SEPTEMBER 2014 / NO. 1
TAGS: MANAGEMENT, E-TV, E-GROCERIES, SELF-DRIVING CARS, PHARMACOGENETICS, E-HEALTH, DOMOTICA, BIO-BASED INNOVATION, 3D-PRINTING, GREY SWANS, KPN, XS4ALL, UPC, ZIGGO, TOMTOM

This won’t happen to us!

“If generals can’t do without good intelligence, why do CEOs think they can?”
This statement is one of my favorites. Be aware that the vast majority of companies do not have a strategic intelligence capability in place. Almost every company may be surprised by changing market conditions and disruption.
Many sectors of industry see this coming, but don’t, however, act in time. Examples of industries where this has occurred include the following: books, brokerage, telephone, newspapers, records, travel, and large box retail. Senior management tends to react: “this won’t happen to us”. We, however, know what happened, do you?
Future change and disruption will occur because of e-TV, e-Groceries, self-driving cars, pharmacogenetics, e-Health, domotica (home automation), bio-based innovation, 3D-printing among others. Have you already identified the upcoming Grey Swans in your sector of industry? If not, you may be surprised and your competitive advantage may vanish. If this happens your company will be in a ‘strategic crisis’ and the next step will be likely cost-cutting and layoffs of people. Why doesn’t senior management see their own company strategic crisis coming?
Consider another example: Dutch National Telecom KPN has a subsidiary called XS4ALL, the leading internet provider for the Dutch business world. XS4ALL was the first internet provider in the Netherlands, founded in 1993 and acquired by KPN in 1998. At the end of June 2013, it was announced that XS4ALL would lay off one-third of their FTEs, due to pressure from cable operators UPC and Ziggo. Did XS4ALL-KPN not foresee the new pressure from these two competitors? Obviously not. Good competitive intelligence could, however, have informed senior management back in 2010 that this was going to happen and that XS4ALL would already face a strategic crisis in 2011.
TomTom. From 2008 onwards the consumer division known for its popular car-navigation devices lost an average of 10-15% sales revenues per year. Sales decreased year-after-year. TomTom was already in a strategic crisis in 2008 as their competitive advantage was under pressure. In June 2013, they announced the selling-off of their consumer division. But it is always easier for management to stay in their comfort zone. Right? Companies facing a strategic crisis can lose their competitive advantage 1-2 years before management gets the necessary insight!
Management fears new projects! In the Netherlands, some 60 percent of all new projects are rejected by management due to fear! Research shows that fear is seen as irrational. Only Ireland has a higher score of 82 percent, while Germany leads with a score of 24 percent. There is no doubt that such a high score in a country such as the Netherlands hurts innovation and change, and reflects a passivity about grabbing new opportunities. You probably recognize the arguments: how many customers are using this already? where has this been proven to be successful? can we see the track record? come back to us if this has proven itself with other customers. This all comes down to a fear of mediocrity!
“With Schindler’s List I got the insight that one person, not an army, but one person can make the difference”, Steven Spielberg
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