And now from Japan – More Brain-Dead Companies!
The February ValuePoint Newsletter was titled “Kodak joins the pantheon of ‘Brain-Dead’ companies.” Then the latest Economist (February 18 p70-71) featured the downfall of Japanese electronics giant NEC (Nippon Electric Company) saying “Today, NEC produces little that other firms don’t make as well.” They go on to imply that Sharp, Panasonic, Toshiba and Hitachi are not far behind. All of these companies were once known for their great innovations but have failed due to success.
They started out with innovations that put them ahead of the pack. Their innovative cultures gave them a great start, but as they grew to scale, and became “world-class,” operational excellence became critical to success. They shifted from focusing on their great minds, represented by Einstein to Operational Excellence, represented by Schwarzenegger, who was once Mr. Universe. This created great success with happy customers and wealthy owners. The catch is that companies at this stage start worshipping operational excellence and forget the kind of innovation it took to get there. Meeting the numbers becomes all important. When problems arise, cost-cutting sets in, with innovation seen as a luxury. Top management is promoted for operation instincts, not the innovative instincts of the founding years. Besides, any new innovation would take too long to build volume similar to current products, so they are discouraged. Without a solid innovation pipeline and without trying “risky” new products and market, they face the biggest risk of all, irrelevance.
The brain is less than 5% of the body, but if it does not work, we are declared dead, and our organs may be harvested and reused: Same for Companies!
See the upcoming March issue of the Value-Point newsletter to measure your own organizational health and to learn how to increase your Organizational IQ.