Question
What do you do when your company is over the hill in its field?
Answer
From the point of view employees, what you should do is abandon ship and look for a new job before you're forced to.
From the point of view of executives and shareholders: it's almost always too late too do anything once you have predictable cash flows. Startups can pivot. Fundamentally sound businesses with good assets but incompetent management can be turned around by PE. But when market positioning for your main cash cow line of business is being undermined faster than new options are maturing, the brand equity may collapse before it can be transferred to something else. And if your marketing sucks, your brand may not even have the elasticity to be transferred to something else. Even companies with viable options have stumbled due to insufficient brand elasticity.
This is why a full-lifecycle innovation management model has to be put into practice on the very first day that a positive cash flow is born, with potential to grow a company. Innovation is basically a sort of business insurance. Even if you do this, you don't increase your survival probability very much.
Most companies buy very poor insurance for this kind of risk (because better policies haven't been invented yet). They do a mix of R&D, which is vulnerable to disruption dynamics, and tech-acquisition M&A, which is vulnerable to business cycle downturns. Those who do both tend to blend the worst of both models rather than the best.
The result? Such severe positioning threats are more often fatal than not. That's one reason company lifespans have fallen dramatically in the last 80 years (see data in Foster's "Creative Destruction").
One way to understand why this is so hard is as a matter of timing. Destruction happens much faster than creation. You can destroy a $100 million revenue business within a year, but building up a new $100 million line from a seed will take 5+ years. Getting the mix right so a company survives a major transition is a 1 in 10 kinda deal. It is usually extremely painful even when successful. IBM is the best known example. In their 1991 turnaround they had to lay off 250,000 people and hire 100,000 different people. That's like a multiple organ transplant that replaces everything but your brain.
The Borders+Barnes-and-Noble vs. Amazon epic battle illustrates how hard it is even for companies that fight strongly.
Like humans, corporations start dying the day they are born. Health management is about as difficult, and companies tend to be even more careless about managing long-term health and chronic conditions than humans.
From the point of view of executives and shareholders: it's almost always too late too do anything once you have predictable cash flows. Startups can pivot. Fundamentally sound businesses with good assets but incompetent management can be turned around by PE. But when market positioning for your main cash cow line of business is being undermined faster than new options are maturing, the brand equity may collapse before it can be transferred to something else. And if your marketing sucks, your brand may not even have the elasticity to be transferred to something else. Even companies with viable options have stumbled due to insufficient brand elasticity.
This is why a full-lifecycle innovation management model has to be put into practice on the very first day that a positive cash flow is born, with potential to grow a company. Innovation is basically a sort of business insurance. Even if you do this, you don't increase your survival probability very much.
Most companies buy very poor insurance for this kind of risk (because better policies haven't been invented yet). They do a mix of R&D, which is vulnerable to disruption dynamics, and tech-acquisition M&A, which is vulnerable to business cycle downturns. Those who do both tend to blend the worst of both models rather than the best.
The result? Such severe positioning threats are more often fatal than not. That's one reason company lifespans have fallen dramatically in the last 80 years (see data in Foster's "Creative Destruction").
One way to understand why this is so hard is as a matter of timing. Destruction happens much faster than creation. You can destroy a $100 million revenue business within a year, but building up a new $100 million line from a seed will take 5+ years. Getting the mix right so a company survives a major transition is a 1 in 10 kinda deal. It is usually extremely painful even when successful. IBM is the best known example. In their 1991 turnaround they had to lay off 250,000 people and hire 100,000 different people. That's like a multiple organ transplant that replaces everything but your brain.
The Borders+Barnes-and-Noble vs. Amazon epic battle illustrates how hard it is even for companies that fight strongly.
Like humans, corporations start dying the day they are born. Health management is about as difficult, and companies tend to be even more careless about managing long-term health and chronic conditions than humans.