Congratulations Rangers Griest and Haver, You Aren’t Diverse – You’re Good

Congratulations Rangers Griest and Haver, You Aren’t Diverse – You’re Good

How clearly I remember.  I was in the finals of my third grade arithmetic competition.  Two of us at the chalkboard, we both scribbled the numbers read to us as fast as we could, did the sum and whirled to look at the judges.  Only my competitor was a hair quicker than me, so I was not the winner.

As we walked to the car my mother was quite agitated.  “You lost to a GIRL” she said; stringing out that last word like it was some filthy moniker not fit for decent company to here.  Born in 1916, to her it was a disgrace that her only son lost a competition to a female.

But it hit me like a tsunami wall.  I had underestimated my competitor.  And that was stupid of me.  I swore I would never again make the mistake of thinking I was better than someone because of my male gender, white skin color, protestant christian upbringing or USA nationality.  If I wanted to succeed I had to realize that everyone who competes gets to the end by winning, and they can/will beat me if I don’t do my best.

Army Officers and Rangers Griest and HaverThis week 1st Lt. Shaye Haver, 25, and Capt. Kristen Griest, 26, graduated Army Ranger training.  Maybe the toughest military training in the world.  And they were awarded their tabs because they were good – not because they were women.

In retrospect, it is somewhat incredible that it took this long for our country to begin training all people at this level.  If someone is good, why not let them compete?  In what way is it smart to hold back someone from competing based on something as silly as their skin color, gender, religious beliefs or sexual orientation?

Our country, in fact much of mankind, has had a long history of holding people back from competing. Those in power like to stay in power, and will use about any tool they can to maintain the status quo – and keep themselves in charge.  They will use private clubs, secret organizations, high investment rates, difficult admission programs, laws and social mores to “keep each to his own kind” as I heard far too often throughout my youth.

As I went to college I never forgot my 3rd grade experience, and I battled like crazy to be at the top of every class.  It was clear to me there were a lot of people as smart as I was.  If I wanted to move forward, it would be foolish to expect I would rise just because the status quo of the time protected healthy white males.  There were plenty of women, people of color, and folks with different religions who wanted the spot I wanted – and they would win that spot.  Maybe not that day, but soon enough.

In the 1980s I did a project for The Boston Consulting Group in South Africa.  As I moved around that segregated apartheid country it was clear to me that those supporting the status quo did so out of fear.  They weren’t superior to the native South Africans.  But the only way they could maintain their lifestyle was to prohibit these other people from competing.

And that proved to be untenable.  The status quo fell, and when it did many of European extraction quickly fled – unable to compete with those they long kept from competing.

In the last 30 years we’ve coined the term “diversity” for allowing people to compete.  I guess that is a nice, politically favorable way to say we must overcome the status quo tools used to hold people back.  But the drawback is that those in power can use the term to imply someone is allowed to compete, or even possibly wins, only because they were given “special permission” which implies “special terms.”

That is unfortunate, because most of the time the only break these folks got was being allowed to, finally, compete.  Once in the competition they frequently have to deal with lots of attacks – even from their own teammates. Jim Thorpe was a Native American who mesmerized Americans by winning multiple Gold Medals at the 1912 Olympics, and embarrassing the Germans then preaching national/racial superiority as they planned the launch of WW1.  But, once back on American soil it didn’t take long for his own countrymen to strip Mr. Thorpe of his medals, unhappy that he was an “Indian” rather than a white man.  He tragically died a homeless alcoholic.

And never forget all the grief Jackie Robinson bore as the first African-American professional athlete.   Branch Rickey overcame the status quo police by giving Mr. Robinson a chance to play in the all-white professional major league baseball.  But Mr. Robinson endured years of verbal and physical abuse in order to continue competing, well over and beyond anything suffered by any of his white peers. (For a taste of the difficulties catch the HBO docudrama “42.”)

