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How shared workspace company WeWork went from being the darling of corporate America to bankruptcy is one example of a long line of business failures caused by top management’s failure to adapt to major changes occurring in the world. .
Many people can’t see the iceberg ahead, but some can change course.
The RMS Titanic sank in 1912 because everyone thought it would never sink. Human arrogance and pride are flaws that everyone has. Even C-level executives have it despite opinions to the contrary, and old practices that have worked well in the past are difficult to change.
Take Nokia, a giant in the analog mobile phone field, as an example. When Apple launched the iPhone and Google announced its Android operating system, the Finnish giant, which had previously pivoted from its wood industry radio business to its mobile phone business, launched its own Symbian operating system. I decided to survive. The market disagreed, and soon after, Nokia lost its lead in the industry to emerging mobile phone makers such as Samsung and Apple, along with companies such as Sony Ericsson and Motorola.
When Netflix was a weak startup, they were sold to Blockbuster for $50 million, but Blockbuster turned down Netflix’s DVD-by-mail movie business. At the time, Blockbuster was a giant in the VHS/DVD movie rental business, with retail stores on many street corners. Unfortunately for them, they failed to recognize the change that had occurred, namely that streaming video technology had become cheaper. Meanwhile, Netflix has humbly recognized the change and is now one of the leading companies on the Nasdaq.
Related: How pivoting saved my business when things didn’t go as planned
Even people with excellent academic backgrounds often fail to notice these changes, especially if they have experienced only success in the status quo. At the end of the day, it’s hard to ask why people are successful. Most people take it for granted, and in some cases even attribute their success to their special management skills.
On the positive side, one example of a successful major strategic shift was when Intel, under late CEO Andrew Grove and co-founders Robert Noyce and Gordon Moore, transitioned from memory chips to microprocessors in the 1970s. This is when I led the transformation into a business. It’s easy for a business to make that transition if it’s currently losing money, but difficult if it’s making a lot of money. In the case of Intel, since the personal computer (PC) business with IBM and others will start in the future, the company decided to shift to microprocessors instead, believing that once a new management team came in, the company would shift to microprocessors.
In his best-selling book on business administration, Mr. Grove pointed out that: Only paranoia survives, companies and industries may face so-called “strategic inflection points” in the future. These are critical moments when management must recognize that something major has changed, and if a company fails to pivot, it could face decline or extinction.
So how should we act?
The number of business failures that end up on the covers of top business magazines shows that arrogance exists everywhere. A real business leader must also display a certain degree of humility in order to continue to achieve success with his company throughout his career.
Even worse, we often try to defend our position and exploit confirmation bias, even if the data supporting our argument is random to begin with. That is, the data seems to support your position, but it doesn’t.
The first step we must take is to admit that, as human leaders, we are not infallible. We can all make mistakes. Just because we’re on the cover of a business magazine, invited to speak at a prestigious global forum such as Davos, Switzerland, or sitting in a C-suite doesn’t make us any less human.
Next, you’ll learn about statistics, including how to use XY scatter plots. At the very least, we can see that we need enough data to show a real correlation trend. Avoid inferring trends from random sets of data that don’t even show lines or curves when graphed. Just because three coin tosses yield heads doesn’t mean the next coin toss will have the same result as before.
The turkey has a long life to live before the ax falls on his head. Turkeys are well fed and treated gently. In other words, past performance is not an indicator of future performance.
If your data is already showing a trend, you don’t have to suffer from analysis paralysis just because you can’t switch gears. If it’s time to change course, do it. Discuss with your team what you would do if you were wrong and actually pivot. No matter how committed you are, agree in advance an exit strategy from your initial position. Be prepared to pivot if something changes.
Related: Knowing when and how to pivot is the key to business survival. Here’s what you need to do:
Don’t become extinct
The ability to sense when something has changed and the willingness to abandon past successes that may no longer apply and take a new, uncharted course is part of being a great business leader.
It’s not without risk, but it’s necessary. If your company masters this skill, it can extend your business for decades to come. Otherwise, we would be just like dodos and dinosaurs.
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