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1、Reinvent Your Business Before Its Too LatebyPaul Nunes and Tim BreeneArtwork: Damin Ortega, Cosmic Thing, 2002, Volkswagen Beetle 1983, stainless steel wire, acrylic, The Museum of Contemporary Art, Los Angeles Installation view, Damin Ortega: Do It Yourself, The Institute of Contemporary Art/Boston
2、, September 18, 2009January 18, 2010 Sooner or later, all businesses, even the most successful, run out of room to grow. Faced with this unpleasant reality, they are compelled to reinvent themselves periodically. The ability to pull off this difficult featto jump from the maturity stage of one busin
3、ess to the growth stage of the nextis what separates high performers from those whose time at the top is all too brief.The potential consequences are dire for any organization that fails to reinvent itself in time. As Matthew S. Olson and Derek van Bever demonstrate in their book Stall Points, once
4、a company runs up against a major stall in its growth, it has less than a 10% chance of ever fully recovering. Those odds are certainly daunting, and they do much to explain why two-thirds of stalled companies are later acquired, taken private, or forced into bankruptcy.Theres no shortage of explana
5、tions for this stallingfrom failure to stick with the core (or sticking with it for too long) to problems with execution, misreading of consumer tastes, or an unhealthy focus on scale for scales sake. What those theories have in common is the notion that stalling results from a failure to fix what i
6、s clearly broken in a company.Having spent the better part of a decade researching the nature of high performance in business, we realized that those explanations missed something crucial. Companies fail to reinvent themselves not necessarily because they are bad at fixing whats broken, but because
7、they wait much too long before repairing the deteriorating bulwarks of the company. That is, they invest most of their energy managing to the contours of their existing operationsthe financial S curve in which sales of a successful new offering build slowly, then ascend rapidly, and finally taper of
8、fand not nearly enough energy creating the foundations of successful new businesses. Because of that, they are left scrambling when their core markets begin to stagnate.About the ResearchIn our research, weve found that the companies that successfully reinvent themselves have one trait in common. Th
9、ey tend to broaden their focus beyond the financial S curve and manage to three much shorter but vitally important hidden S curvestracking the basis of competition in their industry, renewing their capabilities, and nurturing a ready supply of talent. In essence, they turn conventional wisdom on its
10、 head and learn to focus on fixing what doesnt yet appear to be broken.Thrown a CurveMaking a commitment to reinvention before the need is glaringly obvious doesnt come naturally. Things often look rosiest just before a company heads into decline: Revenues from the current business model are surging
11、, profits are robust, and the company stock commands a hefty premium. But thats exactly when managers need to take action.o position themselves to jump to the next business S curve, they need to focus on the following.The hidden competition curve.Long before a successful business hits its revenue pe
12、ak, the basis of competition on which it was founded expires. Competition in the cell phone industry, for instance, has changed several timesfor both manufacturers and service providersfrom price to network coverage to the value of services to design, branding, and applications. The first hidden S c
13、urve tracks how competition in an industry is shifting. High performers see changes in customer needs and create the next basis of competition in their industry, even as they exploit existing businesses that have not yet peaked.Netflix, for example, radically altered the basis of competition in DVD
14、rentals by introducing a business model that used delivery by mail. At the same time, it almost immediately set out to reinvent itself by capturing the technology that would replace physical copies of filmsdigital streaming over the internet. Today Netflix is the largest provider of DVDs by mail and
15、 a major player in online streaming. In contrast, Blockbuster rode its successful superstore model all the way to the top, tweaking it along the way (no more late fees) but failing to respond quickly enough to changes in the basis of competition.The hidden capabilities curve.In building the offering
16、s that enable them to climb the financial S curve, high performers invariably create distinctive capabilities. Prominent examples include Dell with its direct model of PC sales, Wal-Mart with its unique supply chain capabilities, and Toyota with not just its production method but also its engineerin
