Epilogue: Passing The Baton

Epilogue: Passing The Baton


Epilogue: Passing The Baton

Overview

Managers rarely can exercise unbridled free agency. Powerful and predictable forces act upon them. These forces include the need to move up-market to maintain profit margins; the need to satisfy existing customers; the forces of commoditization and decommoditization; the mandate to grow from an ever-larger revenue base; and the fact that the processes and values that define the capabilities of one business model simultaneously define disabilities for other business models. These forces do not Calvinistically predestine managers to take a particular sequence of actions, but they strongly influence the types of choices that managers do and do not confront, and they shape the attractiveness of the different choices relative to the managers’ situations. In this book we have tried to show that when companies face the wrong side of these forces, they lead to predictable growth pathologies. But when companies harness these same forces, they can put wind in their sails. The predictability of these forces makes it possible to capture them and turn them to your advantage in seeking, exploiting, and sustaining new growth opportunities.

If this were a book for mariners, it would be filled with discussions of sailing with or against tides and currents, and how to set sail in order to take advantage of the prevailing winds. Such a book would make it easy to see that where and when you start, relative to the direction that those forces want to carry you, can make a huge difference in how easy it is to get where you want to go.

Similarly, we hope that this book makes it easy to see that where you start, relative to the direction of the competitive, technological, and profit-seeking forces acting upon you, can make a huge difference in the probability that you will succeed. This view simplifies the challenge of creating new-growth businesses. It means that when you start a new business you do not need to envision accurately the details of your strategy or predict foresightedly how technology will evolve. Rather, you need to focus primarily on getting the initial conditions right. If you start from a good place, then the choices that lead to success will look like the right choices. In order to exploit these choices, you need to create a business model whose resources, processes, and values can harness these forces so that they propel you toward success rather than blow you away.

Accurately researched and written histories would reveal that many founders of successful companies—including many of the disruptive companies arrayed in figure 2-4—had the wrong strategy in mind when they started. But due to some combination of intuition and luck, they put themselves in a situation in which they were confronted with attractive choices. Doing what made sense led to a next set of attractive choices, and so on. The initial conditions under which they started and the business structures that they created allowed them to catch the trends and forces that subsequently propelled them toward successful growth.

The structures and initial conditions that are required for successful-growth are enumerated in the chapters of this book. They include starting with a cost structure in which attractive profits can be earned at low price points and which can then be carried up-market; being in a disruptive position relative to competitors so that they are motivated to flee rather than fight; starting with a set of customers who had been nonconsumers so that they are pleased with modest products; targeting a job that customers are trying to get done; skating to where the money will be, not to where it was; assigning managers who have taken the right courses in the school of experience and putting them to work within processes and organizational values that

are attuned to what needs to be done; having the flexibility to respond as a viable strategy emerges; and starting with capital that can be patient for growth. If you start in conditions such as these, you do not need to see deeply into the future. Attractive choices that lead to success will present themselves. It is when you start in conditions that are opposite to these that attractive options may not appear, and the right choices will be difficult to make.

We also believe that the overwhelming odds that corporations will stop growing and be unable to restart growth can be deferred much longer than has so far seemed possible. Executives who understand how these forces create growth pathologies can counteract them better when the tide of these forces begins to shift from opportunity toward threat.

A principal refrain in this book is that blindly copying the best practices of successful companies without the guidance of circumstance-contingent theory is akin to fabricating feathered wings and flapping hard. Replicating their success is not about duplicating their attributes; it’s about understanding how to generate lift. Good theories are circumstance-based. They describe how managers need to employ different strategies as circumstances change in order to achieve the needed results. The use of one-size-fits-all processes and values historically has made the creation of growth torturous. One of the most valuable contributions you can make in the growth-creation process, therefore, is to keep watching for changes in circumstances. If you do this, you can understand when and why changes need to be made long before the evidence is clear to those whose vision is not clarified by theory.



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