Tuesday, 18 February 2002 8:30 am
Over the weekend I was performing the annual ritual of cleaning out old files.  That gave me the opportunity to review corporate strategies of seven to ten years ago which were gathering dust in my filing cabinets.  Many of the strategies and plans in my filing cabinet were never actually implemented, or were not implemented in the way envisioned.  So reviewing them in retrospect, with the knowledge of what actually happened in the intervening years, one can assess with some accuracy whether they would have worked, and whether the assumptions and projections being made at the time were accurate.

It turns out that the strategies were right on target.  They accurately predicted market disruptions and the effect of new technologies. If they had been implemented, the companies would have gained considerable advantage over their competitors and today would be in a much stronger position than they are.  So why were they not implemented?

In most cases, they were implemented initially.  Budgets were shifted, change agents put in place, classes were held, the CEO made speeches, and managers who did not go along were put under pressure.  But after a few years, the companies backed off.  Existing products were demanding more attention and funding.  The predicted future was still in the future.  Margins and profits were starting to suffer.  One small step at a time, attention and funding was redirected from the future back to the present.  The schedules of the new products based on the new strategy started slipping.  The sale force started to lose faith in the new products, and then the customers did.  Some of the change agents started to leave, some under pressure.  Finally, everything associated with the new strategy was halted, and virtually everyone involved in trying to implement it left.  The entire exercise turned into a big waste of money.  Worse, the company's existing products suffered due to a lack of sufficient funding, promotion, and attention.  Worse yet, a whole generation of new leaders rose to the challenge of implementing the new and exciting strategy, and then left as it was abandoned.  The company was much worse off than if it had just continued to plow straight ahead.  But, with the benefit of 20-20 hindsight, it is now obvious that the strategies would have worked brilliantly, if only the company leadership had had the courage of their convictions.  They had foreseen correctly what was going to happen, and had developed excellent plans on how to take maximum advantage for the benefit of the company, stockholders, and customers.

There were a couple of examples in my files where, again, the strategies and plans were correct and would have yielded great advantage, but they died in a power struggle between internal organizations.  In those cases, the company leadership apparently did not understand that it had to change the organizational structure and responsibilities if it wanted the desired outcome.

Occasionally, but only very occasionally, companies actually have the courage of their convictions and act accordingly.  Intel is famous for clearly seeing the future in the late 1970's and deciding to act upon it - they dropped  their biggest selling product - DRAMs - and bet the company on microprocessors.  But even Intel has not had the courage to make any similarly momentous decisions since then.  That is why we are doomed to go through these creative destruction cycles.  We have learned through experience that the creative destruction cycle is not equally creative and destructive at any moment in time.  We can have very creative periods, as we had in the late 1990's, and very destructive periods, as we are experiencing now.  But it always swings back.