472
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The success trap (and some ideas how to get out of it)
Was it a coincidence that out of the four main players it
was The Independent that launched the thing? Of course not.
It was The Independent that basically had nothing to lose; it
would have been the rst one to go under had the industry
continued as it had been. But it chose to not just prolong its
demise: it took a plunge, and recovered.
The same happened to Southwest Airlines. In its early days, when
it was in deep trouble, it had to sell one of its four planes. Yet,
it didn’t try to just save some more costs and continue with 75
percent of its operations, prolonging an inevitable decline; it took
a plunge. It said, “We’re going to run 100 percent of our opera-
tions but with just three planes!” and, in
the process, invented the widely successful
low-cost airline model, having scrapped all
frills and complications, combined with the
emergence of a must-succeed culture.
So, when you’re down: innovate. Don’t
just wait for the inevitable to happen,
prolonging your decline out of some false
hope that you’ll weather the storm. Storms kill; get out of it
while you can.
Is your company brave enough to survive?
To be honest, in spite of my well-intended (and perhaps slightly
desperate) speculations on the previous pages, my real answer, as
a professor of strategic management, to the question, “What can
our company do to survive the downturn?” should have been
“I’m sorry, but not a lot”.
The market is Darwinian: the strongest ones
survive. And an economic downturn is like
winter in Alaska; many animals can live a happy
life in Alaska all through spring, summer, and
fall, but when winter comes, it’s not a great place
to be. It’s a much tougher environment – and
only the ttest survive.
‘‘
when you’re
down: innovate.
Don’t just wait for
the inevitable to
happen
’’
‘‘
The market
is Darwinian: the
strongest ones
survive.
’’
Business Exposed48
If you’re not very strong, if you haven’t accumulated much body
fat or haven’t developed the ability to hibernate, I am afraid it
is going to be tough for you, too. “But what can I do to become
stronger? Get thicker skin? It’s getting a bit cold here!” you might
cry. Well, I am sorry (again), but winter in Alaska is not a great
time to try and become stronger. It is just too late for that. But I
do think there are a few survival techniques to be learned from
looking at rms’ downturn survival strategies, although they are
not for the faint-hearted.
First, we see quite a lot of rms display what I earlier referred to
as “threat-rigidity effects”. When under threat, facing a shortfall
in performance, rms are inclined to more narrowly and rmly
focus on the one thing they do well (e.g., their core product or
service), stop doing other things, and become more hierarchical
and top-down in terms of management control. Unfortunately,
this often makes things worse, or at least prevents you from
coming up with any solutions.
What rms are better off doing is opening up: exploring new
sources of potential revenue and experimenting with bottom-up
processes to generate ideas and innovations. Let me give you an
example. I am in touch with a company, in London, that provides
custom-made software for all sorts of logistics systems, which they
offer in combination with personnel training. Unfortunately, the
vast majority of their customers are automotive companies, like
General Motors and Ford . . . clearly not a great position to be in
right now. This recession has denitely been winter in Alaska for
them, and at rst they went through the usual cost-cutting and
rounds of lay-offs.
After a while, though, the CEO decided to try something a
bit different. He initiated some processes for all employees to
start generating ideas for potential new sources of revenue,
in which they enthusiastically participated (it was not like
they had anything better to do . . .). Most ideas were rubbish;
some ideas were so-so, but a few ideas were really good! One
of these ideas has now brought them a substantial new source
of revenue.
492
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The success trap (and some ideas how to get out of it)
One team had noticed that there was always one business unit
doing well among their automotive customers; the unit providing
spare parts. That’s understandable; in a downturn, when people
stop buying cars, more people need to have their cars repaired.
And this greatly helps the spare parts units. So, this team decided
to propose an inventory control product specically aimed at the
spare parts units of automotive companies. And it worked.
This is the opposite of the usual “threat-rigidity effects” – rather
than focusing and becoming more narrow and top-down, this
company opened up, organized bottom-up processes and tried
something new. This is a brave thing to do, when winter blizzards
are turning your ears frosty, because it feels like spending money
rather than saving it. But nding the “spare parts division”
among your customers might just see you through a downturn.
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