17、g capabilities, which made possible Lexuss luxury cars and the Prius. But distinctiveness in capabilitieslike the basis of competitionis fleeting, so executives must invest in developing new ones in order to jump to the next capabilities S curve. All too often, though, the end of the capabilities cu
18、rve does not become apparent to executives until time to develop a new one has run out.Take the music industry. The major players concentrated on refining current operations; it was a PC maker that developed the capabilities needed to deliver digital music to millions of consumers at an acceptable p
19、rice. High performers are continually looking for ways to reinvent themselves and their market. P&G long ago recognized the untapped customer market for disposable diapers. The company spent five years perfecting the capabilities that would allow diapers to be priced similarly to what customers were
20、 then paying services to launder and deliver cloth diapers. A CEO Jeff Bezos notes that it takes five to seven years before the seeds his company plantsthings like expanding beyond media products, working with third-party sellers, and going internationalgrow enough to have a meaningful impact on the
21、 economics of the business; this process requires foresight, early commitment, and tenacious faith in the power of R&D.The hidden talent curve.Companies often lose focus on developing and retaining enough of what we call serious talentpeople with both the capabilities and the will to drive new busin
22、ess growth. This is especially true when the business is successfully humming along but has not yet peaked. In such circumstances, companies feel that operations can be leaner (theyve moved far down the learning curve by then) and meaner, because theyre under pressures to boost margins. They reduce
23、both head count and investments in talent, which has the perverse effect of driving away the very people they could rely on to help them reinvent the business.The high performers in our study maintain a steady commitment to talent creation. The oil-field services provider Schlumberger is always sear
24、ching for and developing serious talent, assigning “ambassadors” to dozens of top engineering schools around the world. These ambassadors include high-level executives who manage large budgets and can approve equipment donations and research funding at those universities. Close ties with the schools
25、 help Schlumberger get preference when it is recruiting. Not only does Schlumberger keep its talent pipeline flowing, but its a leader in employee development. In fact, it is a net producer of talent for its industry, a hallmark of high performers.The Hidden S Curves of High PerformanceBy managing t
26、o these hidden curvesas well as keeping focused on the revenue growth S curve, it must be emphasizedthe high performers in our study had typically started the reinvention process well before their current businesses had begun to slow. So what are the management practices that prepare high performers
27、 for reinvention? Lets look first at the response to the hidden competition curve.Edge-Centric StrategyTraditional strategic-planning methods are useful in stretching the revenue S curve of an existing business, but they cant help companies detect how the basis for competition in a market will chang
28、e.To make reinvention possible, companies must supplement their traditional approaches with a parallel strategy process that brings the edges of the market and the edges of the organization to the center. In this “edge-centric” approach, strategy making becomes a permanent activity without permanent
29、 structures or processes.Moving the edge of the market to the center.An edge-centric strategy allows companies to continually scan the periphery of the market for untapped customer needs or unsolved problems. Consider how Novo Nordisk gets to the edge of the market to detect changes in the basis of
30、competition as theyre occurring. For example, through one critical initiative the pharma giant came to understand that its future businesses would have to address much more than physical health. The initiativeDiabetes Attitudes, Wishes, and Needs (DAWN)brings together thousands of primary care physi
31、cians, nurses, medical specialists, patients, and delegates from major associations like the World Health Organization to put the individualrather than the diseaseat the center of diabetes care.Research conducted through DAWN has opened Novos eyes to the psychological and sociological needs of patie
32、nts. For example, the company learned that more than 40% of people with diabetes also have psychological issues, and about 15% suffer from depression. Because of such insights, the company has begun to reinvent itself early; it focuses less on drug development and manufacturing and more on disease p
33、revention and treatment, betting that the future of the company lies in concentrating on the person as well as the disease.Moving the edge of the organization to the center.Frontline employees, far-flung research teams, line managersall these individuals have a vital role to play in detecting import
