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When new ideas produce business success

Ordering some books for my American grandson’s Christmas present, I remembered that my bookseller, Amazon, had played a most significant part in both the reality and the folklore of electronic revolution.

The folklore mostly dwelt on Amazon’s trading losses as evidence that the internet was a passing fad which businesses could safely ignore as they went about their affairs in the traditional way. The cynics paid no attention to the reality - like the huge build-up in customer details that Jeff Bezos, Amazon’s founder, was enjoying, or the enviable size of his cash flow. The deniers believed what they wanted to believe, which was that Amazon was going down the tubes.

There are two basic and very grave faults involved here. First is the conservative reluctance to accept that any disruptive change (especially if ‘not invented here’) can possibly be good. Second is failure to think things through. When I wrote ‘Culture Shock - the Office Revolution’ in 1990, the Worldwide Web was still three years away. But it was obvious to anyone who examined the facts that linked personal computers had revolutionary implications for every business then running on paperwork. The benefits on offer vastly exceeded the investment required.

But it’s characteristic of managers en masse to look gift horses in the mouth. Every consultant knows that it’s easier to sell a 10% improvement plan than one offering 100% returns. True, all new ideas pass through teething periods of greater or lesser severity. Out of 150 top electronic system companies listed in 1985, nearly half had left the list 10 years later, and a similar result was probably achieved in 2005. But that’s no excuse for inaction by others. The firms that failed, like those which collapsed in the dot.com bust, were just managed badly.

The old Andersen Consulting, now Accenture, once identified three business processes essential for success: o product development; o customer relationship management; o the supply chain - all areas where managers in general customarily fail to take excellent advice that would greatly improve their performance.

Thus, here’s one tip from the Andersen study: the high performers are more agile and flexible in responding to change, but (and it’s a big but) take much more time before deciding to launch into a new market or a new technology. ‘In fact, decision-making speed in these strategic areas is inversely proportionate to success’. This is no small difference, either. The average high performer in this study needed TWICE as much time as the underdogs to make decisions. The Japanese have the same approach - long deliberation, but high-speed execution once the decision has been made.

In the most rapidly changing industry on earth, many companies, led by Microsoft and Intel, have sustained success because they ‘were willing to re-think traditional approaches to energy, organisation and execution.’ They resisted the conservative impulse to denigrate the new, which they take for what it is - the place of Opportunity. When confronted with an Amazon, in other words, don’t talk the challenger down, but look upwards and onwards to see where it’s heading - and where you should follow, with all deliberate haste.

Robert Heller