The Longer We Wait, The More Difficult It Gets
When facing disruption of our core business, the longer we wait to transform, the more difficult it gets. This is the paradox. Once it is evident that we need to change, the cash available to do so is much tighter, and the need to defend the core business and mitigate its decline becomes the company’s sole focus. Like a rabbit caught in the headlights, we become paralysed.
Mark Johnson and Josh Suskewicz have perfectly illustrated the impact of delaying the decision to transform over time as follows:
Starting the transformation when core revenue growth decelerates (Figure 1).
Starting the transformation when core revenue stagnates (Figure 2).
Starting the transformation when core revenue is in free fall (Figure 3).
Starting the transformation when core revenue growth decelerates
Starting the transformation when core revenue stagnates
Starting the transformation when core revenues are in free fall
The later the decision to transform, the greater the pressure on the core business and the company’s cash flow. As the urgency to transform increases, so does the reluctance to divert resources away from the core to ‘chase’ unproven business opportunities that will barely make an impact in the company’s P&L in the next three to five years.
Conclusion
In many facets of life, we don’t change until we have to. With core transformations, once it is clear and we are forced to change, it is too late.
Notes
The Prosperity Paradox – How Innovation Can Lift Nations Out Of Poverty by Clayton M. Christensen, Efosa Ojomo and Karen Dillon.
Leading From The Future – How To Turn Visionary Thinking Into Breakthrough Growth by Mark W. Johnson and Josh Suskewicz.
