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Why is it only start-ups that can act like start ups?

It seems like I’m spending more and more time with business leaders who are looking nervously for the new entrant predator who is going to turn their market upside down. Maybe they’ve read my post about fearing the new entrant, or more likely, maybe they’ve seen it happen to other markets and know it’s only time before it happens in theirs.

The one thing that strikes me is how many are still thinking defensively and how few of them are really thinking radically. They should be asking themselves “how can we think and act like the upstarts before they do?”

There’s something that stops many established businesses from even contemplating that they can out-innovate those feared ‘kids in a garage’.

In many cases, there’s the assumed latency of legacy - we have such a heavy infrastructure that we have to work within, we must evolve at our own pace, we can’t throw away the vast investment we’ve made to date, it would have too great an impact on the balance sheet. I get this, there are shareholders and stakeholders who will not tolerate corporate irresponsibility, However, this happens even where the impact of ignoring the threat is clearly massive.

Back in 2000, I was asked to join a strategy event for a global entertainment business to set out the possible future impact of digital media. We spent a week in Dallas looking at potential future strategies. The starting point was clear: we don’t know when it will happen, but at some point between five and ten years from then, their existing world would collapse.

I was wrong. It took 13 years.

What really staggered me however was the unwillingness to accept and really embrace the change. They had better content knowledge than anyone else, they had millions of customer transactions driven off countless customer relationships. They were in the perfect position to capture the new market, however every such conversation was stopped in its tracks by comments such as “we can’t risk the impact of cannibalisation” or “our strategy must utilise our estate.”

This was in the face of no one questioning the fact that massive change was coming, nor the devastating impact of the change when it arrived. The irony was that they had the time to effect a change over time, if only they would have been prepared to see that embracing the future may mean leaving the past.

This is an extreme example, but it’s not a one off. It happens again and again. Thankfully for most, the prognosis isn’t quite as dramatic. However, in each case, there is real damage caused to their business and a huge opportunity missed to see the future and embrace it - in spite of the constraints of today.

Can existing businesses ever think and act like start-ups, can they really reinvent themselves in the same way that the unconstrained thinkers can?

I may be just about to find out. Recently, I spent a day with the CEO of a European leisure business who has challenged the organisation to act faster than the start-ups. They have the assets to leave the competition behind - the customer contact points, the data, the brand trust, the infrastructure that can link it to create exciting new customer experiences. But they also have a lot of legacy they are going to have to be prepared to overcome.

Let’s see if they can do it. I look forward to writing the blog in the near future of how market leaders can still be the nimblest players in the market.

For more insights, visit http://www.paconsulting.com/blog/destinationdigital

This was posted in Bdaily's Members' News section by Richard Coughlin .