Many companies struggle and fail, not because they are bad at what they do, but because they are great at what they do. Look at Kodak. Its decline isn’t due to it being poor at film processing, but because it is brilliant at film processing.

And it’s the same with many other companies. Olivetti, for example, is great at making typewriters, and The Gap is great at making and marketing chinos. The problem that these and many other competent companies have faced is that things change; markets change, the economy changes, technology changes and customer tastes change.

But many companies cannot change their offer or their organisation as quickly as their external environment. Companies that are able to align their capabilities and build distinctive advantages to perfectly meet current market opportunities cannot necessarily adapt to meet tomorrow’s.

There are three reasons for this:

  1. Arrogance. The US car industry, for example, for many years rejected the idea that the Japanese manufacturers, led by Toyota and Honda, could threaten their domination of their domestic market. They’re not saying that now!
  2. Defensiveness. When the technology first became available, the music industry tried to kill all digital download companies. Instead, they wanted to protect the sales of the more profitable, older CD technology. A recent estimate suggests that this has meant that the current music retail market is worth $15 billion less than it might have been.
  3. Inertia. This is probably the biggest barrier to change. Many traditional airlines have found it difficult to change their organisation in response to the rise of the low fare airlines. It’s not a question of arrogance or defensiveness, but simply the investment and time it takes to change the way a large business works.

What’s the balance of your focus between protecting your existing success and investing for new growth?

© Stuart Cross 2010. All rights reserved.