As professional business consultant
with almost 30 years experience, Adam Hartung is all too familiar with a common
malady among today’s businesses. Regardless of how much the leaders and
organizations are struggling to grow revenues and profits they cannot seem to
break out of below-expectation performance. Even when hiring top advisors, consultants and employees, results do not
respond as expected. They seem stuck, and
unable to make changes which will lead to superb performance.
Why? This question which sparked a
more than 12 year analysis to determine the root of—and the solution to—the
problem. Geoffrey Moore encouraged Adam to put his findings into a book, which
he now endorses on the cover. The principles now covered in Create Marketplace
Disruption have been affirmed as “fresh and much needed” by Tom Peters, and
“a revolutionary message” by Malcolm Gladwell. Bill Gates’ co-author, Collins Hemingway,
considers Create Marketplace Disruption a must read, as he details in
the Foreword.
Business leadership has not yet made the
transition from management in the industrial economy to management in the
information economy. While much has
been written about an information economy it has yet to fundamentally affect
how leaders manage their organizations. True, computer technology has unleashed
new business models and methods of competition. Yet most leaders are
still using management techniques which were taught in the 1970s and developed
for the industrial economy.
To a large degree, the current disconnect is to be expected. The
Russian economist Kondratiev demonstrated that economies move on a particularly
long wave of approximately 75 years. He postulated that this was due
to major changes in technology which took a very long time to reach adoption,
massive use, decline and eventual replacement by another important new
technology. Initially, the technology is used merely to improve existing
processes and speed existing competitive models as we have seen with computer
technology. Eventually, the full impact of the new technology creates new
methods of competition which obviates the old, ushering in new rates of
productivity and new methods of growth. We are at this fulcrum today.
For decades companies have prospered through “Defend and Extend” (D&E)
Management—establishing a Success Formula, then improving and protecting it
against competitors. In the Industrial Economy this worked well because size,
economies of scale, and entry barriers were important. But today, due
primarily to the emergence of information transparency, Success Formulas are
being duplicated practically overnight—robbing companies of their competitive
advantage. Practicing D&E Management in this environment is a prescription
for failure, and yet that is what almost every company, large and
small, is doing. And how most leaders
are trying to get ahead.
In the three year period ending in 2003,
bankruptcies of public companies increased 855% over the three year period ending just five years prior,
and for companies with assets over a billion dollars the increase was an
astounding 1,750%. To reverse this trend, companies must turn
conventional wisdom on its head. Instead of looking to their Success Formulas
as the solution to their problems, companies
must learn to see their Success Formulas as the source of
their problems. Companies must embrace the Phoenix Principle and
become both willing and able to reinvent their Success Formulas… over and over
again.
In recent years, Adam Hartung met with hundreds
of senior executives. Almost every business leader sang the same sad refrain:
every quarter of every year is a brutal struggle to make their numbers. Most
admit that they don’t really know what to do to make things any better—nothing
they have tried has made a sustainable difference. Historical tactics,
including mergers and acquisitions, extensive cost-cutting, streamlining
processes, outsourcing, and various quality programs have made little or no
impact on competitiveness.
Well-meaning but increasingly outdated advice
from business gurus such as Jim Collins and Larry Bossidy to focus on execution
and optimize the core business are only making matters worse. Create
Marketplace Disruption uses The
Phoenix Principle to rebut the
“optimize and execute” message while providing simple but powerful models that
explain why so many companies are struggling to such an extent. The author
illustrates with many convincing examples and case studies how the inevitable
consequence of D&E Management has been lock-in to outdated Success Formulas
leading to worsening performance. This has resulted in a vicious cycle of
cost-cutting and profit erosion, eventually leading to failure.
D&E Management causes managers to behave as
if their organizations are exempt from market and competitive shifts which can
make their Success Formula obsolete. Many managers cling to the myth of
business perpetuity as a rationalization for their mature companies to use
continuous improvement as a way to create, then maintain, above average
returns—even when the evidence overwhelmingly indicates otherwise. The
hard truth is that the techniques Michael Porter published for competing in the
1980s no longer generate sustainable competitive advantage. Entry
barriers are now exit barriers, supplier and customer leverage are short-lived,
and focus on product innovation and cost reduction is far less likely to create
success than implementing alternative business models.
Business leaders must embrace a new
model for managing based on The Phoenix
Create Marketplace Disruption provides readers with hope that even the most locked-in
organizations can renew themselves. Through
a four-phase approach backed up with solid examples, business managers will
learn how to reinvent locked-in Success Formulas at the individual, work team,
business function, operating unit and company levels. This book provides the vernacular and
practical “how to” information to undertake the “Re-Imagining” recommended by
Tom Peters. Additionally, the author introduces readers to breakthrough
thinking, which is the ability to challenge and change assumptions at the
individual level. Readers are given powerful tools for transforming Locked-in
behaviors, and developing new solutions for today’s dynamic business
competition in the Information Economy.
Create Marketplace Disruption: How
to stay ahead of the competition will
help beleaguered business managers understand why their organizations are
struggling, why their actions not only aren’t helping but are contributing to
the problem, and how leaders and individuals can Disrupt and reinvent their Locked-in
Success Formulas to generate significant breakthroughs in performance.
© 2008 Adam Hartung, All Rights Reserved
