I have recently believed that executives should watch more disaster movies and read fewer business books. Granted, I think that most business books are simplistic and redundant, but my biggest beef is that they do little to prepare executives for the titanic changes that seem to be occurring with greater rapidity. Instead they wallow in trivial incrementalism. In a sense, they pat executives on the back and pass out participation ribbons for making layups.
The central question facing executives today is “How do I make my business fit for the future?” Specifically, how can they anticipate and adapt for the major changes that seem to catch so many companies flatfooted? One of the slides that I often use in presentations is titled “Great to Gone in One Generation”. One after another, the logos of companies that went from household names to oblivion in just twenty years. It’s a long and growing list.
None of these companies set out to fail. They seemingly had all the advantages: scale; profits; brand visibility; and often apparently good management. Yet they failed nonetheless.
One of the examples that I often use is Digital Equipment Corporation. In the mid-90s, DEC was still the second largest computer company in the world, trailing only IBM. People talked about “DEC standards” and working under the “DEC umbrella” and being “DEC compatible”. They hired smart, hard working people who wanted to do a good job. But now, they are the answer to a trivia question. Now a DEC VAX computer is as mysterious as a moai on Easter Island.
That’s why I think that disaster movies are the best training videos for modern business management. They usually start out by showing people going about their daily lives and worrying about mundane things. Traffic. A fight with their spouse. A kid who’s flunking algebra. At the moment these all seem like big important problems. But what no one sees is the meteor screaming at them from outer space.
This came back to the top of my mind when I saw this article reporting that the collapse in the camera business was finally slowing after five years of dramatic declines.
What did Canon and Nikon and Olympus do wrong? In many ways, not much. They improved their products, talked to their consumers and ran their businesses profitably. But the meteor didn’t care.
While camera manufacturers worried about competing with each other, they never saw the iPhone coming Their operating assumption was that they needed to fight for share versus other camera companies and that consumers would always use a “camera” to take photos. They also thought of photography as an art form and photographs as having lasting value.
The iPhone and other mobile phones put cameras in everyone’s pocket all day every day. Photos went from being carefully considered and staged events to ephemeral glimpses of daily life. Apple, Samsung and others not only made their cameras ubiquitous but also better and better. They also optimized them for the way that folks actually are using them now. It’s tough to take a selfie with a “real” camera but ever easier with a phone.
Think about how many different products (that people would have spent money on) are now conflated into a mobile phone. Obviously cameras, but also calculators, address books, landline phones, maps and navigation systems, music players, newspapers and magazines and even a flashlight. I will bet that the incumbents in those businesses never worried about losing their entire market to a phone.
So what is an executive to do?
I am not suggesting that we shouldn’t worry about the vagaries of everyday life. We will and we should. But we also need to ask ourselves what substitute is coming in from outer space to crush us.
The great flaw in the average planning process is that we spend too much time talking to our current customers and too much time worrying about our current competitors. That’s what all the smart business books and consultants tell us to do right? We plan based on the assumption that there will only be incremental changes in our world.
Instead, we need to see what’s happening on the fringes and with non-customers. How are they solving the problems that we want to solve without our help? What are the cataclysmic shifts that might occur—however much we hope that they don’t
The author, William Gibson, is famous for saying that the future is already here—it’s just not evenly distributed. And, in my forty years of working with high technology products, that’s absolutely true. The reason that so few executives see the future is that they rarely look for it.
Most major shifts creep up on incumbents over eight to ten years. They may not be aware of them for much of that time but more likely they dismiss them.
Back to Digital Equipment for a moment. One of the ways in which they sowed the seeds of their own demise was by discounting the importance of personal computers. In 1977, as the PC business was rising, DEC’s founder Ken Olsen, said that there was “no reason why anyone would want a computer in their house”. Their world view was shaped by a belief that real companies did real computing on real computers from real computer companies. Period.
The movie industry had a similar blind spot with regard to television. Daryl Zanuck of 20th Century Fox believed that ““Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.” Well, we know how that turned out.
In both cases (and many more) the technology and service that would challenge their business was present and public. But the top management of the incumbents chose not to take it seriously.
The best way to ensure that your company doesn’t get hit by a meteor is to acknowledge that one might be coming at you. The expected only wounds you. It’s the unexpected that kills you.