In a Gallup Survey authored by Gary Hamel, author of Leading the Revolution, approximately 500 CEO’s were asked two questions:
Question 1: Who took best advantage of change in your industry over the past 10 years – newcomers, traditional competitors, or your own company?
Answer: Newcomers
Question 2: Did these newcomers win by executing better or changing the rules of the game?
Answer: 62% said changing the rules of the game.
Another definition of the “rules of the game” is “business model.”
Hamel explains that in 1992 the economic shelf life of a business model was 10-20 years. In 2002, it had been reduced to 5-8 years. And I sense that the shelf life is getting even shorter. How long have you been in business? Where is your business relative to its expiration date?
I worry nowadays when I interact with executives on matters of strategy. They typically say their problem is that they just have to execute better. They often elaborate that strategy is easy and that implementation is the hard part. Most of these same leaders believe that to compete you have to have deep technical knowledge of the industry that newcomers don’t have.
Hmm! I smell a vulnerable target that doesn’t see what’s coming. The newcomers see that the key to innovation is in new business models, not the technology or the expertise of the industry per se. They understand that it’s not the technology but the business model that uses the technology that creates the economic value. And because the newbies are not bound by industry dogma about how the business works, they develop innovative new models.
Does your dogma and beliefs make your organization vulnerable to disruption, even destruction by newcomers you can’t see because your beliefs cause you to disregard them? More than ever leaders must have a profound humility about the “rightness” of their ideas.
Lest you think this is a business issue alone, I think non-profits, educational institutions, ministries and political entities better understand their vulnerabilities.
More than ever what is important about an organization is the worldview, the belief system of its leaders. So what are you thinking?
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Comments
Great analysis!
Getting blindsided is one thing — but stumbling oblivious is another. How many times do we just ignore the signs?
That’s what pride does — it makes you press on in a wild attempt to do what you think is best. You ignore the signs. You dismiss criticism. You know "the bridge is out," but you still catapult on in ignorance.
The bottom line for all of us is that there’s really no such thing as "All of a Sudden."
I blogged about ignoring signs in our own personal lives over at the Red Letter Believers blog:
http://redletterbelievers.blogspot.com/2010/01/theres-no-such-thing-as-all-of-sudden.html
I sometimes laugh my head off when I see a business honcho being interviewed,…and all they talk about is the bottom-line,
….in a way that leaves you thinking,
…they are not aware of the small, imperceptible shifts and undercurrents that cumulatively alter the strategic competitive environment so dynamically as to make their businesses irrelevant every one or two decades.
Apart from maximizing productivity and profits, the Modern CEO must do serious and really critical and long term critical thinking about their business…whether and in what ways it is shaping, serving or responding to those undercurrents. it may not always be right even 50% of the time, but it is critical to business survival in an unpredictable environment.
David: It’s amazing how often the signs are ignored. It seems like it’s only realized when it’s too late (but not always even then!). Humility. A willingness to argue vigorously against your own most cherished and hallowed beliefs and assumptions. A willingness to put yourself on the outside looking in. These and other steps are necessary to lead in this turbulent environment.
eM: When I see this I don’t know whether to join you in laughing or crying. And nowadays, it’s not just subtle things we miss, but also major shifts. The credit crisis, the housing meltdown, demographic changes, the rise of China, etc. are not small, but they were missed because of the myopic and narcissistic perspective of so many leaders.
Also, classic business training and experience lacks a focus on how to develop strategic foresight. That’s an area that I’ve been working in a lot over the last years. It’s not easy to develop, but develop it must.
Thanks, as always, for your contributions.