Success overkill: Unusual lessons for businesses

Kodak invented the digital camera, but it couldn’t beat the digital revolution
“Last mover advantage” may be the only way to reach the top.
We are inundated with advice on success – what it looks like, and how you get there. Famous quotations applied to business range from the frank (“if you’re going through hell, keep going,” said Winston Churchill) to the fanciful (“all our dreams can come true if we have the courage to pursue them,” according to Walt Disney). But not all advice on being successful follows a conventional narrative. Here are two slightly surprising takes from the experts.

TOO MUCH OF A GOOD THING?

It is perfectly possible to have success burnout – and many companies do. Milorad Ajder, the head of Ipsos Mori’s Reputation Centre, recently explained in City A.M. how continued success can in fact breed failure. Often, big companies turn what works well into processes, those processes become routine, and that routine becomes inertia. This can be their downfall, he says. Research by McKinsey in 2012 showed quite how important dynamism can be. It demonstrated the strong relationship between inertia in how companies allocated capital and shareholder returns. Following 1,600 firms over 15 years, it found that those that reallocated resources most frequently produced annual shareholder returns that were, on average, 30 per cent higher.
Highly-successful companies that go bust often present a similar narrative. Kodak is a good example. The digital age crushed the firm, even though it was a Kodak engineer who invented the first digital camera – way back in 1975. The trouble was that Kodak’s leadership team wasn’t prepared to kill film. Inevitably, competitors like Fuji, which were embracing digital, started chipping away at its market dominance. By 2012, Kodak had filed for bankruptcy.
A sobering lesson is given by Silicon Valley entrepreneur Eric Ries, who says he gives large firms the same advice he gives startups: “why should [your] big company innovate? Because your company will die otherwise. Anybody can rent the means of production... which means nobody is safe,” he told McKinsey.

COMPETITION DOESN’T BREED SUCCESS

But if you’re setting up a company, innovating to gain a competitive edge won’t cut it. That’s according to PayPal’s Peter Thiel. The contrarian billionaire has some surprising advice for would-be entrepreneurs, because he believes that, to really become successful, you need to avoid competition altogether. In his new book Zero to One, he advises that any early business should aim “to be the last mover”. Playing on the idea of first mover advantage, he says that real business success will only come if you can clinch the final development of a particular innovation. “Make the last great development in a specific market and enjoy years or even decades of monopoly profits.” The same, he says, is true in work and life.
Thiel also says that, if you’re very competitive, you get good at succeeding against others – but it’ll always come at a cost. The US-rated Chess Master explained to entrepreneur Tim Ferriss that “if you’re a competitive chess player, you might get very good at chess but neglect to develop other things, because you’re focused on beating your competitors rather than on doing something that’s important or valuable.”

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