Visionary Changes Ahead. Are you and your company prepared? - Café with Mario
Saturday, July 4, 2015

Visionary Changes Ahead. Are you and your company prepared?

Are you and your company prepared for the visionary changes ahead some of which are highlighted in the video below?  If not, it may be time to look into the crystal ball and initiate change.

I often get asked during my public speaking appearances who was my mentor that fostered my career as a visionary change agent and innovation ecosystem architect.  Without hesitation my response has steadfastly been Akiio Morita, the co-founder of Sony Corporation.  Although I never met Mr. Morita, I had always been a very satisfied Sony customer having owned a Sony Trinitron television, a pocket FM transistor radio, a Betamax videocassette recorder, and, the ever so popular Walkman.  It wasn’t until I bought one of the company’s first compact disk (CD) players (even before music stores began carrying CDs) that I took upon the initiative of self-educating myself on the forthcoming digital communication technology revolution as well as researching the history of Sony itself, sans the benefit of the yet-to-come internet of course.  In one of the books by Mr. Morita he mentions there were two memories in life he never forgot.  The first was going to Detroit post WWII and being amazed with the industrialization of the automotive industry.  The second event was going back to Detroit several decades later and being amazed yet again but this time by seeing exactly the same equipment he saw during his first visit.  Although Mr. Morita passed away in 1991, those two memories still live with me and have echoed loudly ever since I read those words of his which further resonated every time I drove past Smith Corona while participating in the early stages of the Personal Computer (PC) revolution.

Mr. Morita’s observations in change (or lack thereof) were taken over a period of decades.  Today, the pace of change has been increasing at a rate that is shockingly hard for many to accept, adapt to, or plan for.  Whether they have not looked hard enough at what the near future holds or are blinded by a natural human instinct for job preservation or at least extension - failure to build an innovation ecosystem based on visionary changes is following the path of Smith Corona.  As an innovation and emerging business specialist I often come across organizations that are innovating for today’s market using today’s technology.  Rather than invest resources in short-lived stop gap efforts companies need to be building today for tomorrow or alternatively phrased “building tomorrow’s market today”.  And when one cannot be completely sure of what the future will hold – innovation based on visionary change is easier said than done.   Often an outside change agent, impervious to internal job preservation or territorial domains can candidly share visionary change and architect the needed innovation ecosystem.  If the company chooses an internal change agent, the individual must have the direct support and “skunkworks” authorization from top management.  In either case the change agent must be resilient as more than likely a few feathers will be ruffled.

I recall an instance where in the very early 2000’s an industry leading company decided not to pursue development of a product with web connectivity because at the time “not all homes had internet.”  There was also concern that such a product could cannibalize sales of their existing high-priced high-margin Radio Frequency (RF) remote accessed products. Today the company is faced with a plethora of competitor companies, large and small, offering low-cost internet connected devices.  Had the company pursued the product development at the time it would not only have been first to market, but by the time the product would have been ready for release home internet penetration would be a non-issue.  Further, the company would have had the opportunity to establish a defensive position through patents for any technology from its research and development efforts.  In this exemplary case, the company which had always had a very conservative business approach perceived products based on future markets as speculative and did not have an innovation ecosystem to support such endeavors which would have read the tea leaves and predicted the demise of their soon to be outdated RF products.

Alan "Lanny" Ross
An exemplary case of failing to adjust to a dynamically changing market is the case of a fabless semiconductor company that offered, along with IP cores and software stacks, a discrete chip for a single peripheral communication function.  At a time when the market trend was integration of technology cores in ever more powerful all-inclusive Silicon-On-Chip (SOC’s) the company opted to disengage from licensing negotiations with a Fortune 100 company after receiving an initial term sheet for its intellectual property core and instead attempt to sale it the company’s discrete Integrated Component (IC) to generate greater sales revenue.  When word reach the fabless semiconductor company that the Fortune 100 firm was in talks to license the core technology from a competing company, management tried to salvage the original deal but by then it was too late.  Even more shocking was when at a board meeting shortly thereafter, despite having been shown by a prospective customer a product board layout already integrating at least three (3) redundant sources for the peripheral communication function the company’s sales team was offering as a discrete IC solution for the target product during a sales call, the engineering team excitedly announced investment in a roadmap for producing the discrete chip in a smaller fabrication process which unsurprisingly never saw the light of day.  At that board meeting Alan “Lanny” Ross (prior President of Rockwell International, future Broadcom CEO, Global Foundries CEO & Chairman) who was seated next to me whispered into my ear that the company was using denial as a defense mechanism against the headwinds of change.  Like Akio Morita’s memories, Lanny’s comments were added to my database of unforgettable mentorship.  In this example, the company did not adapt to disruptive industry changes and tried to continue with a familiar business model that had been successful for the companies management had worked for years before.  As a further illustrative example of adhering to past models and markets, the IC sales leadership, in an effort to compensate their existing IC-stocking sales representatives network relationships for declining IC business as the IP licensing grew, failingly attempted to add licensing of IP cores, which requires significant and extended direct customer engineering collaborative engagement for integration customization, to their IC representative's stocking line cards.  Adhering to old practices in rapidly changing markets is akin to trying to fit a square peg in a round hole; a well architected innovation ecosystem will incorporate an ability for a visionary team to dynamically change business practices and models.

