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CHANGE HAPPENS; EVOLUTION IS REALITY
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made a bold bet. The company aspired to be a global leader in the business, and it experimented with alternative oscillation technologies (quartz, mechanical, and tuning fork). This pushed Seiko s transformation from merely a mechanical watchmaker into a quartz and mechanical watch company. This move into low-cost, high-quality watches triggered wholesale change within Seiko and, in turn, within the worldwide watch industry. Even though the Swiss had invented both the quartz and tuning fork movements, they chose to reinvest in mechanical movements. But ultimately the quartz movement won the oscillation battle to become the industry standard. As Seiko and other Japanese firms prospered, the Swiss watch industry suffered.
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The Problem of Inside Thinking
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Enterprises that sustain their growth over a period of time are seen as successful. With that success, a we know best culture often develops. And why not After all, the evidence seems to suggest that these managers and employees do know best. Over time, pride can lead to overconfidence or arrogance. When people think that they have the answers and others don t, they tend not to pay much attention
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REpositioning
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to those others especially outsiders because it seems like a waste of time. What s the downside An organization that is inwardly focused inevitably misses new opportunities, overlooks threats from competitors, and misreads changing customer needs. When you don t see opportunities or hazards, your sense of urgency drops. With less urgency, you are even less inclined to look outside for the new possibilities and problems. Complacency grows. Examples abound of how success creates size, market power, and an entitlement culture, all of which, in turn, create an inward focus, a lack of understanding of external reality, and a total lack of urgency to correct the problem. Success in repositioning must come from outside thinking. That s where the market is located.
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CHAPTER FIVE
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THE BIGGER THEY ARE, THE HARDER THEY ARE TO CHANGE
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Big is the enemy of change.
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With size comes a large degree of inflexibility, ego, vested interests, and other bad things that hamstring a company in this age of the unpredictable. Just look around you at the wreckage of our largest institutions, such as AIG, GM, Merrill Lynch, Citicorp, and others. Repositioning requires a certain degree of flexibility that size makes very difficult, if not impossible. If you re going to get big, do it the way United Technologies does it. It has assembled a number of highly specialized brands that operate on their own, such as Otis elevators, Carrier air conditioners, Sikorsky helicopters, Pratt & Whitney jet engines, and Norden electronics. Each of these companies could reposition itself if necessary, with little impact on the rest of the organization. Do you think many people know that Otis is owned by
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THE BIGGER THEY ARE, THE HARDER THEY ARE TO CHANGE
United Technologies Does it matter Each brand has retained the flexibility to deal with whatever happens in this fast-changing world. When you start to study the subject of getting big, you quickly come up with a stunning amount of research and analysis that seriously questions whether bigger is better. By the time we finished, we began to wonder what in the world these CEOs were thinking about as they got trapped in the land of merger mania. Let s start with the academics.
The Bigness Complex
Two economists produced a 400-page analysis that confronts the quintessential myth of corporate culture: that industrial giants are the handmaidens of economic efficiency. In a book entitled Bigness Complex (Pantheon Books, 1986), Walter Adams and James Brock argue that the preoccupation with bigness is at the heart of the United States economic decline. A little hindsight shows that they miscalled our economic decline. Quite the opposite occurred: we roared off into an amazing economic expansion. They also missed the fact that these big companies have been falling apart on their own, so we don t need any government policy to keep bad bigness things
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