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While we’re on the subject of wrong ends of competitive waves…

It must be my week for seeing bad news in many places.  I just love reading Scott Anthony's blog over at the HBR web site, where I also am a regular blogger.  Scott is part of Innosight, a terrific consulting firm which helps companies figure out how to address some of the more characteristic problems that can get in the way of their capacity to grow.  He recently talked about a phenomenon which a number of us have written about, the Innovator's Paradox.  While he used Microsoft as a case in point, it applies to many situations, in which phenomenal success can put in place all the wrong incentives if your ambition is growth.

When a company is really successful, it's hard to make investments in new initiatives that attract meaningful attention or that are appropriately resourced.  By the time a company really needs those growth opportunities, it is often too late and too constrained to go after them with conviction.  The result is often that the mighty fall pretty hard, even amidst some of the best cash flows of their corporate lives.  Consider Motorola, on the bring of being broken apart.  Or IBM with a near-death experience that very nearly did it in.  Or Kodak – sigh…

So what do you do about this?  I think it's really important to have an innovation system that recognizes the challenges and puts in place mechanisms to address them, early.  So separate units which are kept small and hungry and which aren't swamped by the mother ship, resources that are not trapped in the existing business, people who feel they can build a career doing something new and different kinds of political leadership that don't let success go to their heads — all valuable when things seem just too good for too long. 

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