Many senior leaders I encounter are grappling with the modern business problem of our time: what to do for an encore. And no, the encore isn’t a personal one, but rather it is all about the business. Long successful businesses are waking up to the reality that not only did someone steal their cheese, but, the thief ate the cheese. That cheese is not coming back.
Reinventing an old business in the process of being rendered obsolete due to changing tastes, new technologies, disruption via business model or some or all of the above is the most difficult act in all of business. It happens, but it is rare. When it does, we study it in business schools, attempting to grok the deep insights of the firm’s managers so that we can apply these enlightened and obviously brilliant rules for reinvention to our own situations. Unfortunately, the rules always seem to be for a game we are not playing.
For every successful re-inventor there are many, many others that flail and fail in the process. The roots of these failures are found in human nature and exacerbated by our stubborn application of our traditional, short-sighted management approaches. Oh, and leaders with true courage are often nowhere to be found.
Why the Deck is Horribly Stacked Against Reinvention:
The firm’s collective knowledge and experience—the secret sauce is all about one recipe. The knowledge, skills and abilities are focused on the legacy markets, customers and offerings. The dominant logic of the firm is rooted in making decisions around a set of well understood variables in the industry and with customers. What made you great yesterday, may be one of your biggest disadvantages tomorrow.
We are mostly in denial about the creeping irrelevance of our legacy businesses. Even in the face of obviously declining markets, revenue and profit targets are ratcheted upward by senior leaders who naively believe that they can fight gravity. “Our sales team is stronger than our competitor’s…we will take market share,”offered one executive facing a factually undeniable collapse in demand for their offerings. Even if it works once or twice, it is a dangerous mindset that delays the urgent need to replace old revenue streams.
We talk a good game about innovation, but lack the discipline to pull it off. With our traditional strategy rendered obsolete, we have no filters to help us assess the quality of ideas and to select experiments to invest our shrinking company treasure. All the ideas seem good in isolation.
Desperation makes us stupid. As the numbers from the legacy business enter free fall, we start to flail, looking for quick fixes and we swing away, hoping to connect on a last minute home run hit. The distance from flail to fail is very short.
Even when we find a viable option, we tend to starve it for resources, focus and time. Our tendency is to evaluate new ideas against traditional metrics, and when the results fall short, we reduce our investment support and increase our agitation over the slow-to-emerge results.
Why Leadership Courage is the Missing Ingredient:
Some would argue that a declining business should be allowed to die—sooner if possible to minimize squandering any remaining shareholder treasure. I struggle with blind acceptance of the need for creative destruction. Having lived through and led during one of these that worked (and one that did not), I know that there is no easy answer. For any chance of success however, the one ingredient that must be present is leadership courage. Every single step of the process of reinvention demands a level of courage that many senior managers struggle to manifest.
Why Leadership Courage is Core to the Reinvention Process:
Navigating successfully into new arenas is frightening to your stakeholders. Shareholders, board members and external influencers will caution you against taking unnecessary risks and urge you to move carefully into these uncharted markets. They will second-guess every move you make, and if you are not careful, their creeping doubt will infect you. Of course, they will hammer you mercilessly for near-term results.
Employees—the ultimate stakeholders, will struggle to understand what this change means for them. Some will fight it, others will resent it quietly and some may even leave. You are left on one side with the need to engage and motivate your employees and on the other side with the need to blow up elements of the culture.
Real-time demands will challenge you every day to put more attention and more resources into the legacy business. The distractions will siphon your energy, gray matter and focus so essential for the new endeavor.
Scanning for new opportunities is often limited to the firm’s myopic view of the world. It is challenging to push beyond the gravitational pull of the legacy world. You are fighting the internal system and the dominant logic. You need help…and often, you will have to ask for help.
Saying “no” to the many good ideas that you will hear—avoiding what Jim Collins describes as the “undisciplined pursuit of more” is essential for survival. It is hard to say “no.”
The Bottom-Line for Now:
If only this issue were simple enough to distill down to one of those ubiquitous “Ten Steps…” type lists so common to blog posts. Life and business are mostly never that easy. And no, my indication of the need for “leadership courage” is not the default answer of a leadership blogger. It is the observation of a veteran of these wars. Without leadership courage present and accounted for in every decision, every day, there is no chance of success.
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Art Petty serves senior executives and management teams as a performance coach and strategy facilitator. Art is a popular speaker and workshop presenter focusing on helping professionals and organizations learn to survive and thrive in an era of change. Additionally, Art’s books are widely used in leadership development programs. To learn more or discuss a challenge, contact Art.
Spot on, Art. Thank you. Might I add that the employees often know what’s happening with the company long before leadership does?
Thanks Ann! And yes, you are so right on the “employees know first” perspective. Thanks for reading and commenting. -Art