Irving Wladawsky-Berger on the LIfe-Cycle of a Business

This is well worth a read:

A Delicate Balance by Irving Wladawsky-Berger

Irving just wrapped up his first semester teaching at MIT and managed to succinctly condense thirteen, three-hour seminars into a nice post. The seminar was about technology-based business transformation and he examined how companies can leverage emerging, major technologies to significantly transform a business or even a whole industry. There are so many factors that go into developing a business based on technologies as broad and complex as the Internet and in his post Irving talks about the delicate balance that exists within the life-cycle of a business:

Companies are born. Many don't make it beyond a few years, but some do and over time become leaders in their industries, with growing revenues and market share. Then, after a certain number of years, they start slowing down and stop innovating. At that point, the invisible hand of the marketplace will often deem the business to be more valuable as a kind of carcass for fast-growing new companies to feed on, rather than as an ongoing, viable institution. In other words - your time is up!!

We've heard ad nauseam that marketplace leaders must address any disruptive innovations being levied against the business model, otherwise, they risk obsolescence. This is easy to understand, yet difficult to embrace.

At the risk of sounding morbid, perhaps the delicate balance should ultimately reflect an organ donor model. Like people, business units have a life cycle. But important components can be saved to not only live another day but also evolve into the next big thing. (BIF research advisor Clay Christensen once told me to think of it like biological evolution: The population will evolve, even though individuals can't.)

All this gets back though to the one intractable issue for established companies and that's mindset. All the scientific arguments in the world can't change an entrenched culture. It's like telling a terminal cancer patient to just give up and accept the inevitable. And that just won't do.

There are no easy answers, which is why I wholeheartedly embrace an experimentation model that involves all parts of the business model - not just R&D.

RELATED
Irving Wladawsky-Berger spoke at our summit last October. His onstage interview with Wall Street Journal columnist Walt Mossberg was one of the highlights from our 2-day event. Watch the video here.

Posted March 7, 2008 09:40 AM by Chris Flanagan | Permalink