34、ant shifts in the market. High performers find ways to bring these voices into the strategy-making process. Best Buy listens to store managers far from corporate headquarters, such as the New York City manager who created a magnet store for Portuguese visitors coming off cruise ships. Reckitt Bencki
35、ser got one of its most successful product ideas, Air Wick Freshmatic, from a brand manager in Korea. The idea was initially met with considerable internal skepticism because it would require the company to incorporate electronics for the first timebut CEO Bart Becht is more impressed by passion tha
36、n by consensus.If strategy making is to remain on the edge, it cannot be formalized. We found that although low and average performers tend to make strategy according to the calendar, high performers use many methods and keep the timing dynamic to avoid predictability and to prevent the system from
37、being gamed.As quickly as competition shifts, the distinctiveness of capabilities may evaporate even faster. By the time a business really takes off, imitators have usually had time to plan and begin their attack, and others, attracted to marketplace success, are sure to follow. How, then, do compan
38、ies build the capabilities necessary to jump to a new financial S curve?Change at the TopSome executives excel at running a businessramping up manufacturing, expanding into different geographies, or extending a product line. Others are entrepreneurialtheir strength is in creating new markets. Neithe
39、r is inherently better; what matters is that the capabilities of the top team match the firms organizational needs on the capabilities S curve. Companies run into trouble when their top teams stay in place to manage the financial S curve rather than evolve to build the next set of distinctive capabi
40、lities.Avoiding that trap runs counter to human nature, of course. What member of a top team wants to leave when business is good? High performers recognize that a key to building the capabilities necessary to jump to a new financial S curve is the early injection of new leadership blood and a conti
41、nual shake-up of the top team.Early top-team renewal.Consider how the top team at Intel has evolved. Throughout its history, the semiconductor manufacturer has seen its CEO mantle rest on five executives: Robert Noyce, Gordon Moore, Andy Grove, Craig Barrett, and current CEO Paul Otellini. Not once
42、has the company had to look outside to find this talent, and the transitions have typically been orderly and well orchestrated. “We discuss executive changes 10 years out to identify gaps,” explains David Yoffie, who has served on the Intel board since 1989.Simple continuity is not Intels goal in ma
43、king changes at the top, however; evolving the business is. For instance, when Grove stepped down from the top spot, in 1998, he was still a highly effective leader. If continuity had been Intels overwhelming concern, Grove might have stayed for another three years, until he reached the mandatory re
44、tirement age of 65. But instead, he handed the baton to Barrett, who then implemented a strategy for growing Intels business through product extensions.Indeed, each of Intels CEOs has left his mark in a different way. Grove made the bold decision to move Intel away from memory chips in order to focu
45、s on microprocessors, a transition that established the company as a global high-tech leader. Since he took the helm, in 2005, Otellini has focused on the Atom mobile chip, which is being developed for use in just about any device that might need to connect to the web, including cell phones, navigat
46、ion systems, and even sewing machines (for downloading patterns).Through structured succession planning, Intel ensures that it chooses the CEO who is right for the challenges the company is facing, not simply the person next in line. And by changing CEOs early, the company gives its new leadership t
47、ime to produce the reinvention needed, well before deteriorating revenues and dwindling options become a crisis.Balance short-term and long-term thinking.Ensuring that the team is balanced with a focus on both the present and the future is another critical step in developing a new capabilities curve
48、. When Adobe bought Macromedia in 2005, then-CEO Bruce Chizen took a hard look at his senior managers to determine which of them had what it took to grow the company to annual revenues of $10 billion. What he found was a number of executives who lacked either the skills or the motivation to do what
49、was necessary. Consequently, Chizen tapped more executives from Macromedia than from Adobe for key roles in the new organization. Those choices were based on Adobes future needs, not on which executives were the most capable at the time.Chizen wasnt tough-minded just with others. At the relatively young age of 52, and only seven years into his successful tenure, he handed over the reins to Shantanu Narayen, his longtime deputy. The timing mig
