In my career, I have had the opportunity to meet many OEMs in various industries. I had the chance to observe them over a long period of time in their directional decisions and behaviors. Some developed magnificently.
Then I learned from corporate geriatricians that only every seventh organization is celebrating its 30th anniversary 1). I quickly realized that you have the choice and that you have to do something. The successful organizations used early and weak trends. They engaged in something new to learn and test quickly.
So there are examples of organizations that reinvent themselves over and over again. IBM is one of the prime examples for me: from the mechanical counting machine to typewriters and memory elements, mainframe computers, mini computers, personal computers, software services, cognitive technologies and blockchain. Such adaptability over the decades inspires me.
Why are many big organizations failing to survive in the long run? As management thinker Roger L. Martin points out, striving for efficiency has a price in addition to the self-reinforcing effect of increased profitability and strengthened market position 2). The price is the loss of resilience, because the tools to respond to external influences and threats were abolished along the way.
However, with increasing speed of change the lack of resilience in monocultures becomes more apparent. Information now spreads more rapidly, so a competitive advantage disappears faster. At such times, it’s probably not the best idea to solely focus on prioritizing efficiency in hierarchical line-driven structures to build competitive advantage.
Why do so many organizations and their consultants have difficulty dealing with this situation? Is there something they overlook?
I believe things have to be done differently now. Instead of only running the one-dimensional efficiency marathon, people also need to be given the environment to use their creativity in order to build new customer value in various dimensions.
And it works. For example, Xavier Huillard, President and Managing Director of VINCI, a 100-year-old construction company with 194,000 employees and 42 billion euros in turnover, spoke from the inverted pyramid that he had established in the company for many years. The heroes of his organization, the employees in contact with the customers, are supported by a very lean corporate office and as few (bureaucratic) processes as possible. They operate independently in many small business units. For him, the competitive advantage derives from the organization itself, the inspirational leadership, the talent development tools, a good mix of local and central, the model of empowerment and a strong culture 3).
With my industrial origin I know that volume, scaling and efficiency are highly valued as a recipe for success. Therefore it is even more difficult to pursue new ideas in such an environment. The opposing approaches of the old and the new need to be bridged.
With my experience in building bridges, I have decided to support organizations to create new customer value and to make their contribution to the society. And the people in the organizations should evolve, find a safe environment, have a feeling of belongingness and see that their work matters.
How can this happen? Continue reading the next posts about the five elements of renewal. Subscribe to the newsletter!
- Loderer, Claudio F. and Neusser, Klaus and Waelchli, Urs, Corporate Geriatrics: Aging, Survival, and Performance, 2009
- Martin, Roger L., The High Price of Efficiency, Harvard Business Review January–February 2019
- Druckerforum November 2018