In 2014, 4057 highly trained, fit soldiers entered Ranger training. 1,609 (40%) graduated.  In this latest class 364 soldiers started; 136 graduated (37%.)  Officers Griest and Haver are among the very best, toughest, well trained, well prepared, well armed and smartest soldiers in the entire world.  (If you have any doubts about this I encourage you to watch the HBO docudrama “Lone Survivor” about Army Rangers trapped behind enemy lines in Afghanistan.)

Officers Griest and Haver are like every other Ranger.  They are not “diverse.”  They are good.  Every American soldier who recognizes the strength of character and tenacity it took for them to become Rangers will gladly follow their orders into battle.  They aren’t women Rangers, they are Rangers.

When all Americans learn the importance of this lesson, and begin to see the world this way, we will allow our best to rise to the top.  And our history of finding and creating great leadership will continue.

What Global Warming and the U.S. Government Shutdown Have in Common

Last week we learned that there is no doubt, the world is warming.  A U.N. report affirmed by some 1,000 scientists asserted 95% confidence as to the likely outcomes, as well as the cause.  We must expect more volatility in weather, and that the oceans will continue rising. 

Yet, most people really could have cared less.  And a vocal minority still clings to the notion that because the prior decade saw a slower heating, perhaps this will all just go away.

Incredibly, for those of us who don't live and work in Florida, there was CNN news footage of daily flooding in Miami's streets due to current sea levels which have risen over last 50 years.  Given that we can now predict the oceans will rise between 1 and 6 feet in the next 50 years, it is possible to map the large areas of Miami streets which are certain to be flooded

There is just no escaping the fact that the long-term trend of global warming will have a remarkable impact on everyone.  It will affect transportation, living locations, working locations, electricity generation and distribution, agriculture production, textile production – everything will be affected.  And because it is happening so slowly, we actually can do lots of modeling about what will happen.

Yet, I never hear any business leaders talk about how they are planning for global warning.  No comments about how they are making changes to keep their business successful.  Nor comments about the new opportunities this will create.  Even though the long-term impacts will be substantial, the weather and how it affects us is treated like the status quo.

What does this have in common with the government shutdown

America has known for decades that its healthcare system was dysfunctional; to be polite.  It was incredibly expensive (by all standards) and yet had no better outcomes for citizens than other modern countries.  For over 20 years efforts were attempted to restructure health care.  Yet as the morass of regulations ballooned, there was no effective overhaul that addressed basic problems built into the system.  Costs continued to soar, and more people joined the ranks of those without health care, while other families were bankrupted by illness.

Finally, amidst enormous debate, the Affordable Care Act was passed.  Despite wide ranging opinions from medical doctors, nurses, hospital and clinic administrators, patient advocacy groups, pharmaceutical companies, medical device companies and insurance companies (to name just some of those with a vested interest and loud, competing, viewpoints) Congress passed the Affordable Care Act which the President signed. 

Like most such things in America, almost nobody was happy.  No one got what they wanted.  It was one of those enormous, uniquely American, compromises.  So, like unhappy people do in America, we sued!  And it took a few years before finally the Supreme Court ruled that the legislation was constitutional.   The Affordable Care Act would be law.

But, people remain who simply do not want to accept the need for health care change.  So, in a last ditch effort to preserve the status quo, they are basically trying to kidnap the government budget process and hold it hostage until they get their way.  They have no alternative plan to replace the Affordable Care Act.  They simply want to stop it from moving forward.

What global warming and the government shut down have in common are:

  • Very long-term problems
  • No quick solution for the problem
  • No easy solution for the problem
  • If you do nothing about the problem today, you have no immediate calamity
  • Doing anything about the problem affects almost everyone
  • Doing anything causes serious change

So, in both cases, people have emerged as the Status Quo Police.  They take on the role of stopping change.  They will do pretty much anything to defend & extend the status quo:

  • Ignore data that is contradictory to the best analytical views
  • Claim that small probability outcomes (that change may not be necessary) justifies doing nothing
  • Delay, delay, delay taking any action until a disaster requires action
  • Constantly claim that the cost of change is not justified
  • Claim that the short-term impact of change is more deleterious than the long-term benefits
  • Assume that the status quo will somehow resolve itself favorably – with no supporting evidence or analysis
  • Undertake any action that preserves the status quo
  • Threaten a "scorched earth policy" (that they will create big, immediate problems if forced to change the status quo)

The earth is going to become warmer.  The oceans will rise, and other changes will happen.  If you don't incorporate this in your plans, and take action, you can expect this trend will harm you. 

