Slowly evolving organizations face extinction

When Bill Gates says, “Microsoft is always two years away from failure,” he’s expressing the competitive reality of the new age. The world is increasingly divided into two kinds of companies: those that can get no further than continuous innovation and those who have made the jump to radical innovation.

As a result of this column you and your organization will learn how to:

Will understand that the 21st century challenge is not to compete for the future, but to create it.

Realize that the world is divided into those that can get no further than continuous innovation, and those who have made the jump to radical innovation.
Be prepared to blow up your old business model and create a new one in order to survive in the 21st century.

An organization evolving slowly is already on its way to extinction. Between 1994 and 1999, the number of mobile phones sold each year exploded from 26 million to 300 million. At the same time, technology shifted from analog to digital.

Motorola, the world leader in the cellular telephone business until 1997, missed the shift to digital wireless by just a year or two.

In those few short years, Nokia, headquartered on the edge of the Arctic Circle, an unknown company… making snow tires and rubber boots…exploited digital wireless and became the new world leader.

Everyone must realize that the 21st century challenge is not to compete for the future, but to create it. Revolutionary businesses are redefining every industry across the globe, as worn-out business models fail. Revolutionaries include such firms as eBay, Cisco Systems, Ariba, and Apple.

In the 21st century, change is abrupt. In a single generation, the cost of decoding a human gene dropped from millions of dollars to about a hundred bucks. The cost of storing a megabyte of data shrunk from hundreds of dollars to essentially nothing.

Millions of small businesses as well as giants such as Compaq, Nike, Novell, Westinghouse, DEC, TWA, Kodak, Kmart, and GM are struggling to stay relevant to today’s increasingly demanding customers.

Buying insurance on the World Wide Web is a totally different business model than going to a physical agency. You can instantly compare policies and are sure that you are getting the lowest price. Over the last two decades, banks have lost nearly half their share of U.S. household financial assets to newcomers such as Fidelity, E*TRADE and Charles Schwab.

IKEA invented a high-volume business model for selling affordable home furnishings that is quite unlike that of a traditional furniture store. It allows customers to pay low prices for trendy designs and to take the furniture home with them.

Revolutionaries blow up old business models and create new ones. Many believe that innovation is only driven by technology. In many cases that’s true. Yet, think of IKEA, Old Navy, Virgin Atlantic, Starbucks, Southwest Airlines, and many other innovators that are not technology pioneers.

Even revolutionaries like America Online are vulnerable to radical new business models.

For years, AOL UK reigned as the largest Internet access provider in the United Kingdom.
In September 1998, Freeserve launched free Internet access service in Britain and in 15 months, won 1.5 million users.
Its innovation was to take a small percentage of the revenue of each user’s phone connection charges for its profit.

If you went to any large telecommunications company and looked up its strategic plan from 1990, you wouldn’t find a single reference to Qwest, Verizon, Sprint or Cisco. Each one ate part of the lunch of the existing Tel-com giants.

One of the biggest mistakes that established companies make is to think that their only competitors are their historic rivals. Freeserve was an offshoot of Britain’s leading electronics retailer and Nokia was in the rubber business.

Questions for discussion:

How can we become a radically innovative organization while continuing to make daily incremental improvements to better serve our customers?

What great ideas could we uncover from further study of organizations like IKEA, Starbucks, Southwest Airlines, eBay, Ariba and Apple?

No one has an exclusive on good ideas. Please share you thoughts by posting at the bottom of our blog. Click here

This article is provided by Joe Murtagh, “The DreamSpeaker^TM” www.TheDreamSpeaker.com. For keynotes, facilitation, workshops, consulting and questions or or a free report on The 3 Most Common Mistakes Organizations Make, email us at Joe@TheDreamSpeaker.com or call 800-239-0058.

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