering some simple but profoundly tough questions.
Art,
I heard a great quote the other day from Ashkan Karbasfrooshan that describes these types of situations. “Those who can, won’t. Those who want, can’t”.
He was describing the situation where TV and cable companies executives know they are milking a dying market, but they figure they can retire before their market ends. So, while they could produce high quality video and distribute it through the internet, they have very strong personal and institutional incentives to not do so.
Compare that to Newspapers, who would love to produce high quality, video on demand and distribute it through their News portals. That could be a route for them to discover a sustainable business model, unfortunately they don’t have the skills, personal or ability to develop those technologies.
Its comforting to say that businesses should reinvent themselves, but isn’t it maybe more beneficial for individuals to move on and reinvent themselves? Isn’t that the essence of Schumpeter’s creative destructionism?
Andrew, thoughtful and thought-provoking as always! The prompt for this post was the fact that so many of my classes and programs are filled with people reinventing themselves. A common denominator is that they are coming from firms that failed to ask and answer the tough questions. As for “comfortable,” having been a part of several businesses that completely reinvented themselves, it was anything but comfortable. -Art
Art,
interesting. I’ve never been a part of a business that has tried to reinvent itself. I would think that the chances of doing that are vanishingly small.
You are correct and accurate in your use of words. For both businesses trying to reinvent themselves or businesses in a dieing market, life is probably anything but comfortable.
From the sounds of it, your students are doing the right thing, reinventing themselves. That is infinitely easier to do than reinventing a businesses. Also, individuals probably recognize the changing environment far sooner than businesses do.
And they did well picking you as a professor.
Thanks, Andrew! The process is definitely a stomach-churning, stare at the ceiling, don’t sleep well, bet the business kind of thing. -Art