Overcoming the perils of success

In our last edition we agreed (didn’t we?) that nothing fails like success. A mixture of corporate arrogance, defensiveness and business model inertia conspires to turn high-performance companies into sluggish has-beens.

So how do you ensure that your company continues to climb the growth curve, and avoids hitting a performance plateau or decline? This week’s edition provides five practical ways for you to stay ahead of the competition and continue to ride the wave of success.

  1. Be sensitive to the signs of slow-down. As a rule of thumb a major organisational change takes two to three years to deliver positive, sustainable results. Understanding where your business lies on the S-curve (of performance growth) is critical in anticipating the need for change and responding accordingly. All too often, change is only introduced once profit performance has eroded, even though the signs of decline – in terms of customer perceptions or the level of new product development, for example – may have been evident several years earlier. Companies need to be more attuned to these early warning signs. As former Intel boss Andy Grove put it, “Only the paranoid survive”.
  2. Raise the bar continually. It’s important to recognise and celebrate success, but don’t let it go to your head. All market leaders need to set increasing standards for success or their competitors will do it for them. In 2003, for example, the England rugby team won the world cup. However, by focusing on victory at that tournament as the ultimate goal for the team, it was difficult for the new management to subsequently raise the bar and the team’s performance quickly declined.
  3. A focus on action. I have shared this quote in previous editions, but there is a major lesson in how to maintain success when Michael Bloomberg said, “While our competitors are still sucking their thumbs trying to make the design perfect, we’re on version No. 5. By the time our rivals are ready with wires and screws we’re on version No. 10. It gets back to planning versus acting: we act from day one; others plan how to plan – for months.”
  4. Cannibalise your own sales. Defensiveness is a key factor in turning market leaders into also-rans. At the heart of this mindset is reluctance, bordering on refusal, to cannibalise your own sales. The trouble is that, in a dynamic market, if you don’t cannibalise your sales you will be overtaken by other players. Apple has brilliantly overcome this issue in the way it has managed the market strategy of the iPod. After its initial launch in 2001 Apple has limited the headroom for competitors to launch rival products by regularly bringing to market new versions of the iPod that deliver better performance at lower prices.
  5. Reinvent your business model. Innovation at a product level is admirable and necessary. Innovation at the level of your strategy and business model requires a far bolder mindset. I admire UK electrical and electronics retailer Dixons. They operate in a highly competitive market and have made bold moves to continue to seek to be successful. Ten years ago they launched new formats such as The Link (for mobile phones) and PC World. Along the way they launched Freeserve, which changed the face of UK internet participation, and in the last year or so have removed the Dixons brand from the high street and refocused it as an on-line retail brand. Although these moves do not guarantee future success they have helped the company keep up with the pace of change – and sometimes to lead the market.

The bottom line

Maintaining and enhancing success is never easy, but it is certainly more fun than being stuck in the pack or being squeezed at the bottom of the heap. These five approaches will help you take an action-based and innovation-focused approach to ongoing market leadership and enable you to avoid the inertia of success.


To find out more contact Stuart by clicking here or call +44-(0)1636-526111.