There’s a very good TED Talk by Simon Sinek about how great leaders inspire companies by asking why? I think it also goes a long way toward explaining why big companies don’t handle change well. It’s not that they can’t ask why?, it’s that the answer doesn’t make sense at their scale, though it should.
The Dow 30 Industrials that make up that all-important stock average began in 1896 as the Dow 12 and of those original 12 only General Electric survives on the list today. None of the other 11 are on today’s list even under different names, though some of the companies do survive. Many of those former industry titans, though — companies like American Tobacco and U.S. Leather — no longer exist at all. In some ways that’s surprising since big industrial companies take decades to build and we continue to need most of the stuff they make, so what was the problem?
Times change and big companies don’t like to change with the times.
At the polar opposite position from big industrial companies sit startups, nearly every one of which begins with an effortless expression of why? Big companies ask What? then How? but almost never Why? according to Sinek, who I think has it absolutely right. But good startups are motivated from birth by Why?
Nearly every good startup begins with why? and that why? is traditionally quite simple — because the founders want one for themselves. A hardware device or software application doesn’t exist and they’d really like one, so they invent it. For startups why is easy. If it isn’t easy then you probably don’t have a good startup.
If as a founder your answer to why? is “to get rich” you are in the wrong job.
Applied to a more mature company, looking at Apple we can see the why of the iPod and iTunes was “to take your entire music collection with you wherever you go.”
That sort of thinking isn’t common in big companies. Some of this is due to scale, some due to arrogance, and some to simply losing their way. But no matter how big a company grows, asking why? is still vital for continued success. They just don’t know it.
Back in 1986 I helped write the business plan for Illustrator, Adobe Systems’ first consumer product. The Why? for Illustrator was “because (Adobe founder) John Warnock wants a drawing program,” which is traditional startup. As I recall the business plan had the new consumer division with a net-net positive cash position of $87,000 after five years. Millions invested creating an entire new business for a new set of customers through a completely new distribution channel for a lousy $87,000?
Most companies would never have done it.
Yet if you look at Adobe’s market cap of $13 billion today probably $12 billion of that is based on consumer and professional software that began with Illustrator.
That $87,000 grew to $13 billion over 25 years.
Adobe had an OEM cash cow business selling printer controller designs and software in 1986 but that could only grow so big. And thanks primarily to Microsoft cloning Adobe’s PostScript, that OEM business would eventually decline and almost go away. PostScript is a small part of Adobe today.
This sounds to me like the position faced by many large, successful companies with mature product lines facing obvious challenges down the road. Such companies (I’m sure you can name a bunch if you think about it) see the problem approaching but are paralyzed by the need to envision $10 billion replacement markets. They can’t do what Adobe did in 1986 because there is no obvious Why? and $87,000 after five years wouldn’t even get before the board, no matter how important it really is to the company’s survival.
Adobe was lucky to have a curious founder still at the helm. It was lucky to be making enough money to risk a few million on an alternate future, too.
But 2011 is nothing like 1986. Looking five years ahead for business justification isn’t done any more. Heck, five quarters is a long time in business today. But then the average CEO tenure is also, what, four years?
And that’s why big successful companies roll over and die.
Why do large companies like Amazon get slammed when they continue to act like startups and execute on disruptive ideas? There was controversy a few weeks ago when Amazon released a mobile app to capture prices at brick and mortar shops. Users are rewarded with an instant price comparison. The “why” would have been “I’d like to get an idea what the going price is for an item I’m buying.” There is more to big companies stagnating because of loss of “why”. Having to act in a socially acceptable manner is another drag.
Price comparison apps like that are hugely disruptive to brick and mortar stores that employ a lot of people. It’s a controversial idea that will attract opposition no matter who does it.
In fact Amazon is still largely treated as a startup, at least by investors. Just look at it’s unbeleivable P/E ratio.
Amazon didn’t garner negative publicity simply for creating a price comparison app.
They received negative publicity because that app applied an additional promotional discount on top of their normal pricing, which already carries a practical advantage.
(Advantage yes, though I characterize it as an issue of lax enforcement on the part of authorities to go after scofflaws, rather than the “level playing field” rhetoric that the politicians and retail lobbyist groups like to clothe it in. But that’s another discussion.)
Effectively and actively undermining the business of your competitors inside their own premises does violate a sense of fairness and ethics to many, no matter the size of the competitors.
>>>Effectively and actively undermining the business of your competitors inside their own premises does violate a sense of fairness and ethics to many, no matter the size of the competitors.<<<
No, it doesn't.
Most stores price match. And of those, many will discount that matched price by 5%.
This backlash against Amazon is absurd. Where is the outrage toward brick-and-mortar stores that hose consumers with inflated prices in-store and then offer cheaper prices at their own website?
Ever shop at Barnes & Noble for books? Their in-store prices are almost double Amazon's or even those of their own site. Ever shop at Best Buy and ask them to price match Amazon? They won't – they call Amazon a "wholesaler." These are only a couple examples of how local retailers insult consumers – and I'm not even mentioning rude customer service, lousy return policies, poorly staffed checkout lines, etc.
Amazon doesn't violate any sense of fairness and ethics when competing with local big box retailers – local big box retailers violate a sense of fairness and ethics when they provide a terrible shopping experience for consumers by blatantly ripping them off.
I disagree. Physical retailers provide a very specific service in addition to allowing consumers to buy an item. Unlike Amazon (and other online retailers), you can physically walk into a Best Buy (or H & M), pick up that camera (pair of jeans), take pictures with it (try the jeans on for size), look at it, hold it in your hand (look at yourself in the mirror) and then decide. This part of the shopping convenience (try before you buy) is built into the retail price at a physical store.
What Amazon here does is on the other side of that ethical line. They let the consumer walk into a physical store, take advantage of that ‘try before you buy’ part of their service, then hijack that one specific transaction and redirect the closing of the transaction to their own business. The physical store has provided the first part of the service, but never got paid for it; meanwhile, Amazon took advantage of that first part (consumer tried the product before buying), then snatched away the client from the competition. No matter how you slice it, this is unethical.
Sorry, but this is also absurd. And has nothing to do with ethics unless you’re an antagonist in an Ayn Rand novel…
By this token Staples is unethical in building a store next to an Office Max where I try something, then walk to Staples and buy the very same product finding it cheaper there. Or maybe Apple suffers an ethics breach in providing me an iPhone I might use to scan the barcode of a TV I’m considering at Best Buy, only to realize I can walk across the street and buy it at Walmart where an app shows me it’s priced less. Stores don’t get paid when consumers try things. Just because that’s an option at a local retailer doesn’t mean it makes a sale.
Apparently, you have some sort of superfluous moral compass relegated exclusively to shopping. A faulty one, perhaps. I do not. To each his own.
Pookie: Your analogy is flawed because you could have also done the same physical checkout in Staples as in Best Buy. They both offer the same service and have invested in bricks and mortar to support that service.
The point is that neither Staples nor Best Buy can effectively compete on price against Amazon, who spends nothing on B&M, and doesn’t offer you any browsing opportunities as a result.
If all the Best Buys and Staples and friends disappeared, you’d have no way to physically compare cameras and such before buying, and would have to rely on Amazon “recommendations” *shudder*.
Ever try to get Amazon to put the book in your hand the moment you decide you need it? There’s a reason why you were in Barnes and Noble in the first place and didn’t order the book from Barnes and Noble’s website. The ability to pick the book off the shelf is worth something too. The ability to touch and examine a product is worth something. It’s not fair to pretend these things have no value. When you go to the store and play around with a computer and order it from Amazon, you are getting something valuable from the store and not paying for it. So who’s taking advantage of whom?
Cringely, great article. I know it’s a search away, but a list of the Dow 12 on the side would be interesting for all, I’m sure.
This implies a local bookstore will always stock the book I need, which seems to be the case maybe half the time. Frequently, I find their selection lacking. Thus, we find another reason to shop Amazon.
That being said, I promise to use local retailers for all my “emergency” book needs.
Ever go to Barnes & Noble and check the price of a book on the shelf with that of their own site only to find it costs ~50% less? Does that aggrevate you? Does it aggrevate you more when you ask the clerk for the online price and he says he can’t do that, but he’ll be happy to order it for you, from their own site, and have it shipped to the store for pick up in a fee days? Does it aggrevate you even further when you suggest he give you the online price now and they restock their shelf inventory with the item he orders from the site and he just shakes his head? It certainly does me, because it’s laughably ridiculous.
And, in case anyone starts heading in this direction with a rebuttal, any retailer that tries to justify charging twice as much for a product in the store vs. what they do online because of shipping/infrastructure costs needs to find a new COO.
Stop feeling guilty about saving money. If you can’t, move to California – they need to expand the tax base. Bob’s already helping.
It’s pretty funny you decided to use books for your analogy. Heard of the Kindle?
The Original Dow Jones Industrial Average and Successors
American Cotton Oil Unilever (UN, UL [Anglo-Dutch])
American Sugar American Sugar Refining (private)
American Tobacco RJ Reynolds (RJR), Fortune Brands (FO)
Chicago Gas Peoples Energy (PGL)
Distilling & Cattle Feeding Millennium Chemicals (MCH), (FO)
General Electric (GE)
Laclede Gas Laclede Group (LG)
National Lead NL Industries (NL)
North American We Energies (WEC)
Tennessee Coal & Iron US Steel (X)
U.S. Leather (pfd) none
U.S. Rubber Michelin (Paris)
Source: https://www.moaf.org/resources/magazine/data/80/_res/id=sa_File1/Article_80.pdf
hollister uk
Wow. That’s cool. just today I was at an interview and I cited the very same Simon Sinek piece. The reason why I’m considering taking a new job is because that very same piece (from a few years ago) made no sense to my current boss. My new partners heard it and loved it. Smart.
Bob, if you want to credit the photo (as a journalist why wouldn’t you?) it’s Gangsta Chimp by Matt Cioffi, https://www.mattcioffi.com/
no, it’s (your least favorite politician here).
While Sinek he gives a very slick presentation, It’s disturbing how he twists the facts about the Wright brothers (and Samuel Langley) to match his “theory”.
First, Langley didn’t quit because the Wrights were successful. He quit because his first two attempted manned flights were very public crashes, causing him to lose the public support his work depended on. The Wrights on the other hand, were funded privately from their bicycle shop income. They conducted most of their experiments away from public view. Setbacks and crashes didn’t affect their funding.
Sinek insinuates the Wrights weren’t motivated by money or fame. This is false. The Wrights were very much motivated by the commercial possibilities of their work. Indeed, they spent many years in the early days of the aviation industry aggressively filing patent infringement lawsuits against competitors. They refused to display their first airplane at the Smithsonian until the museum gave them absolute sole credit for inventing manned flight.
Finally, the Wrights succeeded because they focused on and solved the correct engineering problem: How to control the airplane once it was off the ground. In Sinek’s terms this is a “what” (or maybe a “how”?), but not a “why”. But it was the crucial remaining issue to making manned flight possible, and the Wrights successful.
Sinek’s twisting of these facts makes me question his other conclusions. Caveat spectator…
While that part is certainly iffy, doesn’t invalidate his idea.
I keep thinking about why the Walkman was created (http://en.wikipedia.org/wiki/Walkman)
I had a Professor in college who said necessity is not the mother of invention, if it was, all the poor people in all the poor countries of the world would be doing all of the inventing. I thought about that from time to time. I think perhaps, maybe, opportunity is the mother of invention. Typically, the bigger the problem the bigger the opportunity, but opportunity is the driver. I come up with a super capacitor or cold fusion, or preferably both, I’m rich beyond my dreams.
These days, I’m kind of wondering WHY someone hasn’t invented a sort of helicopter that the masses could use, or at least the rather wealthier masses could use. The wealthy have more money than ever before, figuring out HOW to sell to them is the trick and always has been because wealthy people, by definition, are rather satiated. But an easy to use hellicopter is something they’d all spit out a hundred thousand dollars for, if for not other reason than to say they had it. Thanks to the Jetsons, the concept is ingrained in our social conscience, people have envisioned getting around the way the Jetsons do for a long time. WHY hasn’t someone?
This gets to exactly what you said, the answer to the WHY is because no one has figured out the HOW, and figuring out the HOW means figuring out all the bottle neck engineering problems and arranging for a solution (Solution = What?, perhaps) to them.
There is more idle cash laying around doing nothing now, than ever before. Even fanciful ideas out to be able to attract some venture cash these days. Here’s to hoping some one does.
While one might debate the legitimacy of “necessity” being the mother of invention, there is little doubt that “laziness” is the father. One has to ask what is the need of the inventor and it invariably comes down to “better” as in “building a better mousetrap”.
What is better? Well this usually amounts to easier, faster, more efficient, less disruptive and the like, not to mention just generally making my life more pleasant. Why to you think one of the worlds greatest gadgets is the “remote control”.
Must not forget Papa….
Big companies rolling over to die is not necessarily a bad thing. Most jobs and most innovation (real innovation, not cost engineering) is carried out by new companies, which also happen to be small companies for obvious reasons.
I agree big companies not willing to change deserve to die.
In fact, I think companies should not even be allowed to grow to big. The problem is power corrupts and (almost) absolute power the big companies have corrupts absolutely. Faced with the need to change, they will do everything in their power to change the system rather than change themselves = “change” their customers, destroy competition, lobby the government, etc.
A bunch of small, adaptable, relatively equal sized companies (some being built, some prospering, some dying) is the way to go. The big ones will always be tempted to play dirty…
Ron1,
the USA Founding Fathers had serious discussions on this topic, ie should companies be allowed to be legally immortal. They were concerned that long lives for companies could cause corruption. Unable to find my source reference and it is flying season here.
As for the types who run for public office, having met 30+ (professionly) of my own colony’s pollies about a politically sticky subject, the assessment was that they were well meaning, but all too often, too busy to be informed. As a result, the loudest advisor/funder controlled the process.
BestBuy comes to mind. We used to buy a lot from them, especially around Chirstmas time. We even did a few Black Friday sales with them. Then something unexpected happened. BestBuy’s main competitor went out of business and BestBuy lost their way. Think about that for a moment — the first with the better business model started stumbling when they had won the market place.
The first thing we noticed is BestBuy’s prices went up. They started charging more for the name brand products and carried fewer of them. They started carrying more off-brand and private label junk at a prices of the name brand stuff if you shopped elsewhere. Soon the off-brand stuff was the only stuff you could buy at discounted prices and on Black Friday.
Before we knew it every off-brand item we had purchased from BestBuy was failing — TV’s, monitors, VCR’s, DVD players. You name it, it didn’t last 3 years.
When it came time to make a new, big investment in a large HDTV we started by looking at the reviews. We started visiting retailers. Guess what? Walmart of all people had the best selection, and the best prices. We brought a name brand TV from Walmart for almost $700 less than it was selling at BestBuy. Walmart wasn’t dumping these TV’s. They still carry them today almost a year later, and at the same price.
We “almost” needed a new clothes washer a month ago. Luckily the repairman was able to fix our old one inexpensively. While we were waiting on the repairman we shopped for washer’s and dryers. Our current set was purchased from BestBuy. Again we found a poor selection and poor prices. We found much better choices at Lowes and HomeDepot.
I visited a MicroCenter a few days ago. It was packed with people with loaded shopping carts. The aisle with the laptop cases looked like it had been hit by a freight train. MicroCenter is going to have a very good Christmas season this year. BestBuy used to sell computer stuff. We used to buy a lot of computer stuff from them. That department in their stores is now a joke. Guess what the three stores nearest to me had very few computer cases and they were marked with a price that would assure the same inventory will be there this time next year. MicroCenter sold a lot of tablets, laptops, cases, memory, …. this year.
Guess how much stuff we bought for Christmas at BestBuy this year – nothing, nada, zero, zip. Their selection was poor and their prices were high. We visited their stores a few times and left empty handed each time. Why should I buy a DVD at BestBuy for $15, when it is selling at Walmart and Target for $5?
WHY is such an important question. Why are fewer people buying from BestBuy? Why are profits down? Why are the stores filled with stuff that isn’t selling? If your core competency is selling electronics and appliances, why are other retailers doing a much better job?
When a company wins a dominant position in the market, why do they become complacent and start acting like they are entitled to our business? Someday we may be asking WHY did BestBuy go out of business? They answer will be because they didn’t ask WHY.
Best Buy is a perfect example of too damn big. a little history: they were a sleepy little mid/upper level audio store called Sound of Music. couple of notable competitors, nobody rocked the boat in the region.
then a tornado ripped the roof off the Har Mar Mall and left their store a shambles. they had a clever idea… go across the street, put up a couple big tents, and sell whatever they could get quick to black-up the bottom line so they could fix up.
gangbusters.
Best Buy resulted as a parallel opeartion, then the whole shebang, based on move product quick and cheap, and cut the legs out from under the other guys. it worked in the twin cities. it worked regionally. and it worked to take down a number of growing national chains.
and then there was basically one category-killer. and they begat Vice-Presidents for Coffee Creamers, and Lightbulb Interfacing, and gawd knows what else, and built a nice big new international headquarters and started holding offsites because they could.
now Wally World is eating their lunch and using their restrooms before going back to their 10-hour days.
Brick & Mortar will only survive by providing what mail order cannot. Great customer service. Best Buy basically provides service up until the purchase.
Exhibit A: A while back my brother bought some DVD+R discs that were on sale at Best Buy. Turns out his older DVD burner was incompatible with DVD+R, and found this out without opening the DVD+R stack. He lives out in the sticks, so it takes some time to get back to Best Buy for a swap for DVD-R discs (Best Buy had both on sale at same price). When he tries to return them, neither the DVD+R or DVD-R are on sale any longer. Best Buy will not do a swap. On an unopened item… They want to refund him and make him pay additional to get the DVD-R stack.
So he tells them to pack sand. Walks down to Staples where they had the same brand. Tells them the story and his experience at Best Buy. They say… “Sure. We’ll swap you the DVD-R stack for your DVD+R stack.” We’ve had other dealings with Best Buy, but that’s a classic example of why we’ve black-balled them for life. They are a brick & mortar mail order store.
Brick & Mortar stores will only survive by suing the competition like the music and movie industry does (and to some extent innovative companies like Apple).
Enron’s motto was: “Ask why”
…simply asking “why?” is not enough
I have read that while most big companies fear change, Apple fears stagnation or obsolescence. And I’ve heard that internally, Apple is still very much like a startup. That’s what big companies need to survive: a fear of obsolescence and the startup mentality.
Why is Apple different in this regard? I would argue this is primarily because they had no choice. Did the culture imparted by Steve Jobs have an impact – certainly, but it was groomed out of necessity; they had to reinvent themselves – as it always seemed to be a leader in the market one day, then runner up the next (in terms of market share in a given segment). There have always been emergent factors in markets that they pioneered that forced them to react (e.g. IBM PC/Clones as the definitive example), and raise the water level.
With the buzz that is going around about Apple’s next big move on the TV front (which I heard about first here) coupled with the impact of Android to the iPhone market share – perhaps they stand a chance to keep riding the waves – if they continue to be challenged. I would worry if they really blow the competition away in terms of market share and hold on to it – but that is not likely – given Microsoft’s lead in motion capture, and more recently word of the addition of voice control with the Xbox Kinect and their desire to be the central point for aggregating the TV experience – it should be interesting.
I think this really encapsulates and illustrates Steve’s genius: take something everyone takes for granted, and look at it from a different angle to raise the bar – enrich the experience. The competition, like some nobel gas, will rush to fill the vacuum – and in the meantime, he’s looking for the next opportunity because he knows he’s going to soon be number 2 in the previous one. Can Apple continue to do that without him?
Some companies simply deserve to die, they get so big that they completely forget what customer service is.
I have had a running battle with my ISP for 6 months, every time that my bill comes off ,its wrong, totally wrong.
After hours on the phone trying to get someone to understand, i finally snapped and gave up.
The last time was the final straw as i was diverted to an agent who could barely speak English and then tried to sell me an extension to my existing package that is wrong.
My new ISP is a bit more expensive but it’s money well spent, i get to speak to proper agents who know my package and speak good English.
In a recent poll my previous ISP bombed and who topped the poll, the new start up company..
Some big companies seem content in offering crap and relying on their muscle in advertising in carrying them through, these are the same companies that are on the, “where are they now” list….
I take a slight issue with this piece. I don’t think it is that large companies start asking “why”, I think it is that large companies start answering all questions of “why” with “no”. When you are a startup, you don’t say “no” to many things, because you have nothing to lose. When you are large, it is a lot easier to say “no”, because saying “yes” involves risk, and most people are risk averse. It is that aversion to risk which leads to phrases like “nobody ever got fired for buying form IBM” (even if IBM’s products were, say, below par).
I agree with you Bob that there is a big part of “what” and “how” that large companies also apply, but those what and how are there in the small companies and startups, too, but again, there is less to lose and the people involved are more likely to take risks.
The larger the organization the easier it is to answer “no” than “yes.” Make the outfit big enough and some people find great success by never saying “yes” at all. But in the long run this is a recipe for failure. You have to sy “yes” sometime or die.
Look, for example, at Yahoo, where Jerry Yang was so burned by Mark Cuban that he came to see his primary job as being negative, which is precisely what put Yahoo in its current predicament. Yang should have accepted Microsoft’s original offer.
There’s a lesson here, I think, and that is big companies should probably keep statistics on executive decisions. It’s not simply a matter of mainly making the right choices, but of having at least a few of those be saying “yes.” If opportunities suck they suck, biut a record of some risk-taking is essential to longer term success, yet many companies don’t realize that.
Kinda like Republicans and Democrats.. The haves, do whatever it takes to hold on to their wealth … and most of the time, this involves saying “no” to change of the status quo. The haves-not don’t have anything and are open to change.
Excellent observation. Big companies and recent CEOs have a “drive the cost out” policy that means no is the default answer. I can think of one company where the 7 layers of manager each stop any request until eventually over-ruled when a client account goes red. It is almost impossible to act proactively. And the managers get rewarded for this !
Company has to create high authority trouble shooter teams to dig accounts out of the mess the upper managers “managed” them into.
Libraries of ideas like ITIL are created as rigid process and create another layer of obstruction because clerks can now stop any number of technical activities by saying they don’t understand them, therefore it is not well documented enough. The natural selection process means the technical staff that remain will have no initiative at best.
BTW, no scareware shown up yet in my visits.
https://www.1728.org/dowjones.htm
Has a list of the original Dow 12 as well as the changes to current for their list. GE is the only one on the list, but they were actually dropped from the list and re-added multiple times.
Tech companies that are still in the Dow since 1933:
1. IBM
Y’know, the IBM that Cringely has written off about 4 or 5 times?
You do realize that the podcast RSS has not been updated since July.
Yes, I know that. It’s a long story of software and hardware problems that I keep intending to solve, but since I make no revenue from the podcast it always drops to the bottom of my to-do list.
In other words, your primary motivation is money. We understand. I’m glad you became aware that the technical sound quality sometimes came off as imperfect compared to the TWIT network. Perhaps Leo can help with those issues.
Leo, too, is motivated by money. We actually do this for a living. People who are bothered by that (there are some) might suggest alternate ways for me to support my three children. I’ll get around to the podcast, eventually, but for years it has been just a gift to readers that the readers rarely even acknowledged — approximately 100 hours per years that I could use for something else.
Of course, I agree. I was merely pointing out that the money factor is very important to counter Sinek’s position, and using your comment about the podcast as an example.
I always ‘acknowledged’ the podcast by clicking on an ad everytime a podcast was posted. I’d be happy to pay a subscription fee for podcasts if one was offered.
Google is well known for trying all kinds of (crazy or not) things to see if anything sticks to the wall. Of course lately they seem to be pulling back from that…
Most major corporations operate as old Eastern Bloc planned economies , from the top down mgmt structure and the usage of gimmicks such as “Five Year Plans”. Couple this with regulatory capture in various markets, and you have the recipe for monolithic corporate culture…
One thing to explore would be the destructive impact of federal government procurement on various industrial sectors especially when it comes to “cost plus” bidding practices.
As for startup and nimbleness, just employ young/unattached people and make sure you weed out the Breeders and Feeders(over 40). Easy to do when you’re small, opens you up to lawsuits when you’re the size of Microsoft…
not sure why one would not employ the most cunning part of the workforce if one recruits intelligently. Breeders are very motivated. Have kids to feed. However, your assertion big corporates are like the old iron curtain states is perceptive. Always puzzled by the target setting done as if the marketing for next year can be just ordered. Probably caused by sales weasels as managers, rather than business people. There is an article on Forbes which makes a similar point as Bob.
Yup, let’s get rid of the folks who remember what’s been done before, what works and what doesn’t, and maybe even why it did/didn’t. That way we don’t have to listen them and are free to create the wheel *our* way. Who needs history when we have innovation?
I completely agree about the lack of institutional knowledge. It drives people crazy to have to explain why something was done a certain way because everyone who knew about it left or was downsized out of a job. You can only incorporate so much into documentation; experience is something you simply can’t put in paperwork and ship overseas to a help desk or factory or engineering team.
That is the big tragedy of the big corporate mentality: the concept that people are numbers and numbers are all that matter. The suits can talk about caring for the employee all they want, but everybody knows that perception is reality. The reality is that the employees are treated like numbers on a balance sheet, and it shows in the lack of quality and innovation.
“I helped write the business plan for Illustrator”
That is an awesome footnote on John Warnock’s bio someday, don’t you think?
Anyhoo, you are right about the well-documented industrials of the past go on an uncontrolled (albeit slow) death spirals for they could’a this or should’a that but didn’t – Digital anyone? US Steel? Western Union on A.G. Bell’s invention of the telephone?
All those losers have one thing in common – they were all defensive and not offensive. In 2011 you can make pretty good argument as to which side a company is on.
Apple, for example, is obviously offensive in nature. They try to out-innovate anyone who tries to get near. Being offensive as Apple relegates an existing market to obsolescence just when startups and competitors starts to catch up keeps Apple a generation or two ahead. This will continue to be Apple’s engine of growth for as long as the curious, smart, and creative folks in the middle to upper management are heard from and not ignored by the CEO.
Google has a dominant search business to a point of a monopoly.Google, for its sake, has to defend that psudo-monopoly by flooding the internet with half-baked products like gTalk, gVoice, g+, youTube, gReader, and lots of other garbage. I admit they can be very useful for many people but none of those products contribute much to Google’s search business. Google’s Android is given away like Christmas fruitcakes in the hopes that, in return, subscribers will use the built-in search app and swipe on adMob’s display ads. Google to me sits on the fence between defensive/offensive and without that monster cash flow from search it would be barely keeping its head out of water. They have huge stash of cash to keep buying said startups that can do their innovation for them.
Then you have Microsoft. Its Windows and Office cash cows are still flooding its golden coffers but their technical relevance is coming to a close as the mobile computing dawns. Investors realize this and has been keeping MSFT stock price in the doldrums for the last decade and a half. I remember MSFT valuation at 600+B in 1996. MS’ mobile strategy is in shambles and they could only hope that Windows 8 will be THE hit like 95 was. Maybe. Then maybe not. iOS and Android would have entrenched themselves in another two years. There will be no more room for a third and relevant platform. Windows 8 on mobile will only be a niche for enterprise folks using Windows on PCs as their platform. Even Windows on PCs will start eroding (we can already see acceleration of OSX adoption due to the iPad and iPhone in the enterprise). Using the “Windows” moniker on every product has not and will not help Microsoft’s cause. The inevitable is upon them but yet they are in full on denial. They are too defensive of the past for them to see through that opaque nebula.
It’s this denial of present reality that has devastated and mauled big industrials of the past. For a sideshow, just watch the ongoing saga of RIM swirling around the loo in Waterloo? How befitting…
Apple uses lawsuits to innovate these days.
I never thought of Dr. King as a neuromarketer, but this is a refreshing look at a very old principle.
The ‘why’ is the difference between work and play. Its how Aunt Polly’s fence got three coats of whitewash, and how Tom Sawyer ended up with all the toys.
The military has known this for years. Draw the same three circles and label them, from inside to outside: strategic, operational, tactical. All three are needed. But if you make a mistake at the strategic level, you cannot correct it at the operational level. If you make a mistake a the operational level you cannot correct it a the tactical level. And if you make a mistake at the tactical level . . . well it just sucks being you I guess.
Speaking of big companies failing,
Maybe you should write about DEC sometime, or maybe you have. I think of it as the biggest and fastest decline in history.
Great article with great insight! I have been pondering the fate of big companies in an economy of upheaval, disruption and uncertainty. While most are doomed to eventual failure, there is something to be said for size. With sufficient size, a company can buy time. They don’t have to be the first mover, they can wait and let nimble start ups serve as their R&D.
In my experience, companies must move through five stages of growth to stay alive:
1. The Entrepreneurial Enterprise (newborn) – characterized by intense customer focus. Driven by a sense of mission. Dominant question is “why?”
2. The Performing Enterprise (toddler) – characterized by emphasis on growth . Driven by performnce. Dominant question is “what?”. Figuring out its sustainable value proposition and market.
3. The Systematic Enterprise (teenager) – characterized by over-confidence. Driven by repeatability and predictability. Dominant question is “how?”
4. The Adaptive Enterprise (young adult) – characterized by the awareness that customers determine value and a willingness to change. Dominant question is “when?” Sensitive to changes in the marketplace that will erode its value.
5. The Pre-emptive Enterprise (mature adult) – characterized by entrepreneurial agility and focus on strategic clients. Dominant question is ”where?” Always looking for emerging custome priorities where they will be able to deliver value and be highly profitable.
As executives lead their companies through these stages, they must realize the questions are cumulative. In order to truly get to the next level, the organization must have clear answers to the questions in the previous levels.
Massive companies are able to buy time because they are not monolithic. They typically have multiple companies running within the larger company and operating at different stages of growth. Often, these smaller business units generate the cashflow and profitability necessary to finance the rest of the company.
In the end, I think we will end up with small nimble companies and massive companies. Mid-sized companies, who tend to be more monolithic, will be most at risk.
Wow, that’s very insightful! I think the part about midsize companies is especially so.
So, what you’re saying is, mid-sized companies have outgrown their agility, but are still not large and diversified enough to survive the maturity of their market.
So what do the mid-sized companies do to become large companies? Once there, how do they avoid the pitfalls that come with their size?
Great question Steven! I think mid-sized companies have to avoid the pitfalls of large companies before, not after, they become large. Companies grow rapidly through systematization. Systematization reduces risk by forcing compliance. What leaders need to realize is they are enforcing compliance to methods that were known to work yesterday.
As there is no guarantee that such performance will continue to bring value to customers, leaders need to ensure that the most creative and innovative thinkers in their company are not constrained by administration and policy. Appropriately staffed sub-groups and a percentage of the company’s profits should be continually set aside for exploration, while the bulk of the organization concentrates on getting returns from past investments.
Google is a great example of a recent mid-sized company that continues to explore despite its size. It is really two companies in one – OldCo and NewCo.
This strategic and proactive balancing act between exploration and exploitation is the only hope for mid-sized companies in a new reality of constant change.
Adrian,
good point in your management process assessment. Lockheed did this very successfully under Kelly Johnsons Skunk Works. Ben Richs’ book details what happened when Kelly left and the bean counter age began.
Yep. Your article totally reminds me of Intel which is just turning out silicon and doesn’t have a clue as to how to use or market it. They’ve totally missed the mobile boat and while they are getting power consumption down finally, the supporting layer of device drivers and application software is not there.
Intel does have great fabs and can manufacture any design, this is their core competence, but the stars alignment of MS-DOS PCs & Windows is gone. There is real competition in the mobile arena and all of the why for their products has dried up.
Microsoft is trying to defy the fate you imply for large companies, but I don’t see the same level of worry or effort at Intel.
Intel is plenty worried. They just don’t know what to do.
Perhaps these major companies need a way to incentivize long-term tenure…maybe pay big bucks based on an 8-10 year contract, tied into company productivity? Of course, everyone would have to play the same game to make it work…
There’s plenty of aging geeks marking time at Intel. A birds-eye view of cubicle land would reveal more grey heads than not.
Thank you Mark,
I thought it was only a matter of time before you touched on the Why?
I have been watching for it for a little over two years, anecdotally it works for me. It does take an evolved value system to apply it, the prerequisite of around 10,000 hrs specialising and serendipity to bring about financial success.
You are right, looking into most stories it is the “Why” that is key and it takes special people to grasp that before any opportunity presents itself.
Wishing you well for 2012.
“I have been watching for it for a little over two years, anecdotally it works for me.” What is “it” and who is “Mark”?
What is “it” and ……?
You need to ask what “it” is, Why?
…… who is “Mark”?
If you need to ask it doesn’t matter, Mark knows.
The word – rhetorical – covers it.
Oracle surely doesn’t ask “Why?” anymore. Methinks they’re taking the first steps towards that downward spiral …
Bob-
Jacob Goldman died on Tuesday…….did you know that or was this article just a coincidence????
You just wrote Oracle’s obituary.
This is one of my favorite topics. I’ve wondered long and hard about it, but I’m afraid the definitive answer may arrive long after I’m gone.
After way too many years of making the same mistake (trying to find rationality inside a bureaucratic system), I finally gave up. This was the right move.
“If it ain’t broke don’t fix it,” and “We’ve never done it that way” are my two favorites from that time. There is also the old reliable “Nobody likes change,” which seems to apply universally except for promotions and raises. Go figure.
I’m wondering if, in a large organization, it isn’t at least partly a statistical function. For every “Let’s go north!” there is a “No, let’s go south!”, plus a bunch of “sideways” and “maybe tomorrow” responses. An infinite regression of mutually effective cancellations.
In a company of five, and three want something, they do it. Bang. If it’s an issue, then the other two peel off. Still done and finished.
Can’t quite do that when your company has 90,000 employees. Most of them don’t even realize that a decision is needed. They just blink in the sunlight when the nest has finally been dug open by reality and they have nowhere to go anymore.
I can’t believe I read this article the same day I read what saved The Lego Group from bankruptcy. Wow. Wow.
“At first I actually said, let’s not talk about strategy, let’s talk about an action plan, to address the debt, to get the cash flow. But after that we did spend a lot of time on strategy, finding out what is Lego’s true identity. Things like, why do you exist? What makes you unique?”
http://mobile.businessweek.com/magazine/lego-is-for-girls-12142011.html
There is another way for big companies to adapt and survive. My first stock purchase in 1972 was ITT, a conglomerate, after conglomerates had fallen out of favor. ITT and its decendents have split, and split again into smaller companies. Having sold only one of those, and collected decent dividends for years, the remaining 6 are now diverse, and worth about 11 times their original cost.
[…] Cringely gives us a heads up to watch Simon Sinek’s great TED talk about the golden triangle. I agree that it is great stuff. It gives new food for thought about the idea of “mature product lines”. This (is like the) position faced by many large, successful companies with mature product lines facing obvious challenges down the road. Such companies … see the problem approaching but are paralyzed by the need to envision $10 billion replacement markets. They can’t (adapt in advance) because there is no obvious Why? … […]
Bob, your web site redirects to a fake antivirus web page, the first time a NEW computer loads your web page.
Hi Chad,
I’m glad to know I’m not the only one facing this issue, as it proves it is this site with the problem..
The first time I visit the site each day, I get hit with the redirect.
I sent an email to Bob the other day, but it still is not fixed.
So, I sent another email.
I have the faith Bob will get this solved. At least we aren’t ignorant enough to fall for the fake anti-virus. To be honest, that little thing is responsible for 60% of my business.
Happy (secular, Gregorian) New Year, everyone
Google “hosts file”; all is well here.
We are not talking about ads that are “too aggressive” or “using scare tactics”.
We are talking about being HIJACKED to another site.
And using ad blocking software is brilliant. We wouldn’t want Bob to be paid for his work, right?
So I wanted to take the time to thank you for your well thought out and reasoned post. You have truly helped solve the problem. /sarcasm
I was also pointing out why Bob probably won’t be able to help since he has no control over the ad servers. You could try sending an email to the hosting service for the ad server, but I doubt it would help.
Adobe asked, “What do we do after PostScript?” If it had not, it would be dying now if not already dead. Imagine if Apple had not asked, “What do we do after iPod?”
RIM apparently never asked, “What do we do after BlackBerry?” Of course, we are now seeing the results of that oversight.
What a load of nonsense. Of course large companies ask “why”. The problem is they can’t execute.
Everyone has a very narrow job, so nobody’s responsible for anything.
Accountants and marketers take over, R&D gets pushed aside — it’s cheaper to market the hell out of a crap product than to actually build something useful.
And of course, politics stops everything in it’s tracks as nobody will trust and work together.
Here’s a good “why”. Why does everyone swallow nonsense business theories from consultants who simply have a book to sell?
Executive management incompetence?
The biggest corporation of all? The United States of America. We’re very good at the “what?” and the “how?”, perhaps we’ve lost sight of the “why?” You can find technocrats easily, but you don’t meet many idealists any more . . .
I don’t think you’re right about that at all, there are plenty of idealists in the US today. However, they are idealistic about a thousand different issues. Plenty of them are highly principled, dedicated individuals, uncomprising in they’re efforts for justice, and many more are dogmatic fools, uncompromising in their efforts to screw things up. Too bad it’s the latter group who run for political office or end up as bureacratic managers, eh?
Big companies will never change. forget about big companies, even small and medium companies will never change.It will be hard to change for any company instead they to start maintaining and improving their internal affairs as it does affect externally.
I work for one of the big companies and I can relate exactly to this . I continually come across situations where workers are doing things because some process procedure boss or quality assurance says they have to. I ask ‘why are you doing that?’. The answer is always the same, and it is never ‘because this needs to be done and this is the easiest/cheapest/fastest ‘
As soon as a company hits tthat mentality they are doomed to failure.
The last two times I’ve gone to your top page (once last week, once today), I’ve been hit immediately with scareware. When I close the browser and run a scan, nothing has downloaded, then I’ve gone back into your site and encountered no scareware. Thought you might like to know, in case someone has injected a script.
There is not much that Bob can do it he wants to allow ads. Sometimes the ads are too aggressive, using scare tactics. There are many types and levels of ad blocking software, some built in to the browser. I haven’t tried any of the new ones or the built-ins simply because the oldest is still being updated and works fine: (Google hosts file).
The only odd thing is that it ran either automatically when I reached his site, or perhaps, unknown to me, with an unintended mouse over.
[…] I, Cringely » Blog Archive » Why big companies can’t change – Cringely on te… At the polar opposite position from big industrial companies sit startups, nearly every one of which begins with an effortless expression of why? Big companies ask What? then How? but almost never Why? according to Sinek, who I think has it absolutely right. But good startups are motivated from birth by Why? […]
I am agree with you. I am also working in one big company and they never want to adopt any new changes as they are stick with there old rules and regulations.
[…] ¿Las empresas grandes no pueden cambiar? […]
[…] Kalender Inspire Wednesday, February 15th, 2012 | Author: Martin Why big companies can’t change […]
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[…]I, Cringely » Blog Archive » Why big companies can’t change – Cringely on technology[…]…
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