Wednesday, April 19, 2017

Good Management: Acting Boldly in the Wake of Disruption

      In the Introduction excerpt of The Innovator’s Dilemma by Clayton Christensen, I was particularly struck by the paradoxical nature of the thesis that Christensen was presenting: that leading companies fail oftentimes due to their well-run management and that ultimately the strongest and most powerful force that drives a firm’s failure is because it adopted ‘good management’ principles when it in fact should not have. Christensen writes that “there are times at which it is right not to listen to customers, right to invest in developing lower-performance products that promise lower margins, and right to aggressively pursue small, rather than substantial markets.”  

            As I was reading the excerpt, I started to think about the companies that did indeed fail due to ‘good management’ and a lack of recognition when it came to disruptive technologies and disruptive innovations in general. One example that came up in both the Christensen reading and the Chambers reading was IBM. In just a couple of decades, IBM went from one of the world’s most admired companies to one experiencing the biggest loss in American corporate history in 1992. As the readings mentioned, it is not necessarily the management that led to IBM’s failure, but rather the missed opportunity that the company had to invest in disruptive technologies, which at the time was the introduction of the minicomputer. Instead, IBM stuck to what it did best and lacked the courage to disrupt itself, as Chambers mentions.

            When looking at the case of Cisco, Chambers writes in his article about the importance for leaders to be bold in their decisions to take their companies to the next level and ‘disrupt’ the status quo. Another case study that can be used to illustrate this phenomenon is that of Blockbuster and Netflix.  When Netflix CEO proposed a partnership with Blockbuster in 2000, Blockbuster CEO John Antioco and his team rejected it. Even though the decision seems logical due to the fact that the company dominated the competition at the time, Blockbuster failed to anticipate where the market was heading—it was not bold enough to recognize and capitalize on the disruptive innovation that Netflix was proposing. By the time Blockbuster caught on to Netflix’s business model and the growing consumer demand for DVDs by mail, it was too late. The company filed for bankruptcy in 2010 and Netflix is now a billion dollar company and Netflix advanced to another disruptive innovation: online streaming.


            As we enter the Fourth Industrial Revolution and technologies such as artificial intelligence, 3D printing, and the Internet of everything impact processes in both the private and public sectors, it is becoming more and more important for companies to be bold in their welcoming of and adaptation to disruptive innovations and technologies. Companies will need to re-evaluate their approaches to customer service, process improvement, and project management by keeping these new technologies in mind and anticipating the market shifts and disruptions that the technologies will bring. All in all, the managers of today’s companies will have to harness their ‘good management’ skills that allow them to recognize when it is the best time to welcome disruption and go against the status quo so that they can stay ahead of these technology shifts.


Sources:

https://hbr.org/2011/09/netflix-bold-disruptive-innovation
http://www.cnbc.com/id/100653971
http://www.businessinsider.com/how-netflix-bankrupted-and-destroyed-blockbuster-infographic-2011-3
https://www.forbes.com/sites/gregsatell/2014/09/05/a-look-back-at-why-blockbuster-really-failed-and-why-it-didnt-have-to/#25c2f9181d64
https://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-what-it-means-and-how-to-respond/

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