The rapid shifts in technology, culture and consumption are increasingly putting businesses under pressure to change. This requires a different approach from the past, said Gary Graham, Chief Reinvention Officer at 3i’s Group, during a recent episode of the Small Business Practitioner Webinar Series. Graham was the guest presenter at this Continuous Professional Development (CPD) event, hosted by the Small Business Development Agency (SEDA), Institute of Business Advisors Southern Africa (IBASA) and the Entrepreneurial Planning Institute (EPI).
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Graham explained that before the year 2000, the average length of a business cycle was 75 years, but after the mid 90’s it radically shrunk to 15 years, and today it is only 6 years long. The implication is that businesses that cannot reinvent themselves over shorter periods will stop growing. There are several examples of well-known brands that did not reinvent in time and their products died, such as Nokia in the cellphone market and Kodak in the film industry.
The reason for this is that businesses often suffer from the “Titanic Syndrome”, Graham said.
What is Titanic Syndrome?
Graham shared the story of the Titanic and what we can learn as individuals, businesses and organisations, from the way the involved people acted. He pointed to three important mistakes people make when confronted with disruption and change, which he called the “Titanic Syndrome”.
The story goes like this… It was April 1912. It was a clear night and clear skies. The two men that had just come on duty on lookout were perched high in the crow’s nest above the ship. They were perfectly sober even with a massive party on board because it was the maiden voyage of what was said to be an “unsinkable ship”. They had no binoculars. It was locked up in a glass cabinet, because of their arrogance in believing nothing could go wrong with the new ship.
As with the Titanic, it is often our own arrogance that prevents us from recognising the danger ahead.
The second interesting thing in this story is that they had the best radio operators and the best equipment in the world. Passing ships were warning of icebergs ahead, but they were busy sending messages for the first-class passengers, who paid for the service. It was customer service that sank the ship, not lack of good technology or talent!
As with the Titanic, we may be concentrating on the wrong realities so that we fail to recognise that there are new and emerging considerations.
Probably the most fascinating about the sinking of the Titanic is that the first officer on duty, William Murdoch, was considered the best in the world at averting disasters like this. So what does Murdoch do at the last minute? He gives instructions for the ship to turn away from the iceberg to avoid a collision. This caused the iceberg to push up against the hull of the ship. It popped the rivets, pushed the hull in, and it took on water. It damaged four or five compartments. Had he not turned, but rather rammed the iceberg front-on, it would have damaged one compartment, maybe two. But what did Murdock do? He did what he did before. He applied what he thought to be best practice.
As with the Titanic, we may be falling back on doing what we always did, but we may be limiting our progress when we have this over reliance on past successes.
In the story of the Titanic, we have the tendency to blame the iceberg. But it wasn’t the icebergs’ fault. The iceberg was there long before the ship arrived. It was the attitude of, and the way the people responded that caused the ship to sink.
Many organisations suffer from the “Titanic Syndrome”, as they arrogantly believe they have all the answers ready, they are focussed on the wrong realities, and they keep doing things like they did in the past. In the fast-changing world of today a different approach is needed to ensure that businesses survive and grow, which is what “reinvention” is about, Graham explained.
Shorter reinvention cycles
During the webinar, Graham reflected on working within the reinvention space for the last three years. “We initially started out by calling it a corporate disease, but we’ve subsequently found that it is also present in small businesses, family-owned businesses, startups, communities, whole governments, and whole countries,” he said.
This “disease”, Graham explained, is when we create our own downfall through the presence of arrogance, an excessive attachment to past successes, and an inability to recognise a new and emerging reality.
Most businesses have not yet adjusted to the demand for quicker cycles of reinvention. For example, 88% of the original fortune 500 companies have disappeared over the last 60 years; and in South Africa, we have 300 fewer companies listed on the JSE than we did 20 years ago. Failing businesses are often suffering from the “Titanic Syndrome”.
Graham noted that forward-looking businesses are responding to the challenge and are introducing ongoing processes to manage reinvention, including the appointment of top executives as Chief Reinvention Officers.
“Every business goes through a life cycle, from startup, to growth, to maturity and into decline. And typically, what we are trying to do is, to create a second reinvention curve before decline sets in,” he said. “
The shorter life cycle has important implications for business advisors and consultants as they are tasked with helping their business clients to be ready for a future of growth. Advisory in the long cycles of the past has to be replaced with support to guide businesses through rapid reinvention.
“The leadership approaches that worked in the long cycles must make way for an approach suitable for short cycles. In the past, we would spend most of our time on the design and perfecting of products, and we would use trusted market intelligence to plan implementation; but in the short cycles of today a different approach is needed, where concepts like MVP or minimal viable product are most valuable,” Graham said.
The implication for business advisors and consultants is that they have to be competent users of tools and approaches like design thinking, design sprints, rapid prototyping and rapid testing. But most importantly, it requires adopting a new mindset and method that drives reinvention, and growth in the short business life cycles. This shift in thinking may start with astute awareness of the symptoms associated with the “Titanic Syndrome”, namely overconfidence and arrogance; the inability to recognise changes and shifts; and continued reliance on outdated practice.
To join the upcoming CPD webinar click here: << https://webinar.the-epi.org >>
By attending this episode of the SEDA, IBASA and EPI Small Business Development Practitioner Webinar Series, you will earn credits to count towards your CPD requirements.
Christoff Oosthuysen is Webinar Producer at the Entrepreneurial Planning Institute (EPI) and General Partner at Seed South Capital.