As the new CEO of Sony probes to determine how to restore this once-dominant consumer electronics company to relevance, you are seeing a lot of business press articles about how this former giant sat back in comfort and relied on its traditional hardware innovation expertise and manufacturing excellence. For perspective, the last decade has seen Sony’s stock price go from $45 per share to $12.
Actually, this kind of thing happens all the time and we have had a whole bunch of examples emerge in the past couple of years. Kodak, the traditional king of photography, is today in bankruptcy proceedings. Nokia, the dominant player in cellphones in the 2001-2011 decade is today struggling to avoid the same fate as Kodak. They simply didn’t take smartphones seriously. RIM, the maker of the Blackberry, is a similar story (it failed to take touchscreens and apps seriously).
Let’s face it; the comfort that comes with success is a huge business vulnerability. What are some tips for avoiding this disease? Here are three that are fundamental:
1.) Be Paranoid About Potential Danger – Back in 2007 when reporting record profits, the CEO of Nokia proudly talked about how confident they were about their future success in the cellphone business. When asked about the quickly emerging smartphone entries from RIM (the blackberry) and Apple (the iPhone), he smugly said “we will keep our eye on these newcomers,” and then quickly went back to touting their cellphone triumphs.
2.) Set Challenging Goals with Challenging Deadlines – The head of Canon, world’s leader in digital cameras, is notorious for the specificity of the goals he sets. For example, in dealing with Canon’s Single Lens Reflex team, he demands that at all times they not be inferior to Nikon, and several others in that segment, on any features of those competitors, and be superior on several important features. If they aren’t meeting the goal, they have 3 months to fix the situation.
3.) Constantly Put Fresh, Talented People in Key Jobs - Great new ideas usually come from new perspectives, so constantly reach for people that have a track record of jumping into new situations and performing well, and don’t leave them in the job too long.
Net, beware of success and the resulting comfort!