In his 2011 book, Escape Velocity, Geoffrey Moore takes on the major strategy issue faced by most successful organizations with a bit of history behind them: how to escape the gravitational pull of the past in search of new sources of growth.
It turns out, most of us aren’t much good at pulling this off, which explains the tremendous volume of once good—now gone—organizations. Chances are your organization has plans to change, and as part of your strategy, you must identify and capitalize on new sources of growth. Those concepts make for pretty slides and create head-nodding executive and boardroom presentations. But doing the actual work is far from simple.
Moore offers some priceless assistance in turning those inside-out strategy discussions and budget-driven investment plans into outside-in, investor and future-focused discussions and actions.
Along the way, he proposes a hierarchy of powers, a simple but sophisticated framework that articulates where firms can build or leverage power. Category power is at the top of the hierarchy.
Category power is the primary predictor of financial performance. Participating in growth categories harnesses secular growth that once gone is not easily replaced. The rest of us are left with cyclical growth (mature markets) or low to no growth created through consolidation and cost cutting (declining markets).
Moving into growth categories is a core task for managers and executives. Much of how you manage, plan, budget and commit gets in the way of moving from mature categories into newer and foreign growth categories. This gravitational pull is the enemy of finding new growth.
Shepherding growth categories is different from managing mature or declining businesses. It takes extraordinary effort and a different set of rules to enter and succeed in a growth category
View and manage categories like a portfolio. Most portfolios are out of balance, with too much emphasis in slow-growth, mature or declining markets and no credible source of emerging or growth businesses. Balance your portfolio or suffer the consequences.
Leverage category power. This is the number one way to escape the gravitational pull of the past.
The concept of shifting into newer and higher growth categories as legacy businesses sustain or decline is profoundly difficult for most firms and management teams, yet it is a key task. If you’ve lived through a successful business migration from legacy market to new world, you know that it can be a messy, emotionally turbo-charged experience laced with doubt and fear. It’s also a time rich in experimentation and learning, filled with lots of new things: new people, new customers, new offerings, new products and new partners.
Business and organizational change is never simple. I’ve been involved in two successful migrations, and counseled clients who ultimately pulled it off; I’ve also been around colleagues and clients who were unsuccessful. The truth is, no matter what the size or scale of an organizational transformation, there are certain warning signs you need to watch out for. Conversely, there are certain things you can do to improve your odds of success in building something new while managing the existing legacy business. I’ve identified eight warning signs that identify when you’re off-track and eight signs that indicate you’re on the right track.
Eight Signs of Breakaway Failure
- Management by cloistered cockpit control. Senior management assumes responsibility for change efforts (good), but fails to adequately involve anyone not seated on mahogany row (bad). They work unceasingly to think through the change, but lose track of what the people doing the work need in the form of context, support and motivation.
- The legacy is left behind. The painful reality is that what got you here won’t take you forward. But, when the legacy business pays for an investment in the future, it’s critical to lead and manage this part of the organization with care and concern; when you alienate good people to optimize outcomes, the culture shift crashes.
- Only the cool kids get to play. Yes, it takes new people with new skills to facilitate a successful market shift, but it’s a huge mistake not to bring legacy talent along through opportunities, education and immersion.
- Courage wilts under pressure. The worst of all economic outcomes is attempting to build a future that wilts because of pressure part-way through the process. Leading major change is not for the faint of heart or for those short on courage.
- The strategy is unclear. When senior managers don’t properly define the new opportunity within the context of audience, problem/solution, competitor set, ecosystem and other vexing strategy issues, the lack of clarity will create a brutal case of mission drift.
- Royals arrive and dictators emerge. I’ve observed leaders take on an almost royal—or in some cases dictatorial—persona, with all of the attendant hubris, arrogance and carnage. Their followers took the leader’s every utterance as something between a royal decree and law of the land. Every discussion in every meeting focused on what people perceived the leader to want. It was fascinating and horrifying to watch as good people deserted, as messengers of market truths were regularly executed and as the remaining organizational shell was held hostage by one person.
