Being flexible and coming up with new business models is
increasingly critical for firms. However, many companies continue to operate their
businesses in the ways they had been operated till now. There are mainly 5 reasons why it is
difficult for a large firm to adapt the flexibility model. There reasons are
given below and explained.
Complacency
According to Carol Dweck, a professor of psychology at
Stanford University, individuals typically have one of two mindsets:
A fixed Mindset – They believe their qualities and other’s
are carved in stone
A Growth Mindset – They believe that their basic qualities
can be nurtured and improved through efforts.
Shashank Samant, President of GlobalLogic, a company that
provide R&D services to large technology vendors was invited by a large
firm to redesign their 15 year old product. Samant and the team at GlobalLogic
made a simple but efficient design keeping in mind the audience that prefers
using Google and Facebook. The presentation done by GlobalLogic was loved by
the new age managers but the middle managers disapproved it by saying, it was
not comply with our 15 year old software development standards. They forgot
that the very reason GlobalLogic was hired was to get rid of that clunky old
standards.
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| Microsoft Surface running Windows 8 |
Binary Logic
Large companies and their leaders often operate in a black
and white world that confers a sense of predictability on things. For instance,
there are the blacks, the competitors who are bad and partners are good. We are
entering in the age of grey. Here no one can be classified as a good or a bad.
Competitors of today can be partners of tomorrow or it may coexist. For
instance, Windows 8 is an OS used by HP to power its tablets, here HP has
partnered with Microsoft. But HP and Microsoft are also competitors because
Microsoft sells its own tablet, the Microsoft Surface. Hence a binary thinking
needs to be changed to the grey thinking. Enemies of today can be friend of
tomorrow. Many western pharmaceuticals ignored the lower target segment.
Eventually they were the ones who saved them in the sinking economy.
Risk Aversion
Many large companies do not attempt to develop radically new
products, as they are afraid that these products will cannibalize the market
for their existing offerings. This problem is compounded by the fact that the
tenure of CEOs is shrinking, forcing them to deliver short-term results rather
than drive long-term transformational changes.
Kodak succeeded by selling cheaper analog cameras and
selling the camera film at higher costs. Eventually when the digital cameras
took over, Kodak failed to take the risk and change from its old school model
to adapt to the changing trends.
Rigid, Time Consuming Product Development Processes
Even when some of the major global companies try to be
flexible it is the products that cannot be made in the similar manner. Even
when they have a great idea and they are convinced that this is the next big
thing, it is important for that idea to go through the entire process from ideation
to designing to manufacturing to marketing to selling. This often is time
consuming and the right time is lost. It is immensely difficult for a company
to have the right product at the right time to the right market.
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