The China factory phenomena and accelerated technological innovation are causing business models to age faster than ever. Not many companies that formed the Dow Industrial Index decades ago remains on the index today (the only exception is GE). The others were either acquired, dropped or went bankrupt. And the companies that comprised the original S&P500 some 40 years ago over 80% were off the list after 30 years, and only 12 outperformed the index, In 2 more years, if we look back the last 20 years we can expect 85% of those companies would be gone.
The rules of business have changed, technology disruptions and globlalization have caused many once great firms to fail, some faster than others. The scale and resource based view that dictates managerial decision-making is becoming less important as innovation takes over as the competitive play. The implications of this are far-reaching. It means that every dimension of growth must be exploited as fast as possible and that that many of the traditional barriers can only sustain a shorter period of time. Scale play is simply not enough, it is now Speed Play and Ideas Play, all three are needed. Find great ideas to experiment and move fast to scale—welcome to hyper-competition. Organizations that don’t keep pace may well go the way of those firms that droped out of the indexes.
Why is it so difficult to recognize any industry breakpoints and take preventative actions? One of the most challenging things to do in any large, system and process driven organization is to get the larger management team to see the futures let alone change their paradigm. Because imagination is a creative act, where individuals and groups create an interpretation of reality, future and different scenarios, changing that shared view can be very challenging. It is not easy in large organizational settings when there are so many silos and the systems and structures that work against innovation. Creating a break point you need front line people (and outside people) to scan early and weak signals. These signals can help us to see different futures.
The first help they need is to ask imaginative questions that create the groundwork for innovations. Management are good in asking question about hard analytical data and generally not good asking questions about future. You should yourself the questions: “Does your company manage its imagination capability the way it manages its production capacity?”