U.S. health care is going to be reformed.  How it will happen is just starting.  How it will evolve is still unclear.  Those who create various scenarios in their plans to prepare for this change will benefit.  Those who do nothing, hoping it goes away, will find themselves struggling.

The Status Quo Police, trying their best to encourage people to ignore the need for change – the major, important trends – are helping nobody.  By trying to preserve the status quo they inhibit effective planning, and action, to prepare for a different (better) future.

Does your organization have Status Quo Police?  Are their functions, groups or individuals who are driven to defend and extend the status quo – even in the face of trends that demonstrate change is necessary? Can they stop conversations around substantial change?   Are they allowed to stop future planning for scenarios that are very different from the past?  Can they enforce cultural norms that stop considering new alternatives?  Can they control resources resulting in less innovation and change? 

Let's learn from these 2 big issues.  Change is inevitable.  It is even necessary.  Trying to preserve the status quo is costly, and inhibits taking long-term effective action.  Status Quo Police are obstructionists who keep us from facing, and solving, difficult problems.  They don't help our organizations create a new, more successful future.  Only by overcoming them can we reach our full potential, and create opportunities out of change.

 

Status Quo Police – Innovation Killers


Nobody admits to being the innovation killer in a company.  But we know they exist.  Some these folks “dinosaurs that won’t change.”  Others blame “the nay-saying ‘Dr. No’ middle managers.”  But when you meet these people, they won’t admit to being innovation killers.  They believe, deep in their hearts as well as in their everyday actions, that they are doing the right thing for the business.  And that’s because they’ve been chosen, and reinforced, to be the Status Quo Police.

When a company starts it has no norms.  But as it succeeds, in order to grow quickly it develops a series of “key success factors” that help it continue growing.  In order to grow faster, managers – often in functional roles – are assigned the task of making sure the key success factors are unwaveringly supported.  Consistency becomes more important than creativity.  And these managers are reinforced, supported, even bonused for their ability to make sure they maintain the status quo.  Even if the market has shifted, they don’t shift.  They reinforce doing things according to the rules.  Just consider:

Quality – Who can argue with the need to have quality?  Total Quality Management (TQM,) Continuous Improvement (CI,) and Six Sigma programs all have been glorified by companies hoping to improve product or service quality.  If you’re trying to fix a broken product, or process, these work pretty well at helping everyone do their job better.

But these programs live with the mantra “if you can’t measure it, you can’t improve it.  Measure everything that’s important.”  If you’re innovating, what do you measure?  If you’re in a new technology, or manufacturing process, how do you know what you really need to do right?  If you’re in a new market, how do you know the key metric for sales success?  Is it number of customers called, time with customers, number of customer surveys, recommendation scores, lost sales reports?  When you’re trying to do something new, a lot of what you do is respond quickly to instant feedback – whether it’s good feedback or bad.

The key to success isn’t to have critical metrics and measure performance on a graph, but rather to learn from everything you do – and usually to change.  Quality people hate this, and can only stand in the way of trying anything new because you don’t know what to measure, or what constitutes a “good” measure.  Don’t ever forget that Motorola pretty much invented Six Sigma, and what happened to them in the mobile phone business they pioneered?

Finance.  All businesses exist to make money, so who can argue with “show me the numbers.  Give me a business plan that shows me how you’re going to make money.”  When your’e making an incremental investment to an existing asset or process, this is pretty good advice. 

