I don’t know a business that doesn’t need new business. Without a stream of fresh customers and the innovations they demand, companies and whole industries tend to become stale. Not only that, they become complacent and so protective of their ways of doing business that they become vulnerable to new competitors that dramatically shift the market. For a picture of the tumbling market share that results, I present Nokia and Blackberry— two companies who fell asleep at the wheel!
To keep new business coming in the door means staying relevant as markets and industries evolve. And yet, I too often encounter companies that desperately need new thinking, but cannot achieve it with the longstanding leaders responsible for their stewardship. In the decades I’ve worked with corporations, associations, and academic forums, consulting on how to bridge business relationship creation with capitalization (read: return on impact), I keep finding that a client company is stymied by somebody leading the enterprise who has been there so long, he or she just cannot think or lead toward transformative results.
Mature brands in mature industries are most prone to this kind of locked-up leadership. By that I mean markets characterized by:
- Saturated demand by the current target audience;
- Robust competition, particularly successful with different audience segments;
- Focus on cost-cutting rather than revenue growth to stay ahead of margin erosion; and
- Low turnover, especially in top management ranks.
That last point—low turnover—is what results in the problem of the “old dog on guard.” The conundrum is, how can somebody who has been with the company 20 or 30 years even begin to think and lead differently? Over time these individuals have become mere cogs in the wheel. They are entrenched parts of a system bent on repeating what it was designed to do. In mature companies, in mature industries, the leaders’ tendency is toward complacency and incrementalism. Even if the will exists to explore doing things differently, actually achieving that is about as difficult as trying to change Washington politics—and we’ve seen where that’s gotten us recently!
I’m currently working with several companies in one industry; their U.S. sales have been in steady decline in recent years. I attribute this poor performance predominantly to stale thinking, me-too branding, and more incrementalism (attempting to outperform competitors) vs. real innovation (thinking dramatically differently about customers’ desired outcomes). Other global markets in their industry are growing faster, and thus being allocated more gray and green matter (thinking and resources), which creates a perpetual growth cycle abroad while the U.S. – the industry’s crucial biggest, most influential, and dominant market—remains flat at best.
What the companies in this industry desperately need is a handful of innovative thinkers. But because so many leaders are bred within the organizations, mediocrity prevails. “No, Can’t, Tried that years ago and it didn’t work then; We’ll upset the apple cart” are the normal responses to any new idea generated in the bowels of these companies. Without innovative thinkers, they cannot break the wall of perceptions that damn new ideas before they can even be explored.
Just as bad, when these companies do get together at association meetings or broader industry gatherings, no one wants to share a best practice for fear that fast followers will claim it as their own. What they don’t understand is that fundamentally, value creation is derived from value chain disruption. The anchors that chain them to stale perceptions, whether coming from past regulations or just the accepted norms, prevent anyone from fundamentally turning the industry on its head—from how value is created, to how its transferred from the manufacturers to wholesalers, distributors, retailers, and ultimately the end consumers.
Like any industry outsider, all I can do is to recommend a set of solutions. I can’t grab the old dogs by the leash and lead them toward the gate. Instead, too frequently, I run into the same problem—a complacent old dog who would rather defend his yard like it was full of precious metal than wake up to the need for change.
When I do my due diligence on mature brands these days, I find a desperate need for visionary leadership. For a mature company to thrive over decades, it needs to get three things right:
- Leaders must have the intestinal fortitude to get rid of the “old dogs” when they are actively holding back needed change.
- Leaders must find a way to come at their current situation from a fresh perspective.
- Leaders must bring in relevant experience from outside their industry.
Even if your old dogs are doing their best to find “how do we do things better,” they’re often not able to really innovate—to ask, deeply and with investment in finding the answer, “how do we do things differently?”
Every mature business periodically needs a jolt. That can only come from someone willing to challenge the status quo, not defend it. I would suggest a manufacturer in a mature industry bring in a 40-year-old exec from a tech startup who has recently executed a successful sale to a larger company. Now why would you do that? Think about it. The entrepreneur typically doesn’t have the resources that mature companies do, so very quickly he learned how to get things done with limited resources (creativity). He and his team found a market need and often through an innovative approach in product, process, service, or solution filled it with creative thinking, analytical rigor, and consistent execution; the exact recipe that’s missing from the mature manufacturer. The entrepreneur had to figure out how to scale an idea and go to market differently than those with considerably deeper pockets and greater market reach. Last, but certainly not least, the entrepreneur validated the market need and his or her solution to the satisfaction of a larger suitor who saw not only value in their unique offering, but their market traction, customers, partners, and employees as well.
That type of outside thinking and leadership is often transformational.
It is irrelevant whether an executive’s prior experience is with one type or another of an industry consumer. The point is the fresh lens, creative leadership and a culture that doesn’t tolerate people who spend their time defending the status quo. No more “good enough.” It’s time for, “I’d rather pull the plug on all this so-so stuff we’re doing. Let’s put the priority on doing fewer things really well.”
Once executives with outside-industry experience come aboard, give them the authority to perform and accountability for results. Have we all heard stories of senior leadership changes that ruffle some feathers along the way? Yes. But that’s what it’s going to take. Frankly, I find it bizarre that so many mature businesses fail to see the need for fresh thinking. It’s shocking that they defend their “old dogs” and old ways at such cost to their business success.
- Be willing to initiate a change at the senior leadership level. If old dogs are holding you back, let go of the leash.
- Bring in out-of-industry expertise. Relevant industry: yes. Same industry: Maybe not.
- Give the new talent the authority to do what needs to be done and accountability for measurable outcomes.