Consider the photographic industry in recent times. It is well known that this industry has been thrown into turmoil by the digital electronics revolution. Recently I worked on the issue with the Photo Marketing Association of Australia and Konica Minolta. Midway through a project for helping their retailers – mostly baby boomer 'mum and da?' operations – to promote and market digital products, Konica Minolta completely withdrew from the digital camera market globally, doing so literally overnight. One day we were working on a strategy of short-term actions to get better penetration in the market using their retail distribution network; the next day, nothing. Never mind, Sony stepped in to continue the work.
The problem was that Konica Minolta left their foray into the digital camera market too late, not releasing their first attempt, the Minolta D Image EX-1500, until 1998. They were aware of the technology, and even aware of competitors like Sony making gains in this market, but they waited as they tried to gauge the market better, searching for better information on consumers' responses to digital technology before they acted. When they finally realised that not only was digital technology here to stay, but it was already the dominant medium in consumer photography, it was too late. They had missed the early adopter's advantage. Instead of acting, they wasted time planning a response they never made to the biggest market opportunity to hit their industry in decades.
What decision have you been putting off? Make a decision now! Trust your instincts, and go with it.
Kodak and Sony were both pioneers of digital technology, dating as far back the mid 1970s, but it was not until the mid 1990s that digital cameras met the market requirements of fast, good and cheap at the price.
Kodak started the digital trend with the DCS-100 way back in 1991, but they were almost crippled by the 'disruptiv?' technology they introduced. Perhaps this is because film was their primary product, and the adoption of digital happened so fast that they were not ready for the change.
They seem to be back on track, and now have the number one US market share in digital cameras and photo printers. They are still struggling to achieve their old levels of profitability, but at least they're on trend. The analogue camera share of the market is fast falling to about 10 per cent, and likely lower.
Sony got in fast enough, but only just, with their CyberShot in 1996. As stated above they had been playing in this space for two decades, and still they almost missed the boat. They almost looked so long and hard that the opportunity passed them by. They had the same incomplete information and the same technological resources as Konica Minolta, and they faced the same ambiguity. Fortunately for employees and shareholders, Sony chose to act first and refine their planning second. Before writing Konica Minolta off, they are focusing on selling printing paper to be used for printing digital photographs, which to date is a very popular activity.
When digital cameras first came on the market, no one anticipated how quickly consumers would embrace them. But the nature of modern consumers is that they act fast. Either you move fast as well, or you lose.
After I spoke about the digital camera revolution and its implications at a conference on behalf of my client Sony, a small business owner I'll call Jack (not his real name) approached me for some advice. Three years before he had owned half a dozen photo developing shops free and clear, with net positive cash flow of $250,000 each. On that basis he was making a lot of speculative investments and planning to retire in eight years.
When he came to me, Jack was down to one shop, which was barely breaking even.He no longer owned the freehold on the shop, but had been forced to sell it to service the debt on his speculative investments, which crashed when the technology stock bubble burst. To top it all off, his wife had left him.
As this example should make clear, when I talk about the need to stop planning and start acting, I'm not talking about acting blindly. Jack wanted to believe that his plan was foolproof and he resisted looking at the accumulating evidence that it was not. While he was carrying on with his wishful thinking, his smart competitors were beginning to offer digital photography lessons, digital photo frames, online photo album and scrapbook design and other value-added services, using market feedback to find out what customers wanted most. Also, making speculative investments is not really the same as strategy on the go.
After brainstorming with me, Jack has now begun to offer similar services. In effect he is transforming himself from a commoditised printer to a provider of customer experiences. He no longer sees his business as a simple and easily replicated transaction (printing photos for a fee) that the consumer could get down the road. He sees himself as a partner and mentor for his customers as they capture the memories of their lives. Through lessons and coaching, he is helping customers to adapt their own photography habits to the new digital world. His remaining shop is back on track and he has a chance to return to the profitability he once enjoyed. If he'd had the guts to listen to the market and act on what it was telling him, instead of remaining loyal to an obsolete plan, he wouldn't have so much lost ground to make up. At any rate, I'm glad I could help him with his business. As for the breakup of his marriage, I'm no help there.
Let's step back and look at the larger market point again. When digital cameras arrived, most of the businesses that lived on selling traditional film and traditional film printing feared the end of printing photos and went into a state of denial. A few snapped out of denial and accepted reality fairly quickly, but most did not. Deep down Jack knew he was in denial, but he couldn't face up to his wishful thinking. He was hoping traditional film would hold on long enough for him to complete his detailed plan to retire in luxury in eight years.
