Of Autos & Apples – Vision and Strategy in the Digital Age

In our work with companies around the world I am amazed at how few have a real strategy for capitalizing on and dealing with the challenges posed by digital disruption. On the product front companies are looking to either take cost out of existing services by automating them or offer “new services” which are really no more than online versions of their old ones. On the workforce front, many organizations are playing defense in the automation game, downplaying the possibility of job loss to current employees while scrambling to hire and retain talent needed to get on top of the digital wave. Industry leaders would love to have the same cultural affinity for all things digital possessed by the digital natives. They would also prefer not to have to deal with the problem of what to do with all the resources already committed in non digital design and delivery. They wish for these things to be true but they know they are not and they are unclear on how to get from where they are to where they need to be to thrive, or at least survive, in the digital age.

This feels very much like the mid 1970’s when American automobile companies failed in their response to emerging global competition. When the design teams behind the LTD tried to copy the small car concept we got the Pinto. The huge investments US auto companies had in their platforms, manufacturing lines, management teams and manufacturing workforce were a disadvantage, presenting a ship that was too heavy and slow to turn fast enough to avoid the disaster ahead. That was a tipping point moment – and the US automobile industry, which once supplied the world, has never been the same. While global auto production has soared since 1970, the US is producing about the same number of units now that it did back then.

 

 

If this analog holds true it may be that there is no stopping the displacement of existing leaders by their rising digital competition. Large companies just can’t reinvent themselves. The die is cast and the wheel is turning fast. The good days are behind you. But before we go all doom and gloom let’s consider the alternative. What if companies could not only regroup in time to survive disruption in their industries, but could do more? How about re-imagining who they are and creating entirely new industries in the process?

Time for chart number two.

 

Of course companies can reinvent themselves. Apple has been there and done that, at least three times in the last thirty years. First it was a cool niche alternative to the all mighty DOS/Windows PC. Then it was an online/portable music company. Now it’s a smartphone company. But in a way it is still a personal computing company as the smartphone is the most personal computer we have ever known. Somehow Apple has stayed true to its founding vision of fundamentally changing our relationship with computers while simultaneously shifting product platforms and redrawing industry boundaries. Those who tend towards the “Great Man” theory of history simply attribute this success to the genius of Steve Jobs and move on. But perhaps the genius here resides in the original vision itself: changing our relationship to computers. That vision says transforming is what we do. Implications of the vision:

For strategy: Do not strive to be number one or two in a market. Discover new ones.
For innovation: Do not focus on new product features. Create new experiences.
For investment: Do not get too attached to today’s cash cows. Incubate tomorrow’s.
For human capital: Do not be limited by current capability. Require excellence.
All that from a vision? You bet.

Compare it to most visions:

“We at (insert company name) provide the best products, quality and service to our customers in the (insert market) industry in the (insert target geography) area.”
The visions and strategies of most organizations are grounded in their past, working out from where the have been, building on their keys to success to date. This is what makes the threat from digital startups so confounding. They don’t have a past.

Now back to the US Automobile industry in the 70’s. Imagine if the vision of the leaders at Ford Motor Company had been to redefine our relationship with transportation. Maybe that’s what they were aiming for when they created the Pinto. But probably not.

Now back to the charts. Note the similarity in the overall trajectory of the two curves.

 

 

 

 

 

 

 

 

What is the same?

Transformation occurs in both cases – with sales growing exponentially.
What is different?

In case one – US automakers watched as the world transformed around them.
In case two Apple transformed the world.
The challenge for CEO’s of today’s leading companies is not how to successfully jump on the digital bandwagon and take their old vision for a cool new ride.

Survival in the Digital Age call for a vision test – and a gut check.

Two questions for you in closing:

Is your vision broad enough to span your present and your future?
And are you and your team bold enough to follow that vision where it takes you?

 

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