A Strategy of Assured Destruction

How is it that the vast majority advances in technology, cutting edge products and innovative concepts and designs are born, not from the giants or current industry leaders, but rather from outsiders, the bystanders of the great industries, who have neither the resources nor the obvious capability to make great advancements in technology, product develop or revolutionary marketing advancements.

The once great industry leader Kodak was built on a culture of innovation and change.  It’s the type of culture that’s full of passionate innovators, already naturally in tune to the urgency surrounding changes in the market and technology, the kind of people that keep a company on the cutting edge of innovation and change, developing one new remarkable success after another and always keeping the door of opportunity tightly locked against the competitors entry.  If anyone was destined to become the master of digital imagery, it was Kodak, but of course it was not.

Some look to poor strategy for the failure of Kodak, but others to manager complacency, or the arrogance of entitlement.  The organizations leadership shifted the focus from creating new innovating opportunities to establishing an achievable financial benchmark as the desired organizational target, thus transferring the organizations objective from the innovations to calculations.

Geoffrey Moore, author of Escape Velocity: Free Your Company’s Future from the Pull of the Past, speaks of the phenomena in this way, “In large enterprises typically the annual planning process begins with the CFO circulating last year’s plan, circling the numbers in Q4, with the suggestion that managers multiply these by 4 to get a revenue target for next year, and then put together a plan to reach that number.  By so doing management teams confer an entitlement upon existing lines of business to get “first dibs” at all the scarce resources.  By the time the new business opportunities get to the table, the pickings are slim, and the critical resources for developing new markets are gone entirely.  This makes the enterprise captive to its past, and is at the core of established enterprises’ recurrent failures to achieve breakout growth, even when next-generation categories are booming all around them.

As new technologies threaten to disrupt a company’s traditional product and its market position, the strategy must shift form maintaining the status quo and preserving the time tested products to one of reinventing the company and embracing the new threatening technology.  According to Mr. Moore, there are three “pivot points” to the new strategy; Technology, where the company divests itself of the traditional product and wholly embraces the new technology; pivoting on the customer by maintaining their business and brand relationship while changing to the new product technology, or altering  their management expertise entirely and embark on a new course all together.

According to Geoffrey Moore, “What you cannot do is to stand pat”, the tendency of many iconic companies, resulting in a strategy of assured destruction.