How does a company fail? To borrow a phrase from Hemingway, two ways: “gradually and then suddenly,” says Kellogg.
I met some people today who seemed to be making relatively simple projects very complicated. In fact, everything seemed to be moving forward slowly for them; delivering late and over budget. They were from a business that has been around longer than most of its competitors.
Earlier this week I was talking to another business, a start-up. Everything they were doing was pared back to just what was needed for the immediate future…no more and no less. They have to work that way to satisfy their customers and also to move on, really quickly, to the next thing.
I know which of these two businesses I would prefer to invest in.
Another distinguishing difference between these two businesses is the amount of time they spend with their customers. The start-up, by my estimate, is investing more than fivefold the amount of time per employee talking to their marketplace.
Legacy and established businesses must set out to think and behave like their competitors, to be their own competitor and to replace their services and products with better versions that are fit for the future. If they don’t do it, their start-up competitors will gradually, and then suddenly, kill them off.
There is a good paper from Kellogg, Northwestern University, that talks about these points and more. >>> read the paper