When Giants Fall: Why you need to innovate to stay relevant

“The ANC will rule until Jesus comes back.” When Jacob Zuma uttered these infamous words in 2009 shortly before he was elected president, he upset quite a few people, including many of his supporters.

After South Africa’s Council of Churches said that it was “deeply concerned” about the statement, the ANC felt the need to clarify the sentiment, though it stopped short of issuing an apology.

Many people felt that Zuma’s remark bordered on blasphemy. Certainly, it revealed a level of arrogance on the part of the ruling party that made many people very uncomfortable.

In fact, we shouldn’t be surprised by this attitude – the ANC had won the last four elections with alarming ease, despite mounting dissatisfaction with service delivery and rising public sector corruption.

Why shouldn’t Zuma display such an attitude of confidence?

In fact, very similar attitudes are displayed by some of our largest companies. The problem is that they don’t always hold true.

Common wisdom in the US over the last few decades has held that certain banks and financial institutions were “too big to fail”. The financial crisis saw the end to that sentiment, with giants like Lehman Brothers and Bear Sterns collapsing in a heap.

It’s not just big events like a financial crisis that can cause the downfall of large established companies. Sometimes it happens a lot more gradually.

The world around us is changing and large companies often fail to respond to these changes until it’s too late.

They believe that whatever they have done in the past to create their success will continue to work indefinitely into the future. Success breeds complacency.

The problem is that dominant companies have a big investment in the status quo. After all, whatever they’ve done in the past has been good to them.

They have good products serving a large customer base and earning good profits. Why change things? These companies are very unlikely to embrace or even consider anything that might challenge that comfortable status quo.

Disruptive technologies often start off appearing to be inferior to established solutions. When digital cameras first came in the scene, they were large and clunky.

Picture quality was poor, photos were stored on bulky cassettes with minimal storage space, and there were infuriating delays between pressing the button and snapping the picture.

It’s hard to imagine that this would one day evolve into the technological marvels we hold in our hands today.

At the time when digital cameras first appeared on the scene, Kodak has the opportunity to grow into this new market. In fact, Steven Sasson actually invented the world’s first digital camera for Kodak.

However, the company thought it was a passing fad. According to their world view, customers only cared about picture quality, and the digital camera offered a very poor experience.

So instead Kodak continued to focus on film quality – features like colour balance, stability, grain size and sensitivity.

What Kodak didn’t anticipate was that customers actually valued convenience more than picture quality.

People really liked the fact that digital cameras enabled them to see their pictures immediately without having to wait days to get them developed – and they could delete the mistakes on the spot and correct them.

So once digital camera technology reached a point where the size, storage and delay problems had reached acceptable levels, it became an easy decision for the mass market to embrace the new offering.

Even at this point it was difficult for Kodak to switch over – it was a very successful business, built on decades of investment in film manufacturing, processing and distribution.

In addition, they knew very little about making digital cameras or how to make money out of digital photography, and so would likely be in a weak position compared to the other companies that had emerged in this space.

It’s only when the evidence was so overwhelming that Kodak was forced to change its business. It was too late – in 2012 the company admitted defeat and filed for bankruptcy.

The world around us is changing at an accelerating pace. The rise of the connected economy and cloud-based services means that entire industries can be disrupted by a small start-up in the garage across town.

These young dynamic companies don’t have to focus on the next quarter to appease demanding shareholders, they are not bogged down by corporate bureaucracy, and they don’t have legal gatekeepers saying no to anything new which might push the boundaries.

It’s time for corporate South Africa to change the way it does business – before it’s too late.

Dr. Gavin Symanowitz is an actuary and founder of BlockbusterInnovation.com, where he created the Ideas4Results Programme and gives the talk: “Good to Great to Gone: How to disrupt your business so you’re still relevant in 5 years time”. He is also the founder of FeedbackRocket.com.

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