But when you’re innovating, what you don’t know far exceeds what you know.  You don’t know how to meet unment needs.  You don’t know the market size, the price that people will pay, the first year’s volume (much less year 5,) the direct cost at various volumes, the indirect cost, the cost of marketing to obtain customer attention, the number of sales calls it will take to land a sale, how many solution revisions will be necessary to finally put out the “right” solution, or how sales will ramp up quarterly from nothing.  So to create a business plan, you have to guess. 

And, oh boy, then it gets ugly.  “Where did this number come from?  That one?  How did you determine that?”  It’s not long until the poor business plan writer is ridden out of the meeting on a rail.  He has no money to investigate the market, so he can’t obtain any “real” numbers, so the business plan process leads to ongoing investment in the old business, while innovation simply stalls.

Under Akia Morita Sony was a great innovator. But then an MBA skilled in finance took over the top spot.  What once was the #1 electronics innovator in the globe has become, well, let’s say they aren’t Apple.

Legal – No company wants to be sued, or take on unnecessary risk.  And when you’re selling something, lawyers are pretty good at evaluating the risk in that business, and lowering the risk.  While making sure that all the compliance issues are met in order to keep regulators – and other lawyers – out of the business.

But when you’re starting something new, everything looks risky.  Customers can sue you for any reason.  Suppliers can sue you for not taking product, or using it incorrectly.  The technology could fail, or have negative use repercussions.  Reguators can question your safety standards, or claims to customers. 

From a legal point of view, you’re best to never do anything new.  The less new things you do, the less likely you are to make a mistake.  So legal’s great at putting up roadblocks to make sure they protect the company from lawsuits, by making sure nothing really new happens.  The old General Motors had plenty of lawyers making sure their cars were never too risky – or interesting.

R&D or Product Development – Who doesn’t think it’s good to be a leader in a specific technology?  Technology advances have proven invaluable for companies in industries from computers to pharmaceuticals to tractors and even services like on-line banking.  Thus R&D and Product Development wants to make sure investments advance the state of the technology upon which the company was built.

But all technologies become obsolete.  Or, at least unprofitable.  Innovators are frequently on the front end of adopting new technologies.  But if they have to obtain buy-in from product development to obtain staffing or money they’ll be at the end of a never-ending line of projects to sustain the existing development trend.  You don’t have to look much further than Microsoft to find a company that is great at pouring money into the PC platform (some $9B, 16% of revenue in 2009,) while the market moves faster each year to mobile devices and entertainment (Apple spent 1/8th the Microsoft budget in 2009.)

Sales, Marketing & Distribution – When you want to protect sales to existing customers, or maybe increase them by 5%, then doing more of what you’ve always done is smart.  So money is spent to put more salespeople on key accounts, add more money to the advertising budget for the most successful (or most profitable) existing products.  There are more rules about using the brand than lighters at a smoker’s convention.  And it’s heresy to recommend endangering the distribution channel that has so successfully helped increase sales.

But innovators regularly need to behave differently.  They need to sell to different people – Xerox sold to secretaries while printing press manufacturers sold to printers.  The “brand” may well represent a bygone era, and be of no value to someone launching a new product; are you eager to buy a Zenith electronic device?  Sprucing up the brand, or even launching something new, may well be a requirement for a new solution to be taken seriously.

And often, to be successful, a new solution needs to cut through the old, high-cost distribution system directly to customers if it is to succeed.  Pre-Gerstner IBM kept adding key account sales people in hopes of keeping IT departments from switching out of mainframes to PCs.  Sears avoided the shift to on-line sales successfully – and revenue keeps dropping in the stores.

Information Technology – To make more money you automate more functions.  Computers are wonderful for reducing manpower in many tasks.  So IT implements and supports “standard solutions” that are cost effective for the historical business.  Likewise, they set up all kinds of user rules – like don’t go to Facebook or web sites from work – to keep people focused on productivity.  And to make sure historical data is secure and regulations are met.

