Some Organisations Become A Victim Of Their Own Success And Size

As their success grows, so does the size of the organisation, like Microsoft (increased staff from 57,000 a decade ago to around 127,000 in 2014; this is around 50% higher than Apple yet the latter's revenue and profit is double Microsoft's) plus the thinking changes from innovation to protecting the successful product, services, etc. Some examples include

- smart phone on Nokia & blue-tooth technology

- impact of quartz watch on industry in Switzerland. For a long time the Swiss dominated the world's watch industry. Then in the 1970s the near-fatal crippling of the Swiss watch industry with the popularity of the cheap quartz/digital Asian watches. Yet Swiss were offered, but rejected, this technology. Their own assumptions about the nature of watch making were so strong, they were incapable of understanding the full implications of this invention. The revival of Swiss watch based on it as a fashion statement, ie cosmetic/luxury item, as well as a time piece. The next disruptive inventions could be

i) around "smart watches" using silicon's unique properties like in the smart phone. Companies like Samsung (GearS), Apple (iWatch), Google (Android Wear), Sony, Asus, LG, etc are experimenting with the technology to develop smart watches.
ii) reducing components, eg Swatch's System51 has gone from 200 to 51 components made by robots
iii) cheaper machines + computer-aided designs means that complete watches are made under one roof

- Skype with telcos. Skype (2003) was not seen as a threat to the telco industry, ie technology would not work; it did not have scale, etc

"...What Skype is doing is like a toy..."

Hossein Eslambolchi, AT&T's then chief Technology Officer as quoted by Rachel Botsman

Yet by mid 2013, it now has 30% of the long-distance phone market

- Microsoft buying Nokia to protect its traditional platforms like Windows

. These "successful" organisations become maintainers rather than innovators

. Creative destruction -old are replaced with new, eg technologies, expertise, firms, etc.; winners & losers

. An indication that a product or organisation is near the peak of the S-curve is when they start making cosmetic changes rather than technological, eg change the colour of a product, etc

Furthermore,

"...Just because a company stumbles - or get smacked......by an unexpected event or challenge - does not mean that it must continue to decline. Companies do not fall primarily because of what the world does to them or because how the world changes around them; they fall first and foremost because of what they do to themselves..."

Jim Collins, 2008

Some organisations become a victim of their own success and size. As their success grows, so does the size of the organisation, and the thinking evolves from innovation to protecting the successful product, services, etc. The organisations become, at best, maintainers rather than innovators.This is more obvious in industries with rapidly changing technology. Some examples include the watch industry in Switzerland not taking up the digital technology, IBM and Dell in computers, Yahoo as a search engine, smart phones with Nokia, Zynga in mobile games, etc. Are Microsoft, Apple, Facebook & Google next?

For exmple, Dell initially disrupted the PC industry when it introduced build-to-order and direct online sales; over the years it became the industry leader. But the industry landscape changed, eg mobile phones becoming minicomputers, etc and they remained stuck within a commoditised PC market.

One firm that has used digital technolgy to change the way it does business is Disney,  ie its clients are no longer BBC or RTZ but iTunes, Google, PlayStation and Microsoft.  There was a proliferation of channels/platforms/devices, etc wanting to deliver Disney's content and this put Disney in a position of power.  The new technologies opened up commercial opportunities and new revenue streams, eg

"...you could look at the way in which programs were sold; they could be sold to one person for one platform for one experience and later to somebody else for a different experience......Disney was the first company to put long form episodes on the iPod......technology defines how content is created, how it is distributed and how it is consumed...... if you have a platform  that can't respond to the sort of digital expectations of the consumer, you are in trouble..."
Catherine Powell as quoted by Joanne Gray, 2016a

It is about connecting all the lines of Disney's business that go under the one brand like stage shows, retail and licensing products, release of films, programming and distributing TV channels, theme parks, etc 

NB

"...The essence of innovation is also obsolescence..."

Allan Gray as quoted by Vesna Poljak, 2013

In addition to becoming maintainers rather than innovators, other indicators of being victims of their own success and size are increase focus on

- incremental improvement of current products rather than creative destruction or disruption, eg making cosmetic changes like colour/size of product, rather than technological

- bureaucracy, ie less flexible with more hierarchical, process-focussed, rules & regulations orientated, etc

- silo performance, ie organisation becomes more specialised, segmented, departmentalised, etc with focus on groups rather than whole organisation's performance

- abuse of market power to protect the status quo, eg monopolistic activities, anti-trust charges, etc, Some examples include

i) Microsoft has paid US $3.4 b. in fines to European courts over a decade

ii) Intel is appealing its anti-trust case that started around 2000

iii) Google is fighting the EU anti-trust regulator's claim it has illegally abused its market dominance (2015)

- buying competitor or products/services/staff, etc from other innovative, successful organisations for market share, revenue, etc rather than innovating themselves like Apple's iTune buying Beats to keep its position in music industry and Microsoft buying Nokia to get into the mobile phone business, etc

Remember:

"...Even something that has had a long term success, it's only a knife edge away from failure..."

Steven Lowry as quoted by Jemima Whyte, 2015

 

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