In fact digital photography did not mean the end of printing photos at all. It meant that consumers no longer had to print their photos to look at them, but it also meant that consumers could easily take and store lots more photos than ever before. The percentage of captured images that were printed might go down, but over the long term the total number of images printed would keep going up. One important reason for this is that most consumer photo printing is done by women, who are not content with storing pictures on a personal computer or the web and who like to share prints with friends and family. The companies that acted in step with the market positioned themselves to profit from this, whether or not they saw the underlying dynamic clearly. The companies that bided their time to plan a response lost their place at the table.
Again I say: move! Do something. Whatever fear you are feeling, trust me, everyone else is freaking out about the same things. The ones who will come out on top will be those who act in spite of the fear. It will be those willing to expose themselves to the market (job or consumer market), be aware of the result, and adapt their behaviour accordingly (think strategy on the go). I am constantly surprised how few organisations want to do this.
I can think of many examples of people or businesses failing to embrace change early enough. Here is one on a much smaller scale. When MySpace was starting to get off the ground, well before Rupert Murdoch bought it, I suggested to one of my friends, a member of a band, that he use the site to connect with a broadening fan base. I was talking about how traditional labels are not the only ways to gain distribution and recognition now that the internet has opened the world up.
I also suggested he give some of his music away for free on a file-sharing site ('To Get Control, Give It Up'). He did not respond to the idea very favourably: 'I am a hardworking musician. We are always getting screwed blah blah blah.' His response was common, although surprising from someone who is far from the suit-and-tie corporate types I work with daily.
'How do you know it will work?' he asked.
'I don't,' I replied, 'but you should have a crack anyway.'
He didn't.Here is a guy mad enough to start a band,without any clue as to whether or not people will like their music, and then he won't try a very simple and free way to promote his band. Since that time many bands have been launched and are gaining real moment
um through their use of MySpace.
AVOIDING REGRET
The saddest words in the English language are 'if only'. I recently spoke at a conference in Queenstown, New Zealand.
If you haven't heard of it yet, Queenstown is an alpine lake community every bit as beautiful as Lake Lucerne in Switzerland, Lake Como in Italy and Lake Tahoe in California and Nevada. The afternoon before my presentation I went paragliding and jet boating. By the time I was heading to the airport for my flight home, I was completely sold on the place based only on my own enjoyment of it. But I had also heard talk at the conference about the increasing development the area was going to see, thanks to the airport having been expanded to accommodate more international flights.
My driver to the airport seemed to be reading my mind, because he began talking about how he had seen Queenstown change over the years. I told him that I was interested in investing in some property, because the popularity of the area was clearly going to keep rising.
The blood ran out of the driver's face as he turned to me and said, 'Oh, mate, it's too expensive around here nowadays. You won't get anything for less than $700,000. Not that long ago I could have bought a few blocks of land for less than $60,000, and I told the wife they were too expensive then.'
I did not want to rub salt in the wound, but I was curious to know more. 'How many opportunities like that did you walk away from before the prices went sky high?' I asked.
'At least half a dozen,' the driver answered.
'How much has that cost you in capital gains?'
'At least a few million dollars. If only I had the courage then.'
To support himself at a basic level as he ages, this man will likely be driving a limo well beyond when he might have retired in style or maybe stayed in business and become a property tycoon.He saw the opportunity, he had the resources to take advantage of it, but fear paralysed him.
Ask yourself now: what opportunities are open to me, my career, my life, my business that are potential 'if only?' tomorrow? What path of action do you think is worth taking a bet on now? Take it!
You don't want to go through life continuing to pile up 'if onlys'. You want to say 'if only' less and less, as you become smarter, more confident and more successful. And the only way to do that is by getting comfortable with risk.
This takes on a new and even more potent twist when you delve into the psychology of the way humans process and experience regret. Many people will not act on the grounds that they fear they will regret their action. Most people also operate under the assumption that they will regret foolish actions taken more than smart actions not taken. This is, interestingly, false.
Echoing commonsense wisdom, psychologist Daniel Gilbert, in Stumbling on Happiness, says, 'In the long run, people of every age and in every walk of life seem to regret not having done things more than regret things they did.' This is borne out by a number of academic studies over time – and if you're interested, the most common regrets include 'not going to college, not grasping profitable business opportunities and not spending enough time with family and friends'.2
Despite this, the four driving forces of change seem to have made a lot of companies and CEOs risk averse. It is not surprising really. With the average tenure of a CEO these days barely five years, so many just try to get through it unscathed. The average tenure of a chief marketing officer is far less, and it is not surprising that this is the area most in need of some innovation. Paralysed by fear of failure, risk-averse organisations and leaders try to plan their way to a secure future. The result is that they plan and procrastinate their way straight into the arms of the failure they want to avoid. Think of the major American motor companies for example. They failed to move towards small cars over the last several decades, and hybrid engines in the last decade or so, and watched both Japanese and European car makers steal their market share.
