What got you here, won’t get you there

Change is inevitable. The formula that drove a company to success in the past is not necessarily the same formula that will drive its growth in the future. Holding on to the secret sauce that got you here is a sure recipe for disaster.

Film based cameras drove Kodak to the peak of its success. Holding on to that same formula was what drove them to near extinction. Founded in 1888 by George Eastman and Henry Strong, it amassed a huge market following. When digital cameras started entering its market, Kodak dismissed it as a mere fad. They felt they were too big to fail. From 2003 to 2011, Kodak had to shed 47,000 jobs. They closed 13 manufacturing plants and 130 processing labs. It had not made profit since 2004 and were eating through its cash reserves.

In January 2012, Kodak filed for bankruptcy protection. It was never the same again. Holding on to the formula that drove their success caused their downfall.

The same thing almost happened to the giant IBM. Leasing Mainframe computers drove its massive success worldwide. Big Blue was thought of too big to fail as well. Computers started to shrink in size and grow in processing power. The economies of scale started dropping the price of mini-computers and servers that became accessible to companies. There was a massive exodus of customers that almost bankrupted the computer giant. As IBM’s CEO & Chairman from 1993 to 2002, Lou Gerstners management and leadership style helped save the company. It was under his leadership that IBM moved away from its original cash cow of leasing computer boxes and into Technology Services. The leader that saved the company was the first IBM CEO hired outside the company. That was a big leap from its old culture of raising future leaders from the ranks.

Some companies back here in the Philippines are pretty much in a similar boat. Companies that grew to significant success are often the hardest ones to change. They often have difficulty letting go of the formula that got them to where they are right now. Even the way a start-up is grown into a significant player in the market can have challenges. In the early days start-up’s can make rapid decisions because it is usually centered on one or two people – the founders. Decisions are quick, customer service is intimate with a few clients in the beginning. Activities are personally overseen and micro-managed by the founders.

Years pass by and the company grows into a significant size. The group of 4-5 employees grew into an army of 5,000 to 8,000. Decisions slow down. Micromanaging starts to affect customer service. Delivery dates start to slip. Uncollected accounts receivables starts to balloon. Cash flow starts getting affected.

The same formula that helped grow a start-up is the same formula that’s causing their downfall. Management model must change. Professional managers need to be brought in. Processes needs documentations, job descriptions need to be designed, goals must be cascaded, performance dashboards need to be created and reviewed.

Companies needs to transform every so often to survive and even thrive in the marketplace.

In changing times like these, companies often need to bring outsiders to help assess and map out a plan. Companies such ours come in and help transform organizations. From succession development to organizational development, companies can often benefit from outsiders that can tell you exactly as it is. No agenda, no frills, just plain truth. An honest view with recommendations on how to transform can make a big difference.

What got your company to where you are in your industry? Will it bring you the same level of success in the next 5, 10, 15 years?