The corporation once had a "perfect world" scenario: create an extraordinary product in a blue ocean (i.e., new) category and defend a fountain of profit with good strategy and smart tactics.
In the perfect world, change came in increments. Some competitors would enter the category with some variation on the theme. Others would look for "nook and cranny" weaknesses. The corporation would secure it’s position with incremental responses…and profit poured forth.
The world changed. Now, the corporation is subject to blind side hits. Now the problem is not incremental challenges, but fundamental shifts. For Time Warner, this was the rise of an advertising based revenue model. For The Coca-Cola Company, it was the rise of the non-corbonated soft drink. For Microsoft, it was the rise first of the internet and then server-based software. For Detroit, it was Japan. (The irony: while American corporations are being encouraged to set out in search of "blue oceans," the real challenge are the great masses of water that come looking for them.)
These changes require fundamental shifts in corporate assumption and practice. And this is hard. Corporations rise to greatness because they are good at, say, CSDs (carbonated soft drinks). The advent of Snapple and Gatorade forces them to take on the new, but often this feels like a betrayal of the very things that make the corporation exceptional. "Sure," goes the complaint, "we can make fruit juice, but what we exist to make CSDs!"
It is, finally, a cultural problem. CSD assumptions supply not just the "what" and the "why" of the corporation, but it’s deepest, most powerful, and least visible assumptions, the "unknown knowns," we might call them (with apologies to Donald Rumsfeld).
The problem at corporations like Time Warner, the Coca-Cola Company, Microsoft and "Detroit," is not intellectual laziness, a failure of the imagination, or, God knows, a failure of will. The problem is that non-incremental change forces the corporation off its game, out of its competence, and away from its deepest understandings of the world. Adaptation is possible, but a voice of warning sounds in the head of the senior manager: that way lies the destruction of the extraordinary intellectual, strategic, and cultural capitals that make us who we are. That way lies chaos.
There are lots of ways to rethink the corporation so that it can address the problem of non-incremental change. There is the challenge taken up by Brown and Eisenhardt, Foster and Kaplan, Hammer and Chompy, Handy, Peters, Prahalad, to name a few. The corporation is learning new tricks. The new corporation is being invented fitfully, gradually, and painfully. But it’s coming.
Innovator’s innovation 1
What I would like to see, for deeply self interested reasons, is the creation of an observation platform from which we can keep an eye out for the next new things. In keeping with our Tsunami references, let’s call it a wheelhouse, a conning tower, or a ship’s bridge.
The trick would be to find 5 or 6 really smart, well educated, well informed, well connected, deeply curious, utterly practical people. These qualifications create a tiny Venn intersection, but, hey, we only need 5 or 6 people.
Innovator’s innovation 2
Once potential changes are identified, it is time to see what difference their difference will make. How will the corporation as it is presently constituted in these particular waters? This will help us to find, extract and replace the "unknown knowns" in the corporate culture.
Innovator’s innovation 3
Ok, now we need to build a series of simulated corporations, fit them out, run them in a tub somewhere, and refit as necessary. (Will someone please scuttle the naval metaphor, please!) We can’t wait till the future is here to start the work of adaptation. We want to have done the conceptual work for eventualities well before they eventuate.
Ok, out of time.
Brown, Shona L. and Kathleen M. Eisenhardt. 1998. Competing on the Edge: Strategy as Structured Chaos. Boston: Harvard Business School Press.
Foster, Richard and Sarah Kaplan. 2001. Creative Destruction. New York: Currency.
Hammer, Michael, and James Champy. 1993. Reengineering the Corporation. New York: HarperBusiness.
Handy, Charles. 1990. The Age of Unreason. Boston: Harvard Business School Press.
Kim, Chan and Renee Mauborgne. 2005. Blue Ocean Strategy. Boston: Harvard Business School Press.
Peters, Tom. 1987. Thriving on Chaos: Handbook for Management Revolution. New York: Knopf.
Prahalad, C.K. and Venkat Ramaswamy. 2004. The Future of Competition. Boston: Harvard Business School Press.