(*Burning Platform required)
The boy stood on the burning deck
Whence all but he had fled;
The flame that lit the battle’s wreck
Shone round him o’er the dead.
“Casabianca” by Felicia Dorothea Hemans
Rumor has it that big company executives are rather like performing circus animals. You get them to jump from one place to another by prodding them with sticks and bribing them with things they like. If you want them to move quickly, you have to have a burning platform.
The concept is nicely explained here:
Burning Platform is a business lexicon that emphasizes immediate and radical change due to dire circumstances.
If you want a real life example of BurP’ing, look no further than the (in)famous memo from Stephen Elop shortly after he took over as CEO of Nokia.
So you take your poor circus executive and you set fire to their corporate home. That way they will jump. And innovation is born. It’s the perfect recipe!?
As a result, embracing innovation becomes the corporate equivalent of inviting a cool kid you don’t really like to your birthday party. If they come to the party, you’ll probably be miserable. If they scorn you, you’ll look bad infront of all of your friends. Or at least, that’s the way it seems.
In an earlier post, I boldly said:
The simple truth is that without innovation, your company will die. It may not happen today, or tomorrow, but it will happen… I’ll defend that statement with data in a future post.
It’s time for some defense based on actual data.
I like data. The interwebs are full of data and some of it is even true. A few months ago, I spent some time researching the world’s biggest companies and their history of innovation.
In my simplistic view of the world, innovation is as simple as doing something different to the usual course of business. The simple question I asked was this: “if I look at the biggest companies in the world that have existed for more than a decade, do they show signs of innovation?”.
To be clear, I am not claiming an academically credible level of research here, but even so the results will probably surprise you.
The Actual Data
Where possible, I identified how the company started, new things the company tried and (for fun) some of the things that failed.
Royal Dutch Shell (est. 1907)
Then: Production and transportation of oil
Now: Production and transportation, exploration, refining, marketing and trading of oil, synthetic oil and natural gas; gas stations; lubricants; industrial fuels; and chemicals (now 1/3 of Shell’s profits).
Failures: Nuclear power, coal, mining/metals, electricity generation and forestry.
That’s a lot of new stuff and some expensive failures. Now you could be nit picky and argue that oil, synthetic oil and natural gas are all kind of similar, but by that logic, coal should have been a good fit. It’s also hard to ignore that Shell’s chemical business drives a third of the company’s profit.
The snarky side of me does have to point out that a fossil fuel company being in Forestry shows an exceptionally long-term view of the company’s prospects…
Maybe Shell are an exception. Let’s move on…
Walmart (est. 1962)
Then: Five and Dime store
Now: Discount stores, Supercenters, grocery stores, warehouse clubs, various private label products, video streaming and movie production.
It’s a little trickier to find information on their failures, but I’m sure they have some doozies.
Again, we see a lot of new stuff and only some of it is related to the original business. I’m pretty sure that operating a warehouse club is radically different to operating a five and dime though. Not to mention goods manufacturing, video streaming and movie production!
Toyota (est. 1926)
Then: Manual and machine powered looms (really!)
Now: Automotive, materials handling, electronics, logistics and textile machinery (yay looms!).
Failed at: Aerospace, agricultural biotech, baked goods, barcode readers (did you know Toyota invented the QR code?), chemicals, electronics, energy, financial services, machinery & machine tools, metals, produce, real estate, robotics and steel.
Way to go Toyota! An impressive list of failures including businesses they later re-entered, like electronics. But equally important, a history of pretty radical innovation taking them a very long way from the humble loom.
Apple (est. 1976)
Then: An assemble-it-yourself personal computer kit
Now: Personal computers, consumer electronics, software and digital distribution.
Failed At: Personal computers, consumer electronics and software.
From ugly-is-as-ugly-does kits to a company that defines what it means to care about design. From hardware to being one of the biggest distributors of digital content on the planet. Enough said.
GE (est. 1876)
Then: The humble lightbulb
Now: Lighting (yay!), aviation services; commercial & consumer finance; generation, transmission & distribution of electricity; industrial automation; insurance; jet engines, medical imaging, entertainment (NBCUniversal) and trains.
Samsung (est. 1938)Then: trading company
Now: Aircraft construction, batteries, biologics, chemicals, electronics, glass, hotels & resorts, industrial construction, industrial equipment, insurance, military equipment, ship building, silicon Wafers and steel.
Let’s skip a few and see if the story changes. Next…
Hitachi (est. 1905)
Then: Copper mining
Now: Consumer electronics, enterprise data systems, heavy industry, management consulting and rail.
CVS (est. 1922)
Then: Retail shoe sales
Now: Disease Management programs, pharmacy/prescription benefit management, retail & mail service pharmacy, retail loyalty program, speciality pharmacy and walk-in medical clinics.
Shall I continue or have you had enough? Of companies of any size that have stood the test of time, there are precisely NONE that are still in exactly the business they started in.
Not one. Not a single one.
“Ah”, I hear you cry, “But companies always change over time”.
Yes, they do. It is inevitable.
But how is “change over time” any different from innovation? It isn’t.
Change = Innovation = Change
Going back to circus folks and burning platforms, I’m sure many of these companies jumped into the abyss of innovation out of sheer desperation and a fear of imminent death (hello, Apple). And that’s the part that can be changed.
Innovation doesn’t have to happen as a response to crisis. And that forms the basis of my next post.