You see it happen all the time in sports. A team is clobbering their opponent going into halftime. The players, who are paid millions regardless of the outcome, are feeling pretty good about themselves and their safe lead. After halftime, their opponent, however, comes out and busts their tails and before you know it, they’re either nipping at the heels of the winning team or even have taken the lead. “How did that happen!?!” fans yell at the television screen. I’ll tell you how it happened, the players got caught on their heels. If it’s a soccer match, they packed all 11 players into their defensive end. If it’s basketball, they dropped into a zone to rest up or even sat their star player for a while. Basically, they quit attacking and instinctively resorted to conservative strategies.
Now, change the sports teams for corporations, switch out the millionaire athletes for millionaire CEOs, CMOs, CFOs, and any other Os you can think of, and we have an important lesson in strategy. Too many times, companies who may be a market leader get caught enjoying their success and forget about the innovation and steps needed to be taken to protect their lead. My professor (Dr. Didow) referred to this as “Transitory Defensability.”
The concept behind this theory is that companies must continue to innovate and evolve their companies in order to protect their existing advantages. If a company doesn’t do this, and simply relies on its current category leading product, a competitor will eventually come along and leave the company thinking “What happened?” or, even worse, leaving the company not even knowing anything happened!
I wanted a pic of the light bulb going off in someone's head and got this "product innovation." Two-fer!
An example: Sony is the category leader in portable music players in the 1980s, selling millions of their walkman cassette player. When the 90s come around, they’re still focusing on their star product while CDs are becoming the most popular form of listening to music. Once they see that CDs are going to be the next big thing, they start pumping some money into their own portable CD player, the discman. The product does pretty well, relying on its reputation from the walkman to carry sales. They still are selling their walkman to anyone who will buy it, releasing new models throughout the turn of the century. As people begin partying like its 1999 (because it is), they’re beginning to party with these newfangled mp3 players. Other companies start working on innovative mp3 players, but Sony is just chilling, maybe the CEO is taking a bath in Evian water and drying himself off with Benjamins, you know “the usual.” Sony makes it all the way to 2003 or so before it wonders, what the heck went on and why are we not #1? Then it decides it needs to put an mp3 player out there to the public. However, too late because it’s competition is already waaaay ahead.
I don’t know the exact details of Sony, but that’s the way I see the situation playing out in retrospect (and this way works well to prove my point). What Sony SHOULD have done is continue to R&D and stay on top of developments in the portable music field, implementing them as they come along.
So, there you have it. Whether you’re a small local business or a Fortune 500 company, it’s critical that you not get caught on your heels. You need to be the company that makes things happen, instead of the company that watches things happen or even not know anything that happened. And that’s all I have to say about that.
Tweet This: (Copy and Paste into Twitter)
“Get Off Your Heels and Make Things Happen” – http://bit.ly/Wli5V – New Blog Post by @jackieadkins
