Years ago, I read a great book that had an impact on me: Creative Destruction by Foster and Kaplan. It has helped shape my thinking with respect to how I have led North American and global businesses across several industries, from smaller companies to billion-dollar industry leaders.
My experience has been that all companies, at any time during their life cycle, need to continuously reinvent themselves…before they are forced to by external factors. This is irrespective of whether or not they are successful. In fact, this may be more important for those companies that are doing well, lest they become complacent.
It’s easy to fall prey to the frog in the water syndrome, whereby the poor frog doesn’t realize that the water is gradually heating up until it boils to death. The recent pandemic is obviously an example of an external force either wreaking havoc or being a positive catalyst for companies.
In today’s world, pre or post pandemic, this becomes increasingly important as disruptors have a major impact. All of this applies as much to individuals as it does to companies.
One of the ways to avoid this issue is to effect creative destruction. One process that, which I really like, that I have used with the companies that I have led, is dubbed Creating the Business That Would Put Our Business, Out of Business. As we know our competitors are in a conference room somewhere, trying to do exactly that. Think about the power of such a process. It can be very liberating as it frees us from constraints. The Status Quo inertia is very strong!
It is the force that pre-occupies a manufacturing company with filling up its equipment at all costs, when the right answer may be to outsource. Unfortunately, when you have millions of dollars of equipment, filling it becomes a natural reflex.
It is also the force that prevents a global company from shipping from its Chinese facilities because they are afraid that it will cannibalize their North American or European business. Guess what? If you don’t do it, your competitors will!
Today we no longer talk about evolution…we talk about disruptive revolution. We talk about step change products and processes. No longer version 1.27 going to 1.28. Instead, it’s 1.27 moving to version 7.0!
As individuals and businesses, there is no longer a linear path. Sometimes it’s two steps forward and one step backward or even sideways. The old adage If you’re through changing…you’re through, was never more true.
We need to continuously learn and reinvent ourselves. Intellectual curiosity and flexibility and adaptability become key skills and need to help define a company’s culture.
This is the type of thinking that spawned Netflix, Uber, Airbnb and others. And, in a continued revolution…. Uber Eats. The casualties for whom the bell tolled, include the likes of Kodak and Blockbuster. The proverbial frogs in the water.
We used to talk about a Brave New World as a singular finite event. Today, Brave New Worlds occur seamlessly and endlessly.
Competitive Advantage is furiously sought and then it inevitably fades away. In the past, books like Built to Last created the illusion that world class businesses could be created and forever sustained. Today this is a fallacy unless new S curves are created so quickly in sequence that they look like a series of treble clefs in a piano concerto staccato!
As evidence of this, only 4 of the Top 10 Fortune 500 companies in 2010 were still on the list in 2019, less than a scant 10 years later! By Market Cap this number falls to 3!
It really is Creative Destruction or Die! Try it. It’s fun!
