When a business faces the paradox between transforming for the future and securing its current market position, leading change requires a new toolkit.
The high-profile bankruptcies of firms such as Blockbuster Video and Borders bookstores underlines that a slowing economy leaves little space for out dated business models. Unable to keep up with the pace of digital competitors such as Amazon, Google and Netflix, they crashed to an early demise. That these two relatively young, once innovative firms were unable to respond fast enough is a lesson for all. The digital age moves at a blistering pace, quickly turning winners into losers.
Successful companies across publishing, media, advertising, software and other industries feel this pressure today and continue to search for ways to respond. They seek to take advantage of digital business models and emerging technology and stay ahead of threat, turning it into an opportunity for future growth. The logic is impeccable. However, there is a problem. Borders made substantive investments in online book sales and digital book readers. Polaroid, the inventor of instant photography, brought the world’s first mega pixel camera to market in the 1990s.1 The Swiss watch industry previewed the world’s first quartz watch in 1969. Each of these firms went bankrupt because of innovations that they created or in which they had made investments.
The failure was not one of insight, but of execution. They moved too slowly to capture the opportunity and underestimated the scale of change required. The paradox of success is that while it should make incumbents best positioned to lead the market in the next wave of innovation, in reality it is the factor that most pins them to the past. Though these companies realize the market is moving and thus creating new opportunities, they do not successfully execute and capture the opportunity.