But innovators don’t have a solution mapped out, and all that automated functionality is an enormously expensive headache.  When being creative, more time is spent looking for something new than trying to work faster, or harder, so access to more external information is required.  Since the solution isn’t developed, there’s precious little to worry about keeping secure.  Innovators need to use new tools, and have flexibility to discover advantageous ways to use them, that are far beyond the bounds of IT’s comfort zone.

Newspapers are loaded with automated systems to collect and edit news, to enter display ads, and to “Make up” the printed page fast and cheap.  They have automated systems for classified advertising sales and billing, and for display ad billing.  And systems to manage subscribers.  That technology isn’t very helpful now, however, as newspapers go bankrupt.  Now the most critical IT skills are pumping news to the internet in real-time, and managing on-line ads distributed to web users that don’t have subscriptions. 

Human Resources – Growth pushes companies toward tighter job descriptions with clear standards for “the kinds of people that succeed around here.”  When you want to hire people to be productive at an existing job, HR has the procedures to define the role, find the people and hire them at the most efficient cost.  And they can develop a systematic compensation plan that treats everyone “fairly” based upon perceived value to the historical business.

But innovators don’t know what kinds of people will be most successful. Often they need folks who think laterally, across lots fo tasks, rather than deeply about something narrow.  Often they need people who are from different backgrounds, that are closer to the emerging market than the historical business.  And pay has to be related to what these folks can get in the market, not what seems fair through the lens of the historical business.  HR is rarely keen to staff up a new business opportunity with a lot of misfits who don’t appreciate their compensation plan – or the rules so carefully created to circumscribe behavior around the old business.

B.Dalton was America’s largest retail book seller when Amazon.com was founded by Jeff Bezos.  Jeff knew nothing about books, but he knew the internet.  B.Dalton knew about books, and claimed it knew what book buyers wanted.  Two years later B.Dalton went bankrupt, and all those book experts became unemployed. Amazon.com now sells a lot more than books, as it ongoingly and rapidly expands its employee skill sets to enter new markets – like publishing and eReaders.

Innovation requires that leaders ATTACK the Status Quo Police.  Everything done to efficiently run the old business is irrelevant when it comes to innovation.  Functional folks need to be told they can’t force the innovatoirs to conform to old rules, because that’s exactly why the company needs innovation!  Only by attacking the old rules, and being willing to allow both diversity and disruption can the business innovate.

Instead of saying “this isn’t how we do things around here” it is critical leaders make sure functional folks are saying “how can I help you innovate?”  What was done in the name of “good business” looks backward – not forward.  Status Quo cops have to be removed from the scene – kept from stopping innovation dead in its tracks.  And if the internal folks can’t be supportive, that means keeping them out of the innovator’s way entirely.

Any company can innovate.  Doing so requires recognizing that the Status Quo Police are doing what they were hired to do.  Until you take away their clout, attack their role and stop them from forcing conformance to old dictums, the business can’t hope to innovate.

 

Leading Google – Larry Page Needs More White Space


Summary:

  • Google is locking-in on what it made successful
  • But as technologies, and markets, change Google could be at risk of not keeping up
  • Internal processes are limiting Google’s ability to adapt quickly
  • Google needs to be better at creating and launching new projects that can expand its technology and market footprint in order to maintain long-term growth

Google has been a wild success.  From nowhere Google has emerged as one of the biggest business winners at leveraging the internet.  With that great success comes risk, and opportunity, as Larry Page resumes the CEO position this year. 

Investors hope Google keeps finding new opportunities to grow, somewhat like Apple has done by moving into new markets with new solutions.  Where Apple has built strong revenue streams from its device and app sales in multiple markets, Google hasn’t yet demonstrated that success. Despite the spectacular ramp-up in Android smartphone sales, Google hasn’t yet successfully monetized that platform – or any other.  Something like 90% of revenues and profits still come from search and its related ad sales. 