Today's most successful organisations and people are risk happy. They embrace the messy ambiguity and confusion in the marketplace and the fact that you can't hide your mistakes, and they turn these forces into allies by continually taking chances and trying new things.
This earns them credit with customers, because in oversupplied markets people want their brands to show leadership and courage. They love Nike for phasing out and updating an Air Max style before it's reached the height of its potential sales curve. They become even more loyal to Toyota's Scion when the company limits production in the face of increasing demand so that its hip young brand keeps its edge for the long term and doesn't get oversold in the short term. Meanwhile the business-as-usual brands like Dunlop and Ford can't even get customers' attention.
Risk-happy companies also attract the best staff. It used to be the case that companies that offered stable, long-term employment were more attractive. But these days, the average tenure of people aged twenty to twenty-seven at a single job is less than two years. Companies are finding that the best and the brightest young people are generally not interested in long-term stability and want to leave after a year because they're bored.
GE CEO Jeffrey Immelt worries that his company is not attracting enough young hunter-gatherers, because gas turbines are not as cool as iPods and search engines. 'If we can attract the best 22 year olds,' he has said, 'then we can double, even triple in size. If not then we are already too big.' Not content with that, Immelt has challenged GE to achieve 8 per cent organic growth, exactly the kind of action-oriented move that will keep GE an exciting place to work. It is not the action of a CEO who is afraid to fail, and GE's continued success is testament to the effectiveness of this approach.
Is your organisation working on projects so exciting that the best and brightest in your industry are banging the door down to come and work for you? If not, why not? What could you get off the ground in the next thirty days that will excite not just the people who work for you but the talent that works for your competitors too?
Do you think the people who are scrambling to work for Google (they get 7000 unsolicited applications each day) want to settle into a predictable routine governed by a detailed, long-term plan? These are some of the brightest and most talented people in the world and they are dying to work for Google precisely because it is impossible to predict what the company will look like in five years' time. Sure, Google has vision, just as eBay did in buying Skype, but it acts on its vision in short-term instalments, rolling out new concepts and products fast, abandoning what doesn't work and moving on to something else in a heart beat. At a recent conference in Los Angeles I got to spend some time with Laszlo Bock, the head of HR at Google. He was asked on a panel about workforce planning what he thought the Google workforce would look like in five years. He almost laughed as the question was being asked, and explained that their business changes so fast, as it adapts to the market, that they only really thought in detail about two years out from a workforce planning point of view.
A risk-taking, action orientation isn't just a good business decision from an innovation and market penetration point of view, it is also highly desirable from a staffing perspective. Ambiguity and confusion may scare you as a business leader, but bright and talented employees – the ones you really want and need – love the high-paced, high-energy environment that an action-oriented company creates.
Risk-averse companies and people misunderstand one of the basic facts of life: the surest route to catastrophic failure is not to take any risks. Ice hockey great Wayne Gretzky famously said, 'I miss all of the shots I don't take.' If you want to succeed at anything, you've got to take a lot of shots. You've got to throw plenty of mud against the wall and see what sticks and what doesn't. You've got to develop your risk tolerance by taking lots of small- to medium-sized risks. In so doing, you develop your recovery ability and you shrink risk. You also shrink your fear of failure and learn to make big risks manageable.
This is a key element of confusion management, the number one skill of a good leader in the flipped world. I am about to explain how to mana
ge confusion, but first I must make a very important point.
It is vital that we do not confuse action precedes clarity with speed to market. Speed to market can be very important, but putting something on the market and giving it to consumers before it is ready can have disastrous consequences – it can sometimes be enough to kill a company. This is not what I am trying to say. What this chapter is about is making sure you can have speed to market without compromising what you put out there, because you did not waste precious time over-planning, over-analysing and basically getting lost in the confusion that seems to surround so much of what we do.
For example, Atari was first in video games, but it was Nintendo, a fast follower, that survived to do battle with Sony's PlayStation and Microsoft's Xbox. Likewise Apple, a frequent flipstar example in these pages, brought the Newton PDA to market before it was ready and saw the Palm Pilot become the first truly successful PDA.
CONFUSION MANAGEMENT
There is going to be more confusion in the business world in the next 10 years than in any decade, maybe in history.
Steve Case, former AOL Time Warner chairman
I've already referred to confusion management. The best definition I have ever heard for confusion management came from a good friend and client of mine, Sheryle Moon, who at the time was a director of Manpower (the recruitment company) when she said the key to being a successful manager today is the ability to deal with ambiguity and still take effective action day to day. Here are my thoughts on what it takes to be a good confusion manager.
KEEP MOVING
It goes without saying that step one is to keep taking action. Action creates clarity, so take plenty of it. You may like to look at it in the following ways:
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