- Flailing and then failing occurs. Much like Jim Collins describes in his book, How the Mighty Fall, at least one step on the road to ruin is the undisciplined pursuit of “more.” This malady is present in all the failed transformations I’ve observed. When senior managers are frustrated over a lack of quick results, they’ll lash out in pursuit of new initiatives. Projects are started and abruptly stopped, and new projects are heaped upon the existing overload of work. Eventually the organization grinds to a halt.
- Trust takes a holiday. A creeping lack of trust between a firm’s senior leaders is almost always fatal, and nothing kills trust faster than a team that doesn’t link arms around a direction and a set of choices. My least-favorite senior leadership team refused to meet as a group because of their not-so-secret contempt for each other.
Eight Signs of Breakaway Success
- Create organizational awareness and understanding of the new effort. I’m invoking John Kotter’s dictate that “in times of change, you cannot over-communicate.” Every time a firm’s senior leaders stop working at this, the cultural storm clouds emerge. Take care of it. Daily.
- Position new and legacy efforts as equally critical but very different undertakings. The existing business pays the bills and funds the future, while the new effort strives to ensure a future. Both are critical. Share the over-arching strategy (or opportunity) far and wide; create an understanding of how the firm will execute on the opportunity and share the results, good and bad. Help your entire organization become invested in the new venture’s success.
- Share the cool new toys. New ventures often introduce new processes or approaches to innovation, development and market testing. Find opportunities to cross-train and cross-pollinate new approaches with legacy teams. I’ve seen this most often in the move away from waterfall development to an agile approach. Teams can benefit from understanding and learning to apply new techniques.
- Recognize and manage the inertia of your legacy business in creating new opportunities to invest. Product managers will naturally identify opportunities to improve existing products and introduce new offerings into legacy markets. Marketing associates will find ways to spend their budgets in pursuit of legacy business. Rarely does the volume of development asks or marketing opportunities shrink of their own accord. Senior leaders must manage the incremental requests with a clear filter and a firm hand. Recognize that creating context for “no” on new requests is critical.
- You get what you measure, so use the right metrics. You can’t measure new ventures with the same metrics you apply to existing businesses. New ventures are about engaging innovators and early adopters, gaining feedback and then, increasing activities, pipelines and, finally, dollars and profits. We expect our existing businesses to quickly translate activities into revenues and profits, but new ventures must grow into those measures.
- Be prepared for the “stuff happens” phase. I don’t care how well you define the project and anticipate risks, something unexpected always happens. The unknown-unknowns bite hard, and it requires leadership to stand firm in the onslaught of finger-pointing and second guessing. The firm’s senior leaders and the new venture’s executive sponsor must fight the knee-jerk reactions and guilty-before-proven-innocent tendencies of others vying for the same resources.
- We think, therefore we are prone to errors and traps. Use outside perspectives to challenge your strategy and assumptions. Promote outside-in discussions using target audience feedback and competitor analysis. Ask others to frame your perceived opportunity in a different way and challenge them to identify alternative approaches. Cultivate the leadership team dynamics needed to ask hard questions about insights, direction and strategies.
- Avoid starving the new venture. One of my favorite managers often intones, “We’ve been doing so much for so long with so little that we can now do absolutely anything with nothing.” He always gets a laugh, but it’s no laughing matter when promising ideas die due to lack of care and feeding. If you’re making a courageous leap to push into a new arena, back it with the people, equipment, tools and organizational support needed to improve your odds of success.
Many organizations never move beyond the core business that made them successful. They become yesterday’s name brands and tomorrow’s answers to trivia questions. A lot of effort is required to add something new in an existing environment. By considering ideas to improve the odds of future success—and avoiding tripping points that could destroy those odds of success—you’ll help your company engage in difficult conversations, and invoke the courageous leadership required to move beyond the gravitational pull of your company’s past.