Most companies today claim they are embarked on a transformation to ensure their long-term survival in this era of disruption and rapid change. But in their day-to-day practices, many of their leaders and employees blindly follow the same practices they always have. The results include a rising tide of fading stalwarts, including Sears, Toys R Us, Borders, and Men’s Wearhouse,
Based on my own experience at IBM during the personal computer revolution, I learned first-hand that transformations are a tough challenge. I was impressed to see the issues outlined well in a new book, “Detonate,” by Geoff Tuff and Steven Goldbach, based on their own executive roles with Deloitte Consulting, working with many top clients, and struggling with the same challenges.
I like their summary of the “best practices” that don’t work during today’s disruptive change, and their practical and empowering advice on how to free organizations from old-school practices. With these tips, you can reinvigorate your own and your company’s long-term health with next generation thinking:
- Revenue should not be the key thing you worry about. When established companies think of growth, it’s always some function of looking at past revenue, comparing it to “expert forecasts” of projected industry growth, and thinking of how they will increase their revenue share. That is extrapolated to capital requirements, staffing, and profits.
This approach doesn’t work when you need to penetrate new markets to compete. When we at IBM felt the need for PC technology to thrive many years ago, personal computer revenue projections were low to non-existent. Technology and thought leadership are harder to quantify and sell to management, yet are really critical to long-term survival.
- A strategic planning cycle is largely a waste of time. Every year on a fixed schedule, most companies task a small group of people to go off-site, juggle financial data, and come back with a strategic plan. Unfortunately, market disruptions don’t happen on schedule. Planning and budget horizons should center on the timing necessary to change customer and employee behavior to achieve new goals in the marketplace.
- Syndicating past data alone creates no advantage. The challenge is to look ahead, where there is no data, as well as behind. All your competitors are looking at the same past data, so you need your own proactive market experiments, proprietary trend analysis, and organizational transformations to stay ahead of the crowd and prosper.
- Don’t just wait for customers to tell you their needs. Customer inputs are good predictors for incremental needs, but most customers can’t predict transformational events. They may only recognize a good thing when they see it, so they need your experiments, your thought leadership, and your incentives to see new opportunities.
- Discard one-size-fits-all risk management systems. Successful companies with proven business models typically use an inflexible risk management process, for incremental changes as well as disruptive technologies. In today’s environment, small step execution and testing are the key, with incremental risk analysis between steps.
- Celebrating failure without analyzing the cost is an excuse. Large companies, or even small ones with too much funding, tend to allow a pivot to expand too long before calling it a failed experiment, and celebrating the learning. That’s why small startups have such an advantage when it comes to innovations.
PepsiCo went far overboard in time and money back in 1992 to enter the “new-age beverages” market with its clear, caffeine-free Crystal Pepsi. Webvan spent $800 million expanding before they realized that some cities didn’t have the critical mass to support profitable home grocery delivery.
- Embrace impermanence in org charts and team members. Every organization needs to bring a beginner’s mind to the scene on a regular basis. People need new challenges, and organizations need wholesale restructuring to deal with disruptive change. Current organizational design should never be the cause of your actions or lack of action.
Even with all our team efforts to rethink these debunked best practices, IBM never fully adapted to the personal computer hardware market and abandoned it after a few years. Yet IBM did learn the emerging value of services and solutions from their personal computer experiments and have since totally refocused in the services direction for a dramatic business recovery.
It’s probably past time to start a conversation in your organization about some best practices that aren’t working anymore. If you hear answers that sound like “this is the way we’ve always done it,” then it’s time to start blowing up things before your company and your job are on the fuse.