On the other extreme some companies have developed an almost instinctive culture that prepares well to future changes.  One such organization was Proxima Corporation which was originally founded in 1982 as Computer Accessories Corporation, an accessory products company selling products such as power surge strips, computer cables, and disk storage boxes.  When the accessory market began to be highly competitive, in 1987 the company morphed into Proxima Corporation to become a leader in computer based projectors.  In early 2000, Proxima’s President and CEO Ole J. Fredriksen, acknowledging the threat of affordable fixed flat screen televisions quickly penetrating business offices, established innovation initiatives in Unified Communications and Home Entertainment.  Unfortunately despite establishing fully vested business units as part of its subsequent merger with InFocus, the Proxima initiative leaders left post-merger and the innovation efforts faltered under InFocus which, facing steep declines in computer based projectors, ultimately sold off the Proxima line and the InFocus company itself.  Prior to the merger however Proxima demonstrated acceptance of visionary change and an adaptive mindset to not be beholden to the past or present, but to pursue new initiatives for both preservation of the company and future growth.

Being a leader of visionary change does not always mean developing a new product or service, or even changing business models.  Sometimes innovation is targeted at internal operating processes in anticipation of visionary changes in the value chain.  A great example in leadership in this area is FEMSA, the largest franchise bottler of Coca-Cola trademark beverages in the world, delivering more than 4 billion unit cases a year.  While that is a significant volume of product, even more significant is the amount of water volume utilized; on average it takes a typical bottler 2.7 liters of water to make 1 liter of product.  With water becoming a more fought over resource, FEMSA has been a leader in instituting a goal toward zero liquid discharge investing significant resources over the last decade toward that end.  FEMSA foresees that in the not too distant future the question will not be “What is your energy balance?”, but instead “What is your water footprint?” In addition to water reduction efforts, FEMSA has been introducing innovative water treatment technologies into its processes.  Today FEMSA is even treating the water for contaminants that are either not yet present in the water or are present but not yet regulated.  While this currently may serve as insurance against unforeseen legal claims, the company is prepared for when highly contaminant plumes, moving closer every year, breach the natural and engineered underground barriers and finally reach the water tables.  Having been working for the last decade in driving innovation to address their vision of future water scarcity, reduced water quality, and increased regulatory requirements, FEMSA is an illuminating example of preparing for visionary changes.

Peter Drucker, the founder of modern management, once said “The best way to predict the future is to create it”.  Watch the video below and then ask yourself if you and your company are ready for the visionary changes ahead and are building today for what tomorrow holds.

Update: Four days after the original posting date of this article, Microsoft CEO Satya Nadella announced 7,800 mobile phone workforce layoffs as part of a “restructuring” toward “long-term reinvention and mobility”.  A very bold move by Nadella to write-off Microsoft’s $7.6 billion acquisition of Nokia's smartphone and mobile phone businesses just after one year.  Yet it shows visionary insight by Nadella to discontinue investing in today’s technology for a potential market share gain a few years down the line when current market and technology shifts may predict a future trend away from smartphones.  Today’s generation disdains use of the voice features of a “phone” and with the advances in smart devices and augmented reality Nadella perceives a disruptive revolution ahead and accordingly has instead decided to invest today for what tomorrow holds.

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Item Reviewed: Visionary Changes Ahead. Are you and your company prepared? Rating: 5 Reviewed By: Mario Larach