What separates companies that thrive on change from the ones that are crushed by it? It isn’t resources. Or information. Or talented people. Without question or fail, it’s whether they focus on the future not on the past.
It’s a comforting fiction that companies can be both forward looking and backward looking at the same time. They can’t.
It’s popular to say that we live in the “here and now.” However, it’s also impossible to truly do this. Without going down a rat hole of navel gazing, think about it for a moment. By the time you can actually experience this moment, it has passed. It’s a blur out the side window of a car going 70 miles per hour. This leaves you with the choice of either looking forward or back.
Companies that focus on the current quarter are actually backward looking. They are worried about deriving current revenue from their installed base of products and customers. They always defer investments in new products, new segments, and new technologies to maximize short-term results. They think that they can wait until a new market is mature and sizable before investing. Inevitably, by that time, the opportunity has passed. Companies often try to catch up by buying a hot, young start-up, but typically they screw that up, too.
There are two memorable examples of big companies choosing the future over the past — Apple in the mid-80s, and IBM in the mid-90s. In both cases, it saved the company and left behind a large group of failed competitors.
When Apple introduced the Macintosh in 1984, with the memorable Super Bowl ad, it was already a good-sized public company. The bills were paid by the Apple II, a good and well-respected machine. However, at the next shareholder’s meeting, the Macintosh team was sitting in the front row, and the Apple II team was exiled to a junior college down the street (literally!). People grumbled. People were offended. But Steve Jobs was sending a strong message that Apple was about the future not the past.
In 1995, IBM’s bills were paid by hardware. Software and services were nice extras but were often used as an incentive to get a mainframe sale. Under Lou Gerstner, the focus shifted 180 degrees. He sold hardware divisions and bought software companies. IBM is still a powerhouse. Warren Buffet just took a large position. Their competitors have become answers to trivia questions.
The choices are simple for start-ups. They have no installed base. No legacy technology. No old guard. They are freebooters and are all about the upside and the future. They count on big companies ignoring them and failing to react. They are rarely wrong.
For established companies, being future-focused is tougher. Along with globalization, changing a company’s orientation from the past to the future can only happen from the top. A committee of nice, reasonable people doesn’t get together and vote to gut their company. That is the job description of a benevolent dictator. Left to their own devices, the key managers in your company will kill your key future initiatives.
Here are my top five suggestions for bigger companies that are trying to future-proof themselves:
Build a “white paper” vision of the future of your business
Ignore what you currently own. What business would you invent for the future if you were starting from scratch? Be clear about which businesses are part of your present, and which ones are part of your future.
Appreciate competitors from outside your usual industry reference set
The major disruptors are never the companies that you think of as your current competitors. They are the companies that come in from the cold with a completely different approach and set of rules.
Recruit, reward, and protect people with the skill sets you need for the future
Your HR people may scream. Your old guard will cry “foul.” It doesn’t matter. You need to recruit and retain the best of the new breed and protect them from the people who won’t get it. The best people have nothing but options. And you can’t compete if you have less than the best.
Extract key initiatives, and protect them from your own organization
Your most important future initiatives will always be number 12 on a list of top 10 priorities unless you pull them out of the business units and invest in them separately.
Eliminate people who fight the future
The old guard of your business will fight the future. You will probably need to leave some bodies on the tarmac to send a strong message that this is unacceptable behavior.
It’s not easy to be a start-up. But your plan is clear. Attack. Managing a pivot for an existing business is a much higher problem. It’s complicated and nasty. Feelings will be hurt. But it’s a fight that you can’t walk away from because the future always wins.
Peter Horan is an experienced entrepreneur with a history of building successful media and internet businesses.