There was a great article in the Harvard Business Review, “Knowing When to Reinvent” by Mark Bertolini, David Duncan and Andrew Waldeck, that does a great job of showing the indicators of when you need to reinvent your business. Although Bertolini is CEO of Aetna, the insurance company, the lessons are very relevant for game and technology companies.
In my twenty plus years in the game industry, I have seen many great companies fail because they waited too long to reinvent their business. You can look at companies that missed the shift from PC to console (the Infogrames and CDVs), the transition from console to free to play (the THQs and SEGAs), or the transition from Facebook to mobile (the Zyngas and PopCaps). Conversely, I have seen many fail when they lose focus and chase the cool shiny object too early (the NeoGeos and Playdoms).
Bertolini, et al., first make the point that “no business survives over the long term without reinventing itself.” While nobody argues this point, knowing when to start a deliberate strategic transformation is extremely challenging. There are several obstacles to such a change:
- Employees feel threatened;
- Customers can be confused or alienated;
- Investors see uncertainty and often punish what they consider higher risk.
Ironically, the better a company is doing, the harder it is to pursue strategic reinvention. Investors (i.e. the stock market) are happy with current performance. Although they may prefer a wait and see attitude, that can often lead to reinventing yourself too late (which happened to Borders and Blockbusters).
To understand when you should start the process of reinventing your company, the article’s authors define five fault lines that show the underlying business is less stable than it appears. The fault lines focus on business fundamentals:
- Is your business serving the right customers and using the appropriate performance metrics?
- Is your business positioned properly in its ecosystem and using the best business model?
- Does your business’ employees and partners have the needed expertise?
These three areas lead to five fault lines that show if your business needs reinventing. Continue reading “When to reinvent your company”
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