For many companies, success is based on sustaining the status quo. Most seek to dominate an existing market segment or customer base, geography or industry. They act as if these customer segments will never change or have new demands, no new competitors will enter the geography or industry and no new substitute or alternative solutions will be created.
In an article in the Wall Street Journal on January 7th entitled Avoiding Innovation’s terrible toll, the authors point out several concepts that I write about in Relentless Innovation. First, while we think of large firms as “long lived” most have shorter life spans than most humans. That’s mostly because complacency sets in so quickly and shifts in customer demand and competition leave firms ripe for acquisition or obsolescence. The second point that we agree on is that good innovators are constantly seeking out the “next war” rather than equipping to fight the existing war or the previous war. The contrast documented between IBM and H-P in the article is particularly insightful. Gerstner and Palmisano noticed that IBM’s “business as usual” culture made it hard to enter new markets, so they created the EBO (which I write about in Relentless Innovation). H-P doubled down on the PC market, reinforcing business as usual, becoming less nimble and creating assets to fight for market share in a space that is flat at best, probably declining and under tremendous pressure.
Note that this isn’t just about building for the future, at least in a “straight line” way. The French created the Maginot line for defense against the Germans, planning ahead for the “next” war but anticipating that the fighting would follow the same parameters. Meanwhile the Germans were experimenting with a completely new way of fighting – the blitzkrieg – next door in Spain. Relentless Innovators understand they need to understand the future, and not simply expect the future to be a lot like the present.