When all is said and done, one leadership task that simply has to come from the leader, and only the leader, is the answer to this question: “what about tomorrow?”
Verne Harnish put it this way (In Mastering the Rockefeller Habits): The two most important attributes of effective leaders are their abilities to predict and to delegate. It’s the “to predict” attribute that is critical.
Think of all the times, in movies, and in life, that someone has said, in one way or another, “what now, boss?”
(Here comes my brief West Wing homage). For example, the entire seven seasons of The West Wing can practically be summarized in one phrase: “what’s next?”
When Jed Bartlet is in the early stages of his campaign, and his new young crew is laying out the terrain, he says: “What’s next?” – and then, “When I ask, “What’s next?”, it means that I’m ready to move on to other things. So, what’s next?” When Josh Lyman is on his near-death bed at the end of “In the Shadow of Two Gunmen,” President Bartlet leans forward to hear Josh ask in a whisper “What’s next?’’ And when new President Santos, in his last scene of the show, finishes a quick meeting on his first day on the job, he says to Josh, his new Chief of staff, “What’s Next?”
And President Bartlett, when asked by Mrs. Bartlet what he is thinking about as he flies home no longer the President, says simply: “Tomorrow.”
I thought of all of this as I read this article by James Surowiecki (a columnist for The New Yorker): The Next Level. Here are some lengthy excerpts. (The entire article is worth a careful reading…)
Blockbuster’s demise, for one, was inextricably linked to the success of Netflix. But this raises a deeper question: why didn’t the category killers colonize the Web the way they colonized suburbia? That was what pundits expected. Companies like Blockbuster, the argument went, had customer expertise, sophisticated inventory management, and strong brands. And, unlike the new Internet companies, they’d be able to offer customers both e-commerce and physical stores—“clicks and mortar.” It seemed like the perfect combination.
The problem—in Blockbuster’s case, at least—was that the very features that people thought were strengths turned out to be weaknesses. Blockbuster’s huge investment, both literally and psychologically, in traditional stores made it slow to recognize the Web’s importance: in 2002, it was still calling the Net a “niche” market. And it wasn’t just the Net. Blockbuster was late on everything—online rentals, Redbox-style kiosks, streaming video. There was a time when customers had few alternatives, so they tolerated the chain’s limited stock, exorbitant late fees (Blockbuster collected about half a billion dollars a year in late fees), and absence of good advice about what to watch. But, once Netflix came along, it became clear that you could have tremendous variety, keep movies as long as you liked, and, thanks to the Netflix recommendation engine, actually get some serviceable advice. (Places like Netflix and Amazon have demonstrated the great irony that computer algorithms can provide a more personalized and engaging customer experience than many physical stores.) Then Redbox delivered the coup de grâce, offering new Hollywood releases for just a dollar.
Why didn’t Blockbuster evolve more quickly? In part, it was because of what you could call the “internal constituency” problem: the company was full of people who had been there when bricks-and-mortar stores were hugely profitable, and who couldn’t believe that those days were gone for good. Blockbuster treated its thousands of stores as if they were a protective moat, when in fact they were the business equivalent of the Maginot Line. The familiar sunk-cost fallacy made things worse. Myriad studies have shown that, once decision-makers invest in a project, they’re likely to keep doing so, because of the money already at stake. Rather than dramatically shrinking both the size and the number of its stores, Blockbuster just kept throwing good money after bad.
Netflix isn’t going to have decades in which to bask in its success. Its domination of the DVD-rental market comes just as people are moving toward streaming and downloadable video. As has already happened with music, the business of renting and selling movies will soon be about moving digital files rather than physical objects. Streaming is already a big part of Netflix’s business, and it has signed up partnerships to let consumers get movies via video-game machines, Blu-Ray players, and so on. But this is a market in which Netflix’s expertise in shipping red envelopes as quickly and efficiently as possible will no longer be a competitive advantage. It’s a market that’s already quite crowded—with Amazon, Apple, the cable companies, and now Google (which just rolled out its own TV product) all competing. And it’s a market that remains wide open technologically—no one really knows how, or on what devices, most people will watch movies in the future. In this environment, it would be easy for Netflix to fall back on its safety cushion, milk the existing DVD business for all it’s worth, and try to slow down customers’ migration into streaming, particularly since a customer who streams movies is less lucrative than one who rents three DVDs a month. But then, a decade from now, we’d be writing Netflix obituaries that sounded just like the ones for Blockbuster. Sometimes you have to destroy your business in order to save it.
This is a nice and to-the-point description of the changing terrain in one industry. But it is an object lesson for most other business arenas.
What will tomorrow be like? What’s next? Getting there early, and then being willing to jettison what got us there to get to the next tomorrow, the next new, new thing, is quite a challenge in this ever-shifting world.
First Friday Book Synopsis 