Ok, I'm dating myself here but when I was younger, people went to small, mom and pop bookstores that were very common at the time. I recall one well stocked bookstore that was close to my home and was considered the local "go to" bookstore. It was bigger than most and the owner was always there and it was obvious that she loved her work and loved interacting with customers. It was a nice business. However, she was located on a highway and the area was growing in population, and one day a new business announced it was opening across the highway. It was another bookstore by the name of Borders. It was a much larger facility with probably 5 times the number of books and included a section where customers could sit, relax, and have some coffee while flipping through a book or magazine. Well, people were curious about this new store and they enjoyed going there and in time, more people were visiting Borders then the local bookstore. The owner of the smaller bookstore tried to hang on as long as possible, but one day, I saw a sign on the front window that read "Store Closing".
Borders and a similar store called Barnes and Noble were suddenly opening stores everywhere, slowly driving all the small bookstores out of business. Both were dominating the market. It appeared that these book superstores were the new normal. But change is constant, and when we settle in and think we've reached the pinnacle in an industry, the next wave of innovation is usually not far behind.
Well, that next wave came with a company called Amazon; a business that was started in a garage with a goal of selling books online, at least initially. Their launch coincided with a period when the World Wide Web was being introduced and adopted by the public. And as people became more comfortable with the new digital world, Amazon began to grow into a significant player in the retail book industry. Borders and Barnes & Noble tried to compete by creating an online presence, but Amazon was first to market and taking advantage of new technology. Eventually, Borders was forced to close its doors and Barnes & Noble has been playing "catch-up" ever since.
We're all familiar with the challenges of other companies such as Blockbuster, Kodak, Circuit City, AT&T, Xerox, IBM and many others who were either forced to close or lost their leadership position in all, or some area of their business, to those who brought innovation to the industry.
Before the World Wide Web went mainstream, large companies dominated markets and it was very difficult for startups to compete due to high cost of entry, technology constraints and the time required to deliver products to market. Advances in technology changed all that. In today's environment, you can quickly spin up a data center in the cloud from an office in your basement. And small innovative firms are leveraging that technology to disrupt industries and deliver innovation to customers rapidly without the overhead that exists in legacy organizations. Consumer behavior has undergone change as well. Consumers not only expect innovation, they expect it fast. And in the digital environment, consumers have the world at their fingertips, and if one company doesn't have the "latest and greatest", a competitor is just a click away. Brand loyalty is a thing of the past. Jeff Bezos, founder and CEO of Amazon, put it this way; "Our customers are loyal to us right up until the second somebody offers them a better service".
So, in this fast-changing business and technology environment, no company can afford to get too comfortable with their market position, particularly large legacy organizations. Why legacy organizations? Because, in general, legacy companies focus on their core business. They're executing a proven business model and they want to protect their core business, hit their numbers and keep their customers happy. They don't want to upset the "apple cart". And although they themselves were a start-up company at one time, their mindset changed as they matured and their practices reflect how success was achieved in times past.
Well, "so what" you say. They're making a good product, earning revenue, employing lots of people and keeping customers happy. And that's true. But it may not last. Because what many legacy companies are not doing is transforming themselves to innovate and stay ahead those Lean, Agile companies looking for an edge to disrupt an industry. For example, consider all the overhead accumulated throughout the years that are now part of the fabric of many legacy organizations; fixed budgets, long-range detailed plans, business and technical silos, time consuming approval processes, stage-gates, accepting delay as normal, extensive manual processes and on and on.
This traditional approach leaves little time, if any, for an organization to: 1) streamline their operation to deliver value to customers faster through value stream optimization, automation, cloud and DevOps, 2) identify and evaluate emerging changes in the marketplace and the potential impact of those changes and 3) experiment and drive internal innovation to pioneer new ideas and delight customers. And it's the ability to perform these kinds of activities that give an organization the opportunity to adapt, succeed, lead and disrupt as opposed to a company that may stall and decline.
More and more organizations are recognizing that traditional methods cannot sustain them. Companies like Ericsson, Barclay's, GE, John Deere, and yes, even Microsoft are examples of organizations who've successfully adopted Lean and Agile principles to reduce delivery time, speed ROI, delight customers, and innovate. That last point is noteworthy in that legacy firms spend more time "keeping the lights on" and less time innovating, while Lean, Agile organizations, do just the opposite. To stress the importance of this last point, back to Jeff Bezos for a moment who states "Innovation in one of our guiding principles at Amazon … .".
Change is on the horizon. Is your organization aware of new ideas entering the marketplace for your industry, even at a very low level? Are you evaluating and experimenting with those ideas, even if they conflict with your core business, but impact it nonetheless? Is your organization prepared to pivot quickly to meet a competitive threat head-on? Is your value stream from "concept to cash" optimized for speed, quality and value? Are you leading with innovation? If the answer to these questions is "No", you're a perfect candidate for an internal intervention to disrupt your own organization before it's too late.
Will it be easy? No. It will take work, commitment, motivation and courage and it won't happen overnight. It's a journey, albeit a necessary one if your organization is to survive, succeed and lead in today's very competitive digital environment.