Investors have reason to fear Google might be a “one-trick pony,” similar to Dell.  Dell was wildly successful as the “supply chain management king” during the spectacular growth of PC sales.  But as PC sales growth slowed competitors matched much of Dell’s capability, and Dell stumbled trying to lower cost with such decisions as offshoring customer service.  Dell’s revenue and profit growth slowed.  Now Dell’s future growth prospects are unclear, and its value has waned, as the market has shifted toward products not offered by Dell. 

Will Google be the “search king” that didn’t move on?

When companies are successful they tend to lock-in on what made them successful.  To keep growing they have to overcome those lock-ins to do new things.  The risk is that Google can’t overcome it’s lock-ins; that internal status quo police enforce them to the point of keeping new things from flourishing into new growth markets.  That the company becomes stale as it avoids investing effectively in new technologies or solutions.

At Slacy.com (“What Larry Page Really Needs to Do to Return Google to its Start-up Roots“) we read from a former Google employee that there are some serious lock-ins to worry about within Google: 

  1. The launch coordination process sets up a status quo protection team that keeps things from moving forward.  When an internal expert gains this kind of power, they maintain their power by saying “no.”  The more they say no, the more power they wield.  Larry Page needs to be sure the launch team is saying “here’s how we can help you launch fast and easy” rather than “you can’t launch unless…”
  2. Hiring is managed by a group of internal recruiters.  When the people who actually manage the work don’t do recruiting, and hiring, then the recruits become filtered by staffers who have biases about what makes for a good worker.  Everything from resume screening to background reviews to appearances become filters for who gets interviewed by engineers and managers.  In the worst case staffers develop a “Google model employee” profile they expect all hires to fit.  This process systematically narrows the candidates, leading to homogeneity in hiring, a reduction in new approaches and new ways of thinking, and a less valuable, dynamic employee population.
  3. Increasingly engineers are forced to use a limited set of Google tools for development.  External, open source, tools are increasingly considered inferior – and access to resources are limited unless engineers utilize the narrow tool set which initially made Google successful. The natural outcome is “not invented here” syndrome, where externally created products and ideas are overlooked – ignored – for all the wrong reasons.  When you’re the best it’s easy to develop “NIH,” but it’s also really risky in fast moving markets like technology where someone really can have a better idea, and implement, from outside the halls of the early leader. 

These risks are very real.  Yet, in a company of Google’s size to some extent it is necessary to manage launches systematically, and to have staffers doing things like recruiting and screening.  Additionally, when you’ve developed a set of tools that create success on an enormous scale it makes sense to use them.  So the important thing for Mr. Page to do is manage these items in such a way that lock-in doesn’t keep Google from moving forward into the next new, and possibly big, market.

Google needs to be sure it is not over-managing the creation of new things.  The famous “20% rule” at Google isn’t effective as applied today.  Nobody can spend 80% of their job conforming to norms, and then expect to spend 20% “outside the box.”  Our minds don’t work that way.  Inertia takes over when we’re at 80%, and keeps us focused on doing our #1 job.  And we never find the time to really get started on the other 20%.  And it’s unrealistic to try dedicating an entire day a week to doing something different, because the “regular job” is demanding every single day.  Likewise, nobody can dedicate a week out of the month for the same reason.  As a result, even when people are encouraged to spend time on new and different things it really doesn’t happen.

Instead, Google needs a really good method for having ideas surface, and then creating dedicated teams to explore those ideas in an unbounded way.  Teams that have as their only job the requirement for exploring market needs, product opportunities, and developing solutions that generate profitable new revenue.  Five people totally dedicated to a new opportunity, especially if their success is important to their career ambitions, will make vastly more headway than 25 people working on a project when they can “find the time.”  The bigger team may have more capabilities and more specialties, but they simply don’t have the zeal, motivation or commitment to creating a success.  Failing on something that’s tertiary to your job is a lot more acceptable, especially if your primary work is going well, than failing on something to which your wholly dedicated.  Plus, when you are asked to support a project part-time you do so by reinforcing past strengths, not exploring something new.

