What if it didn’t matter?
We hear time and again that large-scale business transformations fail. They fail at a rate upwards of 80 per cent. In fact, all large projects fail at a rate above 70 per cent. And despite the promise, modern methods like Agile don’t fare much better—if at all. I discuss why Agile doesn’t live up to its promise in another segment, so I don’t want to belabour the issue here. Let’s just say that it’s less the fault of Agile, than of the people who are trying to get something for nothing. Agile is not alchemy.
But, getting back to the main topic, what if it didn’t matter. What if modern business transformation didn’t matter? That’s what I’m going to discuss next.
A prime motivation for needing to transform is to better the competition—or even the potential of competition. If the executive consensus is that the probability of competitors transforming is relatively low—for whatever reasons—, whether from typical economic barriers to entry, to run of the mill myopia, or just a lack of imagination, then the purported benefits of transforming might not be perceived to be worth the costs.
As strategists, we can remind our clients that if you wait for your demise to be imminent, it may be too late to course-correct. There is a cost to doing nothing. And your reaction will be hurried. I don’t want to make this a political discussion, but this was the approach that former US President Donald Trump took on the COVID-19 pandemic. And I think that most of us can agree in hindsight that this was not a successful strategy. On the upside, you’ll have something to react to, and your benefits will include existential factors.
You ask: Why might this not matter? I won’t make any accusations of collusion, tacit or overt, but what if organisations are relying on the 80-plus per cent failure rate—and hiding behind it as a shield? They are asking themselves:
Why should I spend the money and exert the energy to transform if my competition isn’t?
As a consultant, I’ve had the luxury of working with several companies, occupying top slots in their respective industries, each of which is trying hard to appear to the outside to be engaged in some transformation initiative. Yet, it is painfully apparent to someone with an inside view that any material transformation is not in the cards.
These companies attempt to make changes. But these changes are marginal. They may allow the organisations to tread water for a few more years. They bide their time rearranging deckchairs on the Titanic, awaiting the inevitable.
Adding to the inertia is the denial by these cultures that they are steeped in the past. Is the organisational inertia simply too strong to overcome? No. But first, one needs to admit to the problem. This is not the guy who’s just had one too many drinks. This is an alcoholic living on the streets telling himself, he’s just had one too many drinks.
Several years ago, I was having dinner with a CEO and several other executives from a distribution company that was pulling in $30 billion of revenue from US markets, and another $30 billion in European markets. I had spent a couple of months on a transformation strategy project. During that time, I had visited their distribution warehouses, spoken to their national and regional sales and operations management people as well as their data, analytics, and technology infrastructure folks.
We had several hours of discussion on the topic of Amazon.com eating their lunch, but they were not convinced that they had the volume to justify a wholesale automation initiative on par with Amazon. They didn’t feel that Amazon was a threat to their core business. They were even willing to concede that they didn’t even want to protect the one-off orders from small buyers.
They did want to be able to deliver all of their customers product and service needs in their distribution niche, which meant carrying a fifty-cent part to be included in a fifty-thousand dollar order. Although, Amazon could decide to compete with their core market, it probably wasn’t yet on their radar. Too niche. But it was also conceivable that there might come a time.
And, in the spirit of full disclosure, the market is still theirs. And their core business is probably still not on Amazon’s radar, sonar, or Ouija board. I do feel that a well-funded startup could challenge the market, but the margins just aren’t there to attract new entrants into their marketspace, so they can defer transformation—at least for the time being.
I was able to convince them of some fundamental data-needs that allowed them to monetise more of their data—something they were already excellent at doing—, but when the larger transformation conversation occurred, it played out something like this.
I said: You really need to step up your game. Your industry is at risk.
I know this industry is ripe for disruption, but I don’t want to react to a possible threat. If you can tell me what the disruption will be, I’ll defend our turf.
If I knew what it was, it would hardly be disruptive. It’s the surprise aspect that catches one off-guard. Besides, if I knew what it would be in advance, I’d have already done it and be retired in Fiji by now.
Let’s just keep talking. I can’t justify to my board or shareholders on a whim.
There is a cost to doing nothing, and this cost may be unsurmountable and unrecoverable. You don’t want to be the next Blockbuster.
I’m willing to take that chance.
And so it went…
Returning to the main theme: Why should one pay to operate at the speed of digital when the competition is moving along with us at some glacial pace? Sure. Maybe asteroids wiped out the entire dinosaur population, but that’s a black swan event. No Dinosaurs survived. Right?
Not quite. Whilst it’s true that no dinosaurs survived, some life managed to live on, and in fact, thrive. Other reptiles. Mammals. So whilst these companies, um, dinosaurs, become extinct. Something more resilient will persevere.
Don’t be a dinosaur.
I can already anticipate some reactions.
I don’t think planning for a cataclysmic event is realistic. It’s not a good use of time and resources. As long as we ensure that we’re not the weakest gazelle in the herd, it will buy us time to react. Besides, we’re not even close to being the weakest gazelle. I’m all for Darwinism and survival of the fittest. And we are more than fit enough to succeed. When we need to step it up, we will. If push comes to shove, we can probably buy the up-start competition. Right?
One client story before I end this segment. A client of mine was in the business of selling razors for shaving. Great margins. Little competition. It’s not a very glamourous business, so not many entities were clamouring to enter the marketspace.
And then along came Harry’s, and Dollar Shave Club. They had gotten caught flatfooted. No worries. They are just a blip. We can buy them outright and adopt their approach.
Oops! Our competition beat us to the punch. Too little, too late. Now what? Can we copy them?
This is another cautionary tale. It’s about underestimating the marketplace and resting on your laurels. But you can’t remain neutral on a moving train.