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Wednesday, 19 November 2008
Corporate Evolution
Topic: Wargaming For Leaders

One of the things that I have seen across a wide range of corporate wargames in different industries are the firm's that dominate a market for long periods of time do so by continually attacking their current market share with a more innovative product that displaces their current products. In essence they realize that all products eventually lose to a competing product, so they might as well be the ones to win that competition by displacing themselves. Basically a corporation evolves or it dies, much like the Dinosaurs (think big and slow) who eventually lost to the early mammals (think smart and agile). Mammals have so far kept their market share by continuing to evolve.


So, if one were to look at the software market and hypothesize that it were dominated by a Dinosaur, could they see the seeds of their eventual displacement. If their products were unforgiving and difficult to use and if the new versions were not substantively different than their predecessor all that it would take is for a mammal to come along. The mammal might start by capturing niche markets where the Dinosaur was disadvantaged; ones where ease of use, low user IT knowledge, and innovation were valued above other characteristics. The Dinosaur would not have much to fear initially as the niche markets were small, although willing to pay a premium. 


But this is where corporate evolution raises its ugly head, something changes in the environment. The mammal is better adapted to survive, while the dinosaur struggles. New technology that creates new personal devices enter the fray The mammal links their business model to  capture this adjacent, but potentially more lucrative market. If the Dinosaur misses the moment to rapidly adapt and innovate with a new business model they may have written their own epitaph. The combined leverage of the new devices and the niche infrastructure create market momentum. Like the historical animals, the Dinosaur may survive for quite some time, but corporate evolution has already written the answer. 


There are many ways corporations decide to move forward, but many of the solutions to today's problems are not intuitive, but counter-intuitive. As firms look to thread their way forward through uncertain economic times, it will be the wargames, not the spreadsheets that will show the way.

Posted by markherman at 5:41 PM EST
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