Monday, June 13, 2011

Old ideas aren't as dangerous as old expectations

It's rare that you'll find a quote from General Motors in an innovation blog, but I read that Dan Akerson, Chairman and CEO of General Motors, gave the commencement address at Bryant University.  Akerson gave a fine commencement address, full of self-deprecating humor and advice for the graduates.  But one thing he said, tucked in at the end, was important.  He said "Don't be afraid of new ideas; be afraid of old ones".  Here, in the wrap-up of his speech, are the words GM, and every firm needs to hear.

Why are so many firms "afraid" or perhaps more realistically "resistant" to new ideas?  Why do so many firms and individuals cling to ideas that are old and outdated?  Why do individuals and firms consistently cling to concepts that are well past their shelf life, and in doing so fall behind the competition?

New ideas require a shift in perspective.  New ideas require us, as individuals or as corporations, to reconsider our thinking.  New ideas suggest a shift in demand, in the marketplace or in habits or behaviors, and those changes or shifts may indicate that our offerings will be less interesting or less valuable.  But new ideas also come with a price tag.  It is not clear if new ideas will "pan out". After all, the success of many businesses is built on a solid, well-defined "old" idea that has proven its merit, while a new idea may not be as defensible, as scalable or as profitable as the old idea.

So, in light of these challenges, many firms rest comfortably in the knowledge that while new ideas may arise, their "old" idea provides substantial value.  With luck, the old idea can be extended for many years and the firm can build defenses against the preponderance of new ideas.  Over time comfort, inertia and a defensive mindset take hold.  It is far easier to defend, after all, than to attack.  Military strategy holds that an attacking army needs to far outweigh a well entrenched defensive position, and the same is true in business.  Playing defense is far easier, requires less resources and is a more comfortable position. 

Yet a defensive mindset assumes that the environment will change little, if at all, and customers' needs will change very gradually, and that there are few if any shifts in demographic behavior or economic activity.  When the global economy was fractured and trade was limited, these assumptions made sense.  Now, however, with a fully integrated economy that can see supply lines ruptured (Japan Tsunami) and rapidly stitched back together (see also Japanese Tsunami), change is inevitable and global demand increasing.  Consumers are ever more fickle, demanding new products, new services and new experiences at a rate never seen before.  These factors, plus a significant shift Southward (to Southeast Asia, India and Africa) of population density and economic intensity over the North (North America, Europe, Japan) indicate significant shifts in consumer activity and demography.  Firms relying on old principles, old ideas and old rules about product cycle longevity are at significant risk.

We can't be merely afraid of old ideas.  In older, established economies our businesses should be constantly re-evaluating existing business models, product offerings and experiences, running numerous experiments to discover what will work in an emerging future.  It's not merely old ideas that are dangerous, it is old expectations, old rules of thumb and old methods of managing.  The pace is changing, and old theories and old expectations are just as dangerous as old ideas.
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posted by Jeffrey Phillips at 5:57 AM


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Anonymous Anonymous said...

I bought my car in an agency in my country of General Motors, this day in this agency was the CEO of the company , we talked some minutes about pharmacy reviews and some other uncommon topics !

7:49 AM  

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