Especially worrisome is Inc magazine’s article “Facebook Poaches Inc’s Creative Director.”  This is the fellow that created, and managed, the new opportunity labs at Google.  What will happen to those now?

These teams also must have permission to explore the solution using any and all technology, approaches and processes.  Not just the ones that made Google successful thus far.  By utilizing new technologies, which may appear less robust, less scalable and even initially less powerful, Google will have people who are testing the limits of what’s new – and identifying the technologies, products and processes that not only threaten existing Google strengths but can launch Google into the next new, big thing.  Supporting their needs to explore new solutions is critical to evolving Google and aiding its growth in very dynamic technologies and markets.

The major airlines all launched discount divisions to compete with Southwest.  Remember Song and Ted?  But these failed largely because they weren’t given permission to do whatever was necessary to win as a discount airline.  Instead they had to use existing company resources and processes – including in-place reservation systems, labor union standards, existing airports and gates – and honor existing customer loyalty programs.  With so many parameters pre-set, they had no hope of succeeding.  They lacked permission to do what was necessary because the airlines bounded what they could do.  Lock-in to what already existed killed them.

The concern is that Google today doesn’t appear to have a strong process for creating these teams that can operate in white space to develop new solutions.  Google lacks a way to get the ideas on the agenda for management discussion, rapidly create a team dedicated to the tasks, resource the teams with money and other necessary tools, and then monitor performance while simultaneously encouraging behaviors that are outside the Google norms.  Nobody appears to have the job of making sure good ideas stay inside Google, and are developed, rather than slipping outside for another company to exploit (can you say Facebook – for example?)

I’m a fan of Google, and a fan of the management approaches Larry Page and Google have openly discussed, and appear to have implemented.  Yet, success has a way of breeding the seeds of eventual failure.  Largely through the process of building strong sacred cows – such as in technology and processes for all kinds of activities that end up limiting the organization’s ability to recognize market shifts and implement changes.  Success has a way of creating staff functions that see themselves as status quo cops, dedicated to re-implementing the past rather than scouting for future requirements.  The list of technology giants that fell to market shifts are legendary – Cray, DEC, Wang, Lanier, Sybase, Netscape, Silicon Graphics and Sun Microsystems are just a few. 

It’s good to be the market leader.  But Larry Page has a tough job.  He has to manage the things that made Google the great company it is now – the things that middle management often locks in place and won’t alter – so they don’t limit Google’s future.  And he needs to make sure Google is constantly, consistently and rapidly implementing and managing teams to explore white space in order to find the next growth opportunities that keep Google vibrant for customers, employees, suppliers and investors.

View a short video on Lock-in and why businesses must evolve http://on.fb.me/i2dekj

Market to Trends, not Old Ideas – Kentucky Fried Chicken (KFC)


Summary:

  • Success Formulas age, losing their value
  • To regain growth, you have to identify with market trends – not reinforce old Lock-ins
  • KFC is losing sales due to a market shift, but its response is not linked to market trends
  • KFC’s plan to invest heavily in its old icon is Defend & Extend management
  • Market to what it takes to regain new customers, and lost customers, not what your current customers (core customers) value
  • The Status Quo Police have driven a very bad decision at KFC – more poor results will follow
  • You have to market toward future needs, not what worked years ago.

Who’s Colonel Sanders?  According to USAToday, in “KFC Tries to Revive Founder Colonel Sanders Prestige” 60% of American’s age 18 to 25 don’t know. For us older Americans, this may seem amazing, because we were raised on advertising that promoted the legend of a cooking Kentucky Colonel who “did chicken right” creating the recipe for what became today’s enormous Kentucky Fried Chicken (KFC) franchise.  But it’s been a very, very long time since “the Colonel” left KFC in the 1980s, declaring that the chain, then owned by Heublein, didn’t make chicken so “finger lickin’ good” any longer.  Were he alive today, the famed Colonel – who became a caricature of himself before death, would be an astounding 120 years old!  Now most people don’t have a clue who’s picture that is in the red logo – if they notice there’s even a picture of someone there.

