David Seregow's Field Casebook
Strategic Reinvention: An elusive goal for Facebook and Cisco?
Transitioning from the current vision and strategy to the new reinvented vision and strategy is the most dauting challenge an organization faces.
While incremental and structural strategic innovation is a survival factor, real competitive advantage is defined by the depth and rate of change. Seeking greater and greater differentiation, reinvention is often the path of choice for those companies serious about maintaining market leadership.
Good strategy is actually a well researched hypothesis for addressing a company's greatest challenges but, like all hypotheses, is based on a variety of assumptions. "If we do "A" then "B" will happen," or "If we build it they will come" - you get the idea.
Defining and executing reinvention, based on unproven assumptions, is a daunting task. Often what is assumed to happen doesn't and you may find that when you build it they don't come. Facebook and Cisco are cases in point — FaceBook for the very significant challenges it faces moving forward from its recent IPO and Cisco for failing at reinvention.
Facebook Will Disappear in 5 to 8 Years: Analyst
Within a week of Facebook's IPO, an analyst, Eric Jackson, founder of Ironfire Capital, was already predicting its death. Jackson's issue is whether or not Facebook can reinvent itself to remain the social media leader. Here is what he had to say:
"In five to eight years they are going to disappear in the way that Yahoo has disappeared," Jackson said. "Yahoo is still making money, it's still profitable, still has 13,000 employees working for it, but it's 10 percent of the value that it was at the height of 2000. For all intents and purposes, it's disappeared."
"There have been three generations of web companies. The first generation was big web portals, such as Yahoo where content was aggregated in one place. The second was the social web with Facebook and the third generation is companies focused entirely on monetizing the mobil platform, something Facebook will continue to struggle with."
"The world is moving faster, it's getting more competitive, not less, and I think those who are dominant in their prior generation are really going to have a hard time moving into this newer generation," he said. "Facebook can buy a bunch of mobile companies, but they are still a big, fat website and that's different from a mobile app."
The lesson learned here is that today's success doesn't determine tomorrow's success. Future success is determined by your company's ability to reinvent itself quickly enough to remain competitve. In the case of Facebook, the jury is still out.
I look forward to seeing their strategy (hypothesis and underlying assumptions) for successfully jumping from one generation to the next. How much stock did you buy? What assumptions have you made about Facebook's future and the future of your Facebook stock?
Cisco Backs Away From Consumer Products
It was always a mystery to me why Cisco believed it could successfully carry over their very significant success in other market segments to the consumer electronics segment which was outside its core competencies (really, compete with Apple?). As some of us expected it would from the beginning, this reinvention effort failed.
Cisco's strategic hypothesis and related assumptions were, in this case, unfounded. The decision to back away from consumer products was the right decision and, as pointed out again in a recent article, overdue. If reinvention were easy more companies would attempt it. Cisco, the market leader it is, will learn from this experience and continue to drive reinvention, hopefully paying more attention to the underlying assumptions.
The lesson here is that reinvention is deeply challenging but that the most successful companies learn from their failed experiences and continue to tenatiously drive innovation - being smarter the next time around (I guess that's an assumption that may be unfounded).
Let's talk: Do believe Facebook will successfully reinvent itself to maintain its social media leadership - what assumptions are working with. I look forward to hearing from you.
David Seregow, Ed. D. is Founder and President of Attaine Performance Corporation, providing strategic guidance, collaboration, and coaching to high-potential companies. www.attaine.com Copyright 2012 David Seregow, Ed. D. All Rights Reserved. Permission granted to post, print, or email this entire posting if full attribution is included and the post is not edited.