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  • MAP Asia Pacific Ltd

From Kodak to Nokia, why do so many big companies end up failing?

Ranjay Gulati teaches business administration at Harvard Business School. Speaking to Srijana Mitra Das, he discusses key strategies which can energise enterprises:

What is the core of your research?

My overall theme is studying how companies unlock growth or find ways to grow both profitably and sustainably. Initially, this had two aspects, namely understanding how a company develops a great strategy with a unique market opportunity and then carries out implementation or building an organisational culture with teams, etc. I then discovered another element. We were looking at Microsoft’s turnaround story and as Satya Nadella told us, Microsoft was transformed by understanding its purpose. This meant discussing and explaining why Microsoft exists — thinking about this allowed the company to consider what its strategy should be and build new momentum around implementation. Microsoft’s leaders spent about nine months debating the company’s purpose, its identity, worldview and motivation. They then created a oneline statement which helped focus the company’s innovations and energies.

I’ve interviewed over 200 people across 18 companies and found purpose can be a remarkable springboard to growth. My book ‘Deep Purpose’ argues that when companies invest in the idea of their purpose, it brings them directional, motivational, relational and reputational gains.

Can you share your findings on what you term ‘agility hacks’?

I was puzzled by why so many big companies ended up failing — did this happen because of inertia, complacency or tapering innovation? Sears, Roebuck & Co., for instance, invented retail, Kodak designed photography, Motorola developed mobile phones while Nokia devised smartphones — yet, all of these lost their leading position. Studying them, I realised they had created a structure of silos. This is part of a division of labour but, importantly, these weren’t bridged — no one could collaborate or connect information across them. ‘Agility hacks’ are one way to do so.

Businesses like Sony and Novartis, for instance, empowered what they saw as entrepreneurs within their company to work the system. This is very different from the traditional agility approach where businesses think they need to transform the whole company — this can take years. But some companies empower individuals inside the organisation to form small, cross-functional teams and ‘hack’ problems or deliver quick solutions, using prototyping, customer feedback and adaptation.

Sony was iconic but by the early 2000s, it had gone into a slow fade-out, missing the iPod revolution, mobile phones, etc. By 2012-13, the CEO, Kaz Hirai, saw a risk-averse bureaucracy was ending up slowing innovations moving from lab to market because these didn’t fit into existing business verticals. He then made a special unit — an innovation hack — which was to pursue concepts outside existing product categories. This team was told to explore how digitalisation was transforming the field, think of products in a cloud-first world and pursue interoperability both within and beyond Sony. Importantly, this unit would report directly to the CEO, bypassing a large budgeting and decision-making bureaucracy and quickly accessing needed resources. Treated practically as an incubator and given such cover, this team did create several breakthrough products, including intelligent home systems and devices, a 4K home projector and a glass sound speaker system.


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