Week 5 Blog: Doomed to fail

Global forces are disrupting industries at an unprecedented pace. Organizations that remain competitive are those that embrace the trends and ride the tailwinds. Reading the excerpt of Clayton Christensen’s book, The Innovator’s Dilemma, discussing cases where companies with good management, veterans of industry, were disrupted to oblivion by new entrants was quite unsettling. Executives of successful companies have an incredibly difficult job of maintaining market leadership position on top and warding off competition to remain relevant in the industry. But it  also quite comforting, knowing very few, if any, companies are immune to disruption. 

In his book, Christensen theorizes that one of the primary reasons companies with seemingly good management failed to stay on top of their industries is because they listened to their customers’ want for better products. This is quite a contrarian view. To stay ahead of disruption, Jeff Bezos, CEO of arguably the most innovative and successful company today, stays focused on the customer. In his opinion, this is the most important way for a company to remain agile.  Like Bezos, former CEO of Cisco, John Chambers was also in-tune with his customers. In the article, Cisco’s CEO on Staying Ahead of Technology Shifts, Chambers reports to have gotten market shift indicators from customers, and attributes the failure of IBM in the minicomputers market to their disregard for customer feedback.

So how does listening to customers become the undoing of a large, well-managed company? I think that there’s another underlying issue with these companies; a lack of creativity and innovation and the reluctance to be experimental. Companies ought to stay focused on their customers so that they are able to anticipate customer’s needs and innovate ways to meet those needs. Theses companies have to stay agile enough to be resilient against failures, and pivot until the bar for customer satisfaction is raised.

Christensen and Bezos do agree on one thing. In 2016 letter to shareholders, Bezos posits that truly dynamic organizations make decisions very quickly, without waiting for all the information needed to make a “good decision”. Christensen discusses this as the 3^rd principle of disruptive innovation, where very little is known about a disruptive market and so the market cannot be analyzed. Christensen and Bezos recommend making decisions with the information available, though inadequate, and adjusting the course as more information becomes available.

This is the hallmark of true experimentation, which appears to be something large organizations are exceptionally bad at; with bureaucratic processes, single-minded due diligence, and organizational cultures that punish failures, creativity and experimentation are stifled. As companies grow larger, it seems almost inevitable that they are doomed to disruption by more agile counterparts.