As a CEO, people often ask me how I sleep at night knowing that, especially in the IT industry, the competitive landscape can shift almost instantaneously. I tell them the truth: I sleep like a baby. I sleep for two hours and get up and cry for two hours.
One of the biggest challenges CEOs today face is figuring out how to remain relevant and stay innovative. It’s a particularly important issue for CEOs of large companies. Oftentimes, companies get so large that they can’t see their own toes. They are so focused on their set path that they often develop blind spots to the changes in customer needs, market conditions or the competitive landscape.
We can all think of examples where a challenger changed an industry because the leaders didn’t adapt fast enough. Apple changed the paradigm of the smart phone market with the launch of the iPhone. They recognized the growing importance of digital content and delivered applications and services in addition to traditional email and phone access. Amazon.com harnessed the power of the Internet to deliver a wide-range of products well before traditional retailers could evolve their business model.
Companies need to be able to reinvent themselves so that they don’t end up in a conversation that starts with “I wonder whatever happened to…?” Major industry inflection points typically occur every 8-10 years, so it stands to reason that businesses must reinvent themselves every 6-8 years in order to stay ahead of the curve.
A few strategies for big businesses trying to stay nimble and avoid blind spots include:
- Foster innovation – This is the single biggest challenge in large companies. Leaders can often get stuck in the process and structure of profit and losses and can lose sight of innovation. Innovation can occur across all business functions from operations to IT to the supply chain and in the business model itself. So, organizations must foster a companywide culture of innovation.
Companies must find the right balance between improving current products and services, while simultaneously investing for the long term in the disruptive technologies or paradigm-shifting processes that will change the business, create a market, and serve the customers of the future.
It’s a difficult balance to keep, but that does not give any company license to shirk from the challenge.
- Reward risk-taking – Companies need to develop cultures that reward success, while simultaneously avoiding fear of failure. It’s important to realize that innovation and failure are two sides of the same coin, and you never know which side it will land on. CEOs have the responsibility to create an environment where people feel comfortable taking risks and making mistakes. And, when things don’t work out – as they often won’t – give employees the space to learn from their mistakes and try again.
- Don’t be afraid to change – The IT industry is driven by change, but oftentimes we are the most resistant to it. In business, it’s often difficult to evolve a business model that drives consistent revenue for the possibility of something better. Case in point: IBM. Even after being responsible for building the PC model, IBM eventually ran out of steam. They were used to a business model built around low volume and high prices. When the industry shifted to a model of high volume and low costs IBM couldn’t – or wouldn’t – evolve with it. CEOs today must be champions for change within their companies.
Industries transform, competitors come and go, and customer needs evolve. In order to remain relevant and innovative, CEOs must be aware of their blind spots and realize that it’s no longer enough to simply improve current products or make tweaks to their go-to-market strategy.
The same is true for IT leaders. A successful IT organization is the backbone of many organizations today. In fact, for many organizations IT represents a competitive advantage. So, IT leaders need to think about how to evolve their organizations to contribute to the success of the overall business.
Bottom line: if another company can reimagine how people will use a technology or predict how pervasive a technology can become that company could become a real challenger. In order to lead and remain relevant, CEOs must encourage innovation at every level and in every function of their company – every day.