Change is inevitable. No matter how good or bad things are, they will change. You’d think we would have figured this out by now and learned to deal with change a lot better than we do. The fact remains that in study after study, people consistently report that change is one of the most stressful things in their lives.
When you apply this to companies, the reality is even starker. It is amazing how resistant to change companies are. Even when the facts are staring management in the face, companies are very reluctant to change.
In the context of companies, management teams are reluctant to change, largely because they have been successful doing things a particular way. They are often concerned that making changes to what works could destroy what has been working. “If it ain’t broke, don’t fix it” is the motto that they cling to.
However, in a rapidly changing environment, “evolve or perish” would probably be a more appropriate motto. Most of us of a certain age can remember Smith Corona, the typewriter giant. They were the most dominant makers of typewriters in the United States for over 100 years. When the PC revolution came along, and typewriter use had declined, you would think that Smith Corona would have evolved to become a printer company. They continued to steadfastly build typewriters well into the ‘90s.
In 1992, the company’s CEO, G. Lee Thompson, told the Wall Street Transcript, “Many people believe that the typewriter and word-processor business is a buggy-whip industry, which is far from true. There is still a strong market for our products in the United States and the world.” When asked what new products and services the company planned to introduce, he replied, “Nothing right now. They’re still in the formative stages.”
They have since had to abandon the dead typewriter business and become a barcode label and ribbon company.
Companies that change their products and their business models in the face of changing times thrive and prosper. When change is embraced from within the company at the highest levels, innovation leads the way.
Take legendary rivals Kodak and Fujifilm. While the first working digital camera was developed by Kodak scientists Gareth Lloyd and Steven Sasson, Kodak management resisted commercializing the digital camera because they were afraid digital cameras would cannibalize their dominant film business. Fuji, while a formidable rival to Kodak in the film business, threw its energies into developing the digital camera, investing aggressively in new technologies.
Fast-forward to the present: Kodak has filed for bankruptcy and has now given up naming rights to the iconic Kodak Theater in Hollywood, the home of the Oscars. Fujifilm, on the other hand, is a vital and profitable company with a 7% share of the lucrative global digital photography market and a market capitalization of $12.6 billion. As The Economist magazine said in an article, "Kodak acted like a stereotypical change-resistant Japanese firm, while Fujifilm acted like a flexible American one."
For executives and individuals in a corporate setting, change is especially challenging. Courageous and forward-thinking individuals, like Apple's Steve Jobs, not only embrace change but act as agents of change, fundamentally altering the norm. Jobs changed the way the world bought and consumed music and was arguably single-handedly responsible for the current troubles of the record industry. Others who were afraid of embracing change, and cannibalizing their business, ended up having their business cannibalized for them by their competition. The irony of this was the competition didn't even come from the quarters they imagined, but entirely unexpected quarters. Smith Corona's competition didn't come from cheaper manufacturers, but rather from PCs and printers. Kodak's competition was not Fuji Film, but rather the digital camera.
For better or for worse, change is coming. Never get too comfortable with the way things are. Companies that anticipate change and lead the charge will win.