False paradox - using the old to justify not doing the new - Microsoft, iPad
Today the Harvard Business Review blog got to the topic of my early May Forbes article (Microsoft's Dismal Future) with "Microsoft and the Innovator's Paradox." Unfortunately, painting Microsoft as facing a difficult paradox gives Ballmer and the management team too much credit. It implies that Defend & Extend behavior is a good tradeoff compared to investing in growth markets. This isn't really a trade-off because good companies pursue both courses, growing the existing business as long as possible AND investing in new growth markets simultaneously. Like Google investing in search and ad placement while investing in Android. Positioning Microsoft as facing a dilemma may sound politically attractive, but is inaccurate. Microsoft simply needed to do more in growth markets - a problem shared by too many companies. Instead it spent way too much in sustaining developments - and now is in big trouble.
HBR did not offer much of a solution for Microsoft. Instead, leaving the impression that it's reasonable to expect "mature" organizations to do more sustaining innovation. The truncated S curve displayed HBR article ignores the reality that "mature" companies don't extend forever - but rather simply fall into the Swamp of poor returns and eventually disappear into the Whirlpool as growth slows. And further ignores the horrific cost of sustaining innovation, as we detailed in Microsoft's exorbitant 2009 R&D spending as the company kept pushing Windows 7 and Office 2010 development. Microsoft really hasn't faced a "paradox" for investing for many years - leadership made a bad decision to keep investing in old markets rather than pursue new ones.
Contrarily, Mediapost.com's Marketing Health column ran a description of how pharmaceutical companies could use iPads to improve the performance of their physician customers and simultaneously market their own products in "Tap Into iPad's Marketing Power." Using these low cost devices (including Kindle and Cisco's new Cius [Cnet.com "Cisco Introduces New Cius Android Tablet PC"]) is not a "paradox" in investing for growth. It's additive. As readers of this blog know, for over a year I've promoted marketers and designers become more proactive in using these new mobile devices. Only by viewing the new development as a trade-off from doing more of the old marketing does it slow investment in a high growth opportunity. By looking at the new opportunity as something that takes away from doing more of the old creates an artificial paradox - not a real one. Companies simply aren't doing enough of what will help them grow - too often choosing the low-return route of doing more of what they know in old markets simply because they understand it better.
PS - Check out my radio interview with Rod McConnel of X Zone Radio about BPs management crisis, and how it
applies to all businesses. Recorded by X-Zone in Canada the show is being syndicated
this weekend across the world to various radio stations. You can find the timing of play, or the podcast version, at the
X-Zone web site. Download On Apple iTunes here. Download as Podcast here. Or listen on X Zone jukebox here.
PPS - Thanks to Gary Woodill at Brandon-Hall.com for picking up my comments on his Workplace Learning page - "It's the One You Don't See That'll Kill You." He trumpets replacing traditional strategic planning with more scenario planning to better prepare companies for success. Great article!
To Everyone in America - Happy Independence Day!