There is, perhaps, no greater test for an organization and its leadership than to engage in the process of strategic growth, and be forced to choose between “staying the course” and “changing direction“. The complexities are evident whether the immense decision on the table is being made due to unexpected opportunities or failed performance. It is one of the most substantial and obvious examples of the conflicting dichotomies and strategic realities that exist in the business environment today. Hindsight is 20/20, but long-term solutions aren’t always obvious in the here and now.
Regardless of the label applied to it – “changing direction“, “shifting gears“, “restructuring” or “pivoting” – the process of modifying products, services, personnel, markets, industries or other distinguishing investments of an organization’s structure/strategy has traditionally been viewed as an indication of business failure. The instinct is to imply/assume that if change is needed, some critical aspect of the formula went horribly awry. After all, there are volumes of data that suggest that the most sustainable, industry leaders specialize in a single, core market (i.e. “Know what you are good at and do it better than anyone“).
Conclusion? If original goals weren’t achieved exactly as envisioned, change needs to be enacted to right the wrongs.
On the other hand, there are volumes of analytics and countless examples of organizations that found their greatest success in looking beyond their original vision – embracing shifts in strategy (particularly the “how” and “what“) as an inherent part of growth. Consider such as examples as influential entities like GE (that evolved from being known for appliances and light bulbs into an entity invested in such diverse sectors as television, aviation, transportation, renewable energy and healthcare) or IBM (that transformed itself from a technical hardware provider to a consultant advisor and then to its current status as a global leader in machine learning and artificial intelligence). If GE and IBM considered such dramatic deviations from their original vision….why wouldn’t others? Are they not the very definition of horizontal and vertical growth success?
Conclusion? If original goals weren’t achieved exactly as envisioned, change should be enacted as a proactive form of growth.
The variance between these two conclusions can be further emphasized by revisiting one of the more infamous examples of an organization that stood upon the tipping point of change and opted for a more conservative approach. In the 1970s, Eastman Kodak “stayed the course” when it came to their own digital camera invention, and they lived, albeit in bankruptcy, to regret their choice. The example of the Kodak digital camera business decision has been so widely published and studied, one can only assume some of the facts have been exaggerated. We do know that Steven Sasson, an electrical engineer at Kodak, developed the concept and plans for the world’s first digital camera. We also know that his invention was not enthusiastically received by senior management and the board, a decision most anecdotes attribute to the assumption that Sasson’s solution would result in cannibalization of Kodak’s core product. If these postulations are indeed true, it is one of the ultimate examples of long-term strategy being inappropriately determined based upon an organization’s “how” and “what” (retail distributed film/processing) instead of “why” (preserving and capturing memories for a lifetime).
To their credit, Kodak did file for a patent (actually I believe multiple patents) related to the digital camera, but the organization did not venture into the production or product space related to its own intellectual property until the late 1980s. At its height in 1996, Kodak had a market capitalization of nearly $30 billion and employed almost 150,000 people throughout the globe. Admittedly, it made millions of dollars in patent rights from the invention, but it was not enough to compete with its own creation. When it filed for bankruptcy in 2012, Kodak’s employee base had been reduced to less than 20,000. That same year, Instagram, the app known for its utilization of digital photography, had a market capitalization of more than $1 billion, and its 13 employees sold the entity to Facebook for an equally impressive amount. Kodak is rebranding, in the spirit of the very themes we are discussing here. I personally can’t wait to see where they are in ten years.
Admittedly, I was just a toddler when Sasson innovated the digital camera, and I can’t imagine that had I personally been in that organization’s c-suite or boardroom 50 years ago, I could have foreseen what we all know today about the global impact of his invention. What I can assert confidently is that there are lessons about the power of the pivot we can all learn from the story and evolution of entities like GE, IBM and Kodak and relate them to the context of today’s business environment:
Anyone aspiring to be a perceptive, fearless, imaginative cross-disciplinary leader needs to remove any assumptions that automatically equate pivoting to personal or organizational failure from their mindset and vocabulary. More often than not – particularly in the rapidly changing global business environment and age of condensed business/marketing life cycles – proactive pivoting is actually a sign of strength, vision and flexibility. Not weakness.
It is a given that things aren’t always going to go according to plan. The business and economic environment is evolving so quickly, change and pivoting must be assumed and embraced in a positive light. Incorporate “what if” scenarios within your strategy to help your organization respond more adeptly during the optimization phase.
The ability to recognize that every situation, organization and opportunity is different, and there is no constant recommendation that can be made if an entity should “change direction” or “stay the course“. Yes, there are still business failures and mistakes being made that need to be rectified with restructurings and replacements. But the trend has indeed shifted, and successful growth strategy now mandates that leaders recognize that four steps of strategic planning – strategy, alignment, implementation and optimization – must factor in the tangible and intangible value of the proactive, anticipatory and visionary pivot.