From the time we wrote our very first resumes, we’ve been taught that experience is one of the greatest assets in business. It is through experience that people gain depth of knowledge in the work they do and the industries they serve. It teaches them risk and reward through the mistakes they make and the lessons they’ve learned. Ultimately in business, experience is tantamount to assets on the balance sheet in that the more there is, the greater the value.
But is this still true? Do years of working knowledge and real-world experience make you more valuable? Does it make your team and your company better equipped to manage and take advantage of the rapidly changing world around it? Or has the speed of technology and innovation changed our reality so much that the deeper our experience, the deeper the hole we dig?
The Vertical Integration of Self
Vertical integration has been a popular business strategy for nearly a century. From the time industrialists started purchasing companies that produced the raw materials they needed to manufacture their products, to the current investments by companies like Apple in their own retail environments, deep integration throughout the value chain and sales channel definitely has its benefits. But it also has its weaknesses and primary among them is reaction to change.
While a standalone retailer can quickly switch out the products they sell to meet the ever-changing demands of the consumer, a vertically integrated retailer has to continue to sell the products the rest of their company is producing. This “handcuffed” state only gets worse when entire technologies change, especially in today’s world where change can manifest so quickly.
Imagine being a vertically integrated retailer of typewriters facing the technology shift to word processors and personal computers. To survive, you couldn’t just start selling computers. You’d have to change over every link in their chain. There’s a reason why nearly all are out of business today.
Personal business experience is very similar to vertical integration, especially when confined to an industry.
Instead of purchasing or building assets throughout the value chain and sales channel, we are building knowledge. A seasoned clothing retailer will know a lot about the raw materials, manufacturing and wholesaling aspects of their industry, possibly having even worked for different links in the chain. A supplier of beef will similarly know a good deal about farming products, animal health and possibly even food trends.
But what happens when we face significant change like the retailer of typewriters?
Most of us would rely on the assets we own (i.e. the knowledge and skills we have gained throughout years of industry experience) to try and determine a way forward. How much did years of deep knowledge and experience in the typewriter industry help the owners, leaders and managers adapt to and embrace personal computing? Not much. In fact, many of these individuals sought to compete against the change simply because everything they knew, their own personal vertical integration, kept them in a typewriter mindset. Essentially, it was their own personal experience and the convictions that came from it that confined their thinking and spelled out their eminent demise. In times of significant change, deep knowledge and experience may cause us to rely on antiquated thinking to solve new-reality problems.
A great example of this experience-driven myopia can be seen in new learnings from Kodak’s painful demise. As a new article from the Harvard Business Review surmises, it wasn’t that Kodak was blind to the digital camera trend. They actually created the first digital camera in 1975. Nor was it that they didn’t take it seriously enough to invest in it, having spent billions on the development of a range of digital cameras. They were even progressive enough to understand that photos would be shared online, acquiring a photo sharing site called Ofoto in 2001 to make the printing of photos easier than ever. Instead, their true downfall was that they ultimately couldn’t look past their years of printed-photo experience to realize that online photo sharing was the new end-game, not just a way to expand their enormous printing business.
So how do deeply experienced business leaders overcome this trap?
While recognizing the potential downfalls and devaluation of knowledge and experience is a critical first step, it doesn’t change the essence of how we think. As such, it’s important that we embrace new practices to proverbially “shake things up.” Here are a few you can try:
- Embrace Outsiders – From a personnel standpoint, our natural inclination is to recruit the best and brightest minds our industries have to offer. While this no doubt makes the onboarding process easier (due to the fact that they already know the “lay of the land”), it may only serve to compound our myopic thinking. As such, learn to embrace talent from completely different worlds of business. And once they’re part of the team, fight the resounding urge to simply assimilate them into your worldview as that is the exact “way of thinking” you are trying to challenge.
- Step Out – Most industries will have a handful of associations whose purpose it is to educate and elevate the masses through events, courses, webinars, resource materials, etc. While these are indeed valuable professional development partners, they too may suffer from the same experience-driven tunnel vision. As such, learn to seek out and embrace tangental learning opportunities. Instead of attending your industry’s annual “can’t miss” conference or event, find another industry that has recently experienced or is currently experiencing significant change and see what trends, challenges and opportunities are headlining their “must see” events. Immersing ourselves in their reality can be a great way to temporarily shift our minds out of our own realities long enough to think differently.
- Seek Controversy – When studying, researching and interacting with our end customers, be very wary of confirmation bias. As data can be interpreted in many ways, it is easy to elevate findings that mesh with our own thinking. Instead of doing so, learn to focus on the outliers, the input that doesn’t “fit” with the rest. This isn’t only the negative, but the sometimes “out there” feedback that can so quickly be discarded as statistically irrelevant or simply just too odd. Imagine being a taxi company getting feedback from a customer saying that they’d rather get a ride with a total stranger because it’s easier. I’m not sure if that ever happened, but if it did, it would have been quickly dismissed.
One final recommendation, which comes from our Chairman, Balaji Krishnamurthy, is to completely and literally start fresh. As he posits in his “Is It Time to Prepare the Envelopes” article, sometimes we need to take radically different actions if we desire radically different thinking.
Our CEO, David Baker, wrote a recent article that addresses the need to avoid complacency and make an intentional decision to change. He suggests that an accountability update is the only way for entrepreneurs and long-tenured executives to keep moving forward. To read the full article, click the button below: