Lessons in reinventing the future
Posted by Grant Brewer on 01 Jun 2006
Strategy is about inventing the future. It's about creating your own destiny. Gary Hamel and CK Prahalad, two well known strategists and authors, talks of inventing the future in book Competing for the future. This is what leadership is really about - about setting a direction goes beyond reacting to the circumstances of today; it must create an exciting future that your people want to be a part of.
Strategy is about inventing the future. It's about creating your own destiny. Gary Hamel and CK Prahalad, two well known strategists and authors, talks of inventing the future in book Competing for the future. This is what leadership is really about - about setting a direction goes beyond reacting to the circumstances of today; it must create an exciting future that your people want to be a part of.
Few companies manage to do this for long. A few lucky and skilful companies manage to do it for decades or longer. This achievement is partly the result of avoiding the "innovator's dilemma" that Clayton Christensen writes about in his book of the same name. The dilemma is how to avoid falling into the comfort-zone of today or yesterday's existence when the change is just ahead of you.
Business history is littered with companies that were once great - that once dominated the headlines, the stock markets or their customers' lives. The history is also full of companies that promised much, but that failed to live up to their early promise. Sometimes the reason for failure seems largely out of the executive's hands, and at other times, success seems to be the result of plain luck. Few CEO's like to admit that luck plays a role in their success, but it does. The margin between success and failure is often incredibly small.
There is an interesting case study in South Africa today that can shed light on the nature of corporate success, and in particular, how strategy is about keeping your eye on the future - reinventing the future so that it favours you. In our case study, not only did one or two competitors underestimate a changing marketplace but the entire industry appeared to be looking the other way. Of course, any reader of "Bruce Cameron's Personal Finance":http://www.persfin.co.za will know that our case study is the life insurance industry.
How is it that an entire industry can have their collective strategy so misaligned with their customers and their competitive context that they could risk failure? The life insurance industry has managed to continue developing products that don't seem to have the customer's best interests at their core. Their charges are not transparent and until recently have penalised customers and instead benefited the companies and their brokers.
There are many things that we can learn from the life industry. Amongst other things, we can learn how over-confidence can get in the way of success. Forgetting that you earn the trust of your customers because you believe your own hype is the result. There is also something to be learnt about how success is not guaranteed no matter how successful you have been in the past. Today, organisations have to keep innovating and thinking if they're going to deserve success in the future.
The life industry is also a good example that you do do actually need to put customers first. Sometimes "putting customer's first" seems to belong in the classroom, but not in the reality of the business world. Companies like Alexander Forbes that forgot about their customers and are paying the price. Focusing on your customer means that you are clear on who the customer is: the life industry seemed confused by whether the customer is the broker, themselves or the actual investor. It seems that the investor was the last to benefit from some of their decisions. In some cases, management went as far as to confused their client's money with their own when making investment decisions.
All of this turmoil in the life industry serves as a good reminder not to take your organisation's success or your industry position for granted just because you're large or established. Reflect on how your organisation treats is customers and make sure you hold a lead position because you've earned it. That means really believing that you're there because the customer put you there - something the life industry seemed to have forgotten. Talk about retirement products "not being bought, but being sold" should have been a warning sign a few decades ago.
All organisations should see themselves as competitive, but not at the expense of ethics (take a look at Enron too) or the customer. In the long run, any industry that forgets how to provide a service or provide products with value is going to decline. It is a question of when, not if. And more than that, you need to deliver that value responsibly, with respect for your customer and their community, and deliver it with fairness. The life companies seem to have believed that as long as the customer was getting something, they wouldn't be concerned with the other practices that were eating into the returns they actually deserved.
A final lesson to take from the life industry is how these failings led them to stop creating the future - essentially to stop thinking. More astute leadership in the life industry would have, at the least, seen the inevitable change that was (and still is) coming. Even more astute leadership would have created a future for their organisations that would have avoided the narrow confines of their current strategic choices. Leadership is responsible for looking forward, for thinking and for creating the future for their organisations. This is the real leadership challenge.
Business credibility is earned one customer at a time as each promise of value is met. Remember that as you think about the future and you will have a chance of creating your organisation's own destiny and seeing the rewards of your efforts.
_Lessons in reinventing the future_ was published in Intelligence Magazine as Strategym #38 in June 2006.
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