Winners and losers amid rapid changes
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In a lecture at business school IMD in Singapore, respected business-strategy professor Cyril Bouquet mentioned how rapidly changing marketplaces are causing some companies concerns and bankrupting others.
To support his argument, Bouquet said 3D-printing technology was worrying Nestle and Carrefour because they feared consumers might eventually be able to print their own food at home.
He touched on how drones were being used by e-commerce giant Amazon and a small pizza firm in India to deliver goods to consumers by air, while Google’s self-driving car was worrying traditional car companies and insurance firms. Under the theme “Are You Ready for the Future?”, Bouquet was speaking at IMD’s “Orchestrating Winning Performance” (OWP) leadership programme in Singapore.
“The CEO of Uber taxi in Geneva told me [that] in the next five years all cars will be [self] driving,” said Bouquet, who teaches at IMD’s school in Lausanne, Switzerland. “But the biggest issue is insurance companies, since there will be fewer accidents.
“Your kids will laugh when they learn you needed to get a driving licence.” To help prepare for the future, Bouquet suggested companies apply his “sense-understand-adapt” method.
“Being able to ‘sense’ what is going on: That’s not about technologies, but about sensing how people are changing, and then you are able to evolve your company,” he said.
He cited the case of Kodak, which invented the digital technology that killed it. Knowing what’s going on did not automatically lead to adaptation, he said.
“Kodak actually had many patents on digital technology,” he said.
“There’s a tendency when big companies begin to go downwards to believe that they were blind to the changes in the market. This is not the case.
“What actually tends to happen is that while they’re aware of what’s going on, they don’t have the shared insight or capacity to react. They have too many diverging views and fail to align in order to act.”
Nestle – transformed from a food and beverage firm to a wellness company – was raised as an example of a company whose leaders propelled change when it was still enjoying a relatively high margin.
From “sense” or data, to “understand” or insight, to “adapt” or action, Bouquet advised business leaders to use these eight principles:
l Embrace ambiguity. “Don’t just think outside the box, throw the box.”
l Think first from outside in, then inside out: “Business should start from customers or the market first.”
l Identify and address the root cause, not the symptom.
l Define your “sprints” (accelerating to fix your business today) and your “marathons” (preparing for the future such as developing capabilities you don’t have).
l Forget “ego systems”, think ecosystems.
l Focus on co-creation.
l Build a shared purpose among employees.
l Manage change.
Another IMD professor, Bill Fischer, said 12 per cent of US households now did not own a car, and this trend was expected to accelerate because of what Uber had done.
He said Tesla, Google and Twitter were among the other examples of established industry players that had faced disruptions due to market changes. Incumbent players could be held “hostage” by their past success.