KFC is the largest chicken franchise, with 15,000 stores.  But size has not been any help as the chain has lost its growth.  Last quarter’s same-store sales fell 7%.  A clear sign a deadly growth stall has started that bodes badly for the future!  People have stopped going to KFC outletd.  So management needs to do something to bring new customers into the stores – in American and globally.  In a remarkable display of defending the Status Quo, leadership’s recommended solution for this problem is to put a heavy marketing blitz  into “educating” consumers about the Colonel, and the oompany’s history!

Are we to believe that knowing about some long dead company founder will drive customers’ decisions where to eat lunch or dinner next week? Or next year?

I don’t know why people are eating less KFC, but it’s a sure bet it’s NOT because the Colonel has faded from the limelight.  Times have changed dramatically.  Everything from the acceptance of fried food, to concerns about chicken raising, to menu variety, to store appearance, and alternative competitive opportunities have had an impact on sales at KFC.  What KFC needs is to understand these market trends, recognize where consumers are headed with their prepared food purchases, and position the company to deliver what consumers WANT this year and in the future.  If KFC finds the trend – even if it’s not chicken – it can regain its growth.  KFC needs to give the market what it wants – and is that a heavy education about a dead icon?

KFC is trying to turn back the clock.  It is looking internally, historically, and hoping that by promoting the Colonel it can regain the glorious growth of previous decades.  KFC leadership is remaining firmly committed to its old and clearly tiring Success Formula (the one that is producing declining sales and profits.)  So it is holding fast to its menu, its preparation methods, its store appearance, its “brand” image and now even its iconic founder that is irrelevant to this current generation and any international consumer!

Does anyone really think reviving the Colonel – a white haired senior
citizen in his heyday -will create double digit growth?  Or bring in
those young people between ages 18 and 25?  There’s not one shred of
market input which says this is the way to grow KFC.  Only a belief that
somehow future success will come from an attempt to replay what worked
when the Success Formula was created over 40 years ago.

In a telling quote from the article “KFC’s trying to paint a new picture — actually asking its core consumers to paint it for them.” The marketers are actually hoping a contest to re-sketch the lost icon will drive people to “reconnect” with the franchise.  What’s worse, clearly they are hoping to appeal to the “core” customers – current customers – rather than find out why lost customers left, and what new customers might want to encourage a switch to KFC.  They are “focusing on their core” rather than figuring out what the market wants.

Add on top of this that management has admitted it expectsmost (possibly all) future growth to come from international expansion, and you really have to question how focusing marketing on the Colonel makes any sense.  Why would people in Europe, South America, India, China or elsewhere have any connection to a character more attuned to America’s civil war than today’s global economy and international high-energy brand images?

This is the kind of decision that is driven by a strong Status Quo Police.  Of all the options, from changing the menu and name, to developing a new icon, to creating a new image for the alphabet soup that is KFC (most young people don’t even relate KFC to the original name – and international customers have no connection at all) – all the things that could be based on market trends – leadership went down the road of doing more of the same.

It’s a sure bet we’ll be reading about further declines in KFC over the next year.  There will be a big store closing program.  Then a quality program to improve customer service and cleanliness.  Layoffs will happen. Some kind of lean program to tighten up the supply chain and cut costs.  Revenues will probably decline another 15-25%.  Exactly what McDonald’s did about 6 years ago when it sold Chipotle’s to “refocus on its core.”  Management will talk about how its “core” customers relate well to the Colonel, and they are sure if given time the marketing will return KFC to its old glory. 

And the only people who will enjoy this are the Status Quo Police.  For the rest of us, it’s watching another great company fall victim to its past, rather than migrate toward a better, high growth future.

Read my Forbes.com column “Fire the Status Quo Police” for more insight to how consumer branded companies hurt long-term viability by maintaining brand status quo rather than migrating with market trends.