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Here’s Why Even Successful Companies Find It Hard To Innovate In New Markets

2017 October 18
by Greg Satell

In 1892, George Eastman formed the Eastman Kodak Company to “make the camera as convenient as a pencil.” It was an idea whose time had come and by the early 20th century, Kodak emerged as one of America’s largest companies and Eastman one of its most successful entrepreneurs.

It wasn’t just that one idea that made the company so successful, it managed to stay on the bleeding edge for over a century, pioneering impressive new advancements in photographic paper, development and image processing. In 1975, it invented the digital camera, which would lead to its downfall as a major corporation.

The problem wasn’t that Kodak didn’t understand the potential, but that it became stuck in its operating model. It was so huge and so profitable, that almost any other opportunity seemed small by comparison. While Kodak is an extreme case, many others fail in new markets for similar reasons, they fail to bridge the gap between innovation and operations.

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You Can’t Change Fundamental Behaviors Without Changing Fundamental Beliefs

2017 October 15
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by Greg Satell

In 2006, Blockbuster Video launched Total Access, a service that allowed its customers to rent videos online and return them to stores. The strategy was an immediate hit with customers and before long its online unit was making big gains against Netflix. It seemed that the video giant had finally cracked to code to renting videos on the Internet.

Alas, it was not to be. Investors balked at the cost of the new plan, while franchisees feared that online rentals would make them obsolete. In 2007, the company’s CEO, John Antioco, was fired and the online strategy was scrapped. Just three years later, in 2010, Blockbuster filed for bankruptcy.

Traditionally, we have looked at strategy solely as a set of plans designed to achieve specific goals. However, as we increasingly operate in a world of networks rather than hierarchies, leaders need to learn the lessons of social movements and focus on shared values. As the story of Blockbuster shows, you can’t change behaviors without first changing core beliefs.

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Innovation Isn’t About What You Control, But What You Can Access

2017 October 11
by Greg Satell

Completed in 1928, Henry Ford’s River Rouge plant was a marvel of its age. It was almost 100% vertically integrated, even producing its own steel and by the 1930s over 100,000 employees worked there, producing nearly every component for the cars that Ford built. It was, at the time, considered to be a key advantage.

Nobody makes factories like that anymore though. It wouldn’t make any sense. In today’s economy, it would be impossible for any one firm to be competitive in more than a handful of the thousands of components that go into a modern automobile. That’s why today we have global supply chains.

All to often, we think of innovation as an problem of developing internal capabilities but in today’s world, far more value can be unlocked by widening and deepening connections. So we need to learn to use the entire ecosystem, including partners, suppliers, customers and open resources and think in terms of value networks rather than value chains.

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Don’t Bet On Someone Else’s Success Story

2017 October 8
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by Greg Satell

Every bold new business idea starts with a success story. Either it is a single organization or an aggregate sample that implemented a particular strategy and achieved outstanding results. That solid track record helps to convince others to adopt it, yet somehow the new management fad fails to deliver as promised.

The problem is often one of survivorship bias. While it’s fairly easy to find an examples of those who were successful with a particular strategy, the ones who tried it and failed are often overlooked. Other times, a post hoc fallacy is at work. Just because someone implemented a particular strategy doesn’t mean that’s what led to success.

The truth is that a strategy can never be validated backward, only forward. The past is a very imperfect indicator for the future because circumstances are constantly in flux. Technology, competition and customer preferences change all the time, so whenever anybody tells us that they have come up with a sure-fire way to succeed, we need to be skeptical.
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What Will We Do After Moore’s Law Ends?

2017 October 4
by Greg Satell

In 1965, Intel cofounder Gordon Moore published a remarkably prescient paper which predicted that computing power would double about every two years. For a half century, this process of doubling has proved to be so remarkably consistent that today it is commonly known as Moore’s Law and has driven the digital revolution.

In fact, we’ve become so used to the idea that our technology gets  more powerful and cheaper that we scarcely stop and think about how unprecedented it is. Certainly, we did not expect horses or plows — or even steam engines, automobiles or airplanes — to double their efficiency at a continuous rate.

Nevertheless, modern organizations have come to rely on it to such an extent that people rarely think about what it means and, with Moore’s law about to end, that’s going to be a problem. In the decades to come, we’re going to have to learn to live without the certainty of Moore’s law and operate in a new era of innovation that will be profoundly different.

