All our newsletters are copyrighted but we encourage you to share them with others.
If you use the information, please let us know and cite us as the source. Thank you.

Copyright 1997 AXIS Performance Advisors, Inc.

Are you really ready for the 21st Century?

The new year always gets us thinking of the future. This is especially true as the millennium looms closer. While none of us has a crystal ball, we all recognize that our future success depends on our ability to anticipate and prepare for what's coming. How good are you and your leaders at preparing your organization for the 21st century?

Fads or Foresight

Ask any executive what they're doing to prepare for the next century, and most likely you'll hear a litany of buzzwords including reengineering, high-performance teams, restructuring, mergers, outsourcing. We're ready, they say. We're doing all we can. We've got it under control.

Maybe they do and maybe they don't.

Don't get me wrong. All these improvement strategies have their place. They can all radically improve your productivity. So what's the problem?

"A good deal of corporate planning...is like a ritual rain dance. It has no effect on the weather that follows,
but those who engage in it think it does....Moreover, much of the advice related to corporate planning is
directed at improving the dancing, not the weather."

­Brian Quinn, Dartmouth

All these strategies focus on doing what you do better. But your future success will be determined by your ability to do something radically different. Don't believe me? According to Don Tappscott, author of The Digital Economy, most of Hewlett-Packard's revenues come from products that didn't exist a year ago and 90 percent of Miller's revenues come from beers that didn't exist 24 months ago. Executives need to spend roughly an equal amount of time envisioning their future business as they do improving their current one. Few executives do.

Looking backward to see forward

To get a sense of how much change is in store for us, consider how different life was in 1982, only fifteen years ago. Think back to where you were. Reagan was president. We'd just come out of the energy crisis. The Berlin Wall was still up and the Cold War was still waging. At work...

• There were no faxes, answering machines, or cell phones
• Rotary phones and typewriters were commonplace
• If people had computers at all, they were dumb terminals
• Semiconductors, cable TV, and the Internet were not major industries
• "Made in Japan" was just beginning to connote quality, not junk
• Many of what are now the world's largest markets were closed to outside trade

"To effectively 'manage' the strategy-making process, then, is not to preconceive strategies
but to recognize their emergence and intervene when appropriate."

­Henry Mintzberg,

The Rise and Fall of Strategic Planning

Now imagine as much change in the next ten years. Remember, the pace of change is increasing.

So what's a leader to do?

How do you plan for discontinuous, radical change? Many don't try. But according to Gary Hamel and CK Prahalad, authors of Competing for the Future, there are three kinds of companies: drivers, passengers, and road kill. Only the drivers have any control over the direction of change.

"Organizational commitment and perseverance are driven by the desire to make a difference in
people's lives­the bigger the difference, the deeper the commitment."

­Gary Hamel and CK Prahalad,

Competing for the Future

Being in control of your future requires that you establish foresight about where your industry is going and develop strategies to control or influence its future. If you do not do this, your competitors will, and then they can position themselves to benefit the most. You have three choices to become an industry leader.

• Fundamentally change how business is done in your industry (e.g., Charles Schwab and discount brokerages)
• Redraw the boundaries between industries (e.g., Time Warner and "edutainment")
• Create entirely new industries (e.g., Netscape and web surfing)

Notice that increasing market share is not on this list. If you want to be an industry leader long-term, you can't get there by just doing more of the same.

Three legs of the race

Most people define market leadership as being the first to market and the biggest in the market. However, true leadership is determined not just by market predominance, but by two other attributes as well. And these two additional attributes must be in place before an organization can gain market supremacy. The order in which they must be achieved are:

Industry foresight and intellectual leadership

You must be able to envision a realistic future for your organization that is radically different from what you do now. Imagine, for example, that you own Hollywood Video. Your business involves people coming to your stores to rent videos. You own millions of prime retail square footage. What happens when customers can download Robocop XX directly off the Internet or from their cable provider on demand? Will they still want to come by your store, just for old times sake? I doubt it. So what is the future of the video/entertainment industry?

Foreshortened migration paths

Next, you must develop the capacity, often across traditional industries, to position yourself for that future. What technologies will Hollywood Video need to compete? Should they get into the cable TV business, learn about satellite technology, or develop CD-ROM capabilities? What industry lines must they cross to develop the core competencies necessary?

Market position and market share

Finally, you must get to the future first and become the world leader, for in the global market place, only a world-wide presence will provide the preeminence necessary for leadership. To remain a leader, Hollywood Video will need to deliver entertainment in Beijing and Nome just as easily as in your home town.

Try This: It's better than twenty-questions Here's a set of questions we suggest you ask your leadership to answer in writing: What 5-6 industry trends most threaten our firm over the long term? What new types of benefits do we want to offer customers in the next 5, 10, and 15 years What new competencies will this require and how will we acquire them? How will we need to change our interface with the customer in the near term? Then analyze their answers: How consistent were their answers? What did they take "over the long-term" to mean­how far out are they looking? What radical, wacky ideas might just be worth exploring? What does this imply you should start doing and stop doing? Source: Competing for the Future

Thinking in the future tense takes time and practice. Ironically, most leaders are "too busy" managing day-to-day matters to do this visioning work. But you can't be an effective driver if all your attention is on the gas gauge. Unless you've got your eyes on the road and the horizon beyond, you'll likely end up in a ditch.