The Art of the Possible

Successful strategy is not just about rigorous analysis or even business acumen. It’s often as much about what you can actually get people to go along with.

For example, consider two pairs of companies: Kodak and Fujifilm, and Digital Equipment Corporation (DEC) and IBM.

Biggest news story this week is probably Kodak’s filing for bankruptcy. One of the many interesting facets of this story is that they invented the very digital camera technology which killed their photographic film business, and, I learned from Bloomberg TV, internal Kodak research predicted that they would run out of road by about 2009 – so they weren’t far out in their analysis!

They knew what was coming, but they didn’t respond. In contrast, Fuji, in an identical business, spent billions buying a large number of digital camera firms and are doing well even though the contribution of film to their business has gone from about 60% to about zero.

Then there’s DEC and IBM. IBM has just reported great results – DEC, which used to be second only to IBM in computer manufacturing, is long gone. I’ve written about DEC before (in Making a Merger More Successful), in particular on the the point that they also knew they had to change strategy, but failed to get the internal buy-in to do so. In DECs case, they needed stop making the best-technology-come-what-may mini-computers their engineers loved and start selling the technically less sophisticated PCs that the market wanted.

DEC have been gone for years. Contrast that with IBM who have reinvented themselves again and again (adding machines, mainframes, PCs, services and software) and have just turned in results beating analysts estimates.

In both these pairs of cases, success looks much less an issue of analytic competence, and much more about the ability to influence internal stakeholders, the courage to stop doing things which have worked for years but are past their sell-by-date, and the discipline to see the changes through.

© 2012. Andrew Bass. All Rights Reserved.