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Don’t Break Down Silos, Connect Them

2017 October 1
by Greg Satell

Nobody likes a silo. Or a stovepipe for that matter. These insular structures restrict the flow of information, which makes it hard to coordinate action and adapt to change. In some cases, it can even lead to disastrous consequences like the General Motors ignition switch scandal. So it should be no surprise that managers try to break down silos whenever they can.

The problem is that when you reorganize to break down one kind of silo, you inevitably create others. If, for example, your company is organized around functional groups, then you will get poor collaboration around products. But when you reorganize to focus on product groups, you get the same problem within functions.

The answer is to not try to eliminate silos, which are inevitable and often have important benefits, but to connect them effectively. Yet that’s easier said than done. As Chris Fussell explains in his new book, One Mission, it requires us to reimagine how organizations really function and learn to shift our thinking from hierarchies to networks.

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4 Innovation Mistakes That You Really Need To Avoid

2017 September 27
by Greg Satell

One of the things that startup guru Steve Blank likes to say is that no business plan survives first contact with a customer. What he means that every idea is wrong. Sometimes it’s off by a little and sometimes it’s off by a lot, but it’s always wrong and the sooner we find its flaws the sooner we can start making it work.

This holds true even when an idea is revolutionary, like electricity or the personal computer. There is always a gap between an idea and it’s impact. In fact, on average takes about 30 years to go from an initial discovery to a significant effect on our lives. That means that the “next big thing” is usually about 29 years old!

So there is no lack of fertile ideas, but still most organizations fail to innovate. The problem is not a lack of intelligence or ambition — any enterprise that is able to stay in business for any length of time obviously has both — but that innovating successfully is profoundly different than running operations, which leads managers to make four fatal innovation mistakes.

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Here’s What We Can Learn From The Bankruptcy At Toys “R” Us

2017 September 24
by Greg Satell

The recent bankruptcy filing at Toys “R” Us has roiled the toy industry. Yet, struggles at the company are not new. The firm was taken private in a $6.6 billion leveraged private equity buyout in 2005 with the aim of turning the chain around, but the resulting debt has proved to be unserviceable.

The news is part of a larger trend of closings that some are calling the retail apocalypse. The rise of e-commerce, combined with a shift in consumer preference towards dining out over shopping and years of overbuilding, has made for distinctly unattractive economics in traditional retail.

Take a closer look, however, and the prevailing narrative isn’t quite right. Amazon has made a big push into physical retail, capped off by its $13.7 billion  purchase of Whole Foods. Others, ranging from Apple to Warby Parker, also opened physical stores. So clearly the problem isn’t with retail itself, but the inability for legacy firms to adapt to a new model.

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The Quantum Age Is Almost Upon Us We And Need To Start Taking It Seriously

2017 September 20
by Greg Satell

Every new technology has the capacity to inspire wonder and fear. One Swiss scientist, Conrad Gessner, warned in the 1500’s that the data overload from the printing press would be “confusing and harmful” to the mind. Similar concerns have been voiced about every conceivable advancement, from the train and car to computers and social media.

The truth is that technology transforms human experience and that always comes with tradeoffs. Information technology reduces our ability to retain information and do arithmetic  in our head. Automobiles cause pollution and thousands of deaths every year. Still, I don’t see many people willing to give them up.

We’ll soon be entering the quantum era and the sensationalism has already begun. A recent Forbes article, for example, warns of the ability of quantum computers to crack even the most secure encryption. That sounds like a scary problem, and it is, but it’s also a very solvable problem. What the quantum era needs now is not fear-mongering, but understanding.

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Building A Network To Solve Education

2017 September 17
by Greg Satell

Talia Milgrom-Elcott went to Harvard Law School with the idea of making the world a better place. An early role model was Charles Nesson, a professor at Harvard who devoted his career to defending the downtrodden. One of his cases, involving a famous lawsuit, even became the subject of a hit feature film, A Civil Action.

Yet after she graduated, she decided that she could make a bigger impact outside practicing law. Today, Milgrom-Elcott is the Executive Director for 100Kin10, which is spearheading the effort to train 100,000 STEM teachers in 10 years. So far, it has raised more than $100 million and is on track to meet its goal.

What makes 100Kin10 so effective is its unique approach. Rather than coming to the table with yet another program and yet another strategy to improve education, Milgrom-Elcott saw that far more could be achieved by helping existing programs to connect and learn from each other. It’s a model that has the potential to solve other complex social problems as well.

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