THE JOURNAL OF LEADERSHIP APPLICATIONS
Vol. 3, No. 1
(626) 350-1500 Ext 102
© 2004 By William A. Cohen, PhD, Major General, USAFR, Ret.
The concept that you must change even a successful strategy or fail has been promoted by management guru Peter F. Drucker for years. It is the other side of the coin of our last month’s topic, and it is frequently ignored. However it has been true in all times and in every field including not only business, but war and politics. Companies and industries failing due to not following this important precept are many. In fact, as you read these lines, I can guarantee that hundreds of currently successful organizations, big and small, are double-timing down the primrose path to failure in blissful ignorance that disaster awaits just around the corner because they plan to operate following the same methods that led to success in the past.
Classic business cautionary tales of those ignoring this concept include the demise of the buggy whip industry and everything having to do with equestrian transportation. Before the automobile, horses were the primary mode of getting around. After the automobile industry was well established, a very successful Ford Motor Company lost its market leadership to General Motors for fifty years when founder Henry Ford failed to acknowledge that customers were prepared to ignore the mighty Model T in black and pay more for a variety of colors and options.
The railroad, that great invention of the 19th century which changed the nature of warfare, helped win the American west and in the process created some of the wealthiest men in America, was relegated to much reduced roles while the legendary and mighty companies which were the industry’s stalwarts shrank to tiny shadows of their former eminence.
The entire billion-dollar vinyl record industry vanished almost overnight and vinyl record manufacturers lost millions when they failed to prepare for the growing threat from compact disc technology.
Slide rules, once carried by engineers worldwide are no more except for very specialized roles. The Pickett Corporation dominated the industry. Its market disappeared in a flash with the introduction of the handheld calculator, and because it failed to change, it disappeared too.
I could go on, but you get the general idea. The point is, like a light bulb which burns its brightest just prior to complete failure, many of these companies and industries were at their best just a few years or in some cases just a few months prior to their bankruptcy.
Why do these tragedies occur? Why can’t a company or an organization continue to do what has made them successful in the past? What happens is that the environment changes in some critical way that invalidates all the old rules. For example:
Technology — something new like the automobile comes along and downgrades the horse from the basic means means of personal transportation.
Economics — the economy falls into depression or becomes inflationary. One condition might cause potential customers to hold on to their money; the latter to spend more freely and in a much shorter period of time.
Social Change — bathing suits covering the entire body go out of fashion. Ten years ago, a simple change in the Air Force uniform put several firms making silver braid out of business when that item was removed from two million Air Force uniforms.
Politics, Laws, and Regulations — what was once legal becomes illegal and visa versa. Prohibition on the sale of alcoholic beverages becomes illegal, or becomes legal (both happened in the 1920’s in the U.S.). Or, the law places restrictions on the ownership of firearms or how they may be sold. The firearm industry suffered major losses in sales when mail order purchases of firearms were severely limited after President Kennedy was assassinated.
Actions of competitors — if a competitor is successful in an action that you have not anticipated and allowed for, you can be in serious trouble. Apple Computer opened the market for personal computers and dominated the market. IBM was a latecomer. Because of poor marketing research, IBM had not foreseen the demand for the PC and had sat back and let it happen even though they were the world champs in large mainframe computers. Fortunately for IBM, they had the resources to recover from this error. Moreover, when they entered the market they adopted a very shrewd strategy. Whereas Apple Computer had not allowed everyone to create software for their operating system, IBM allowed anyone to do so. As a result, the amount of software available for IBM’s operating system soon far exceeded Apple’s. This strategy allowed IBM to takeover and dominate this market even with a late start and entering the fray with a product that was technically inferior to their competitor’s.
Unexpected major events – the terrorist attack on 9/11 lead to reduced air travel and created a demand for much greater security. A major earthquake or a war can affect the environment similarly.
You might think that senior leaders easily anticipate and readily prepare for change. This is rarely the case for several reasons. These leaders are in power because they “made it ”under the old paradigm. These prior actions made them and their organizations successful. They are comfortable with the old way, not some new, perhaps unproven, idea. Many leaders are afraid to deviate, afraid to make a mistake. They invested heavy in the old model and avoid anything that says that they must invest again and start over. It takes an exceptional leader to do this, or even utter to the words that imply that anything will change. However, you can be such a leader.
One of the most remarkable cases of a leader that was able to recognize the future was not a business executive but a military leader. His name was Henry H. “Hap” Arnold. He was the Commander of the U.S. Army Air Forces during World War II. After the U.S. Air Force was given the status of an independent military force after the war, he became the first and only 5-star general that the air force ever had. General Arnold had fought his entire career for an air force independent of the U.S. Army with full career opportunities for those that flew. This had not always been the case previously when the air force was under the control of non-flying senior officers of the army. Yet with a lifetime of fighting for this flying air force, General Arnold cautioned his flying officers that they must be flexible and forward looking in their vision of the future of this new military service. “There will come a day,” he stated, “when the airplane will be outmoded as a weapon system and the Air Force must be ready to adopt others means of fulfilling its mission.” General Arnold said that more than fifty years ago, and while airplanes are still an important part of the Air Force’s arsenal; space and other systems take an increasingly larger share of the Air Force mission every year.
However, there is a problem. It would be foolish, even dangerous to abandon successful products, organizations, strategies, or weapons systems while they are still very profitable and useful. How than can we recognize the onset of environmental conditions of significant magnitude that we must immediately prepare for and adopt change?
I recommend that you consider the following:
- Know what’s going on, not only in your industry, but in the world. Familiarize yourself not only with new products, but with anything that could remotely affect your operations. This means a regimen of continual reading, trade journals, newspapers, and other relevant media. You can never stop this as a process.
- Ask yourself not what will happen, but what can happen based on current developments.
- Play a “what if” game with yourself. What would you do if …
- Watch trends and new developments closely. If sales drop over several quarters find out why. Do not automatically assume that everything will “return to normal.” There is no normal.
- Recognize that nothing lasts forever, prepare yourself mentally for change and take immediate action when necessary, regardless of your previous investment in time, money, or resources.
- While you should not change just for the sake of change, establish a program of continual review of every product, strategy, tactic and policy. Aggressively seek opportunities to change and use change to stay ahead of the competition.
Adopt new ideas and change from previously successful methods to one that are even more successful for the future. In this way, you’ll not only succeed, you’ll succeed in a big way.
THE ART OF THE STRATEGIST WAS RECENTLY PUBLISHED BY AMACOM IN NEW YORK AND IS NOW IN PRINT AND AT YOUR LOCAL BOOKSTORE – – –
Its has been recommended by CEOs of companies, generals (including the former Chief of Staff of NATO and the former Chief of Staff of the Israeli Army), professors of strategy, ambassadors, and more. Here is a direct link to the publisher’s for more information about the book:http://www2.amanet.org/books/catalog/081440782X.htm
THE LESSON: Successful strategies of the past are the failing strategies of the future. Your environment is constantly changing. Take action to stay ahead of it to maintain winning strategies