Despite their espoused commitment to putting the customer first, most traditional companies operate quite differently: they tend to be competition centric. They pay a huge amount of attention to financial results, especially earnings per share, and dance to the quarter-by- quarter short-term rhythm set by the capital market.
Building Block 2: Continuous Bar-Raising Talent Pool
Most traditional companies spend enormous amounts of money and effort in recruiting, developing, and retaining talent, and yet still encounter huge difficulty in finding the right people and deploying them in the right jobs. Take recruiting for example, where many companies lack specific standards, and even if there are standards, they will easily give way to the pressing business urgency.
Building Block 3: AI-Powered Data & Metrics System
In most companies founded pre-digital, data is scattered and fragmented within different silos, layers, and business units producing significant latency of weeks and months. People seeking a full picture of what is really happening in any day-to-day operation must spend intensive efforts involving many people, and suffer long wait times, in order to dig beneath the results on the surface.
Building Block 4: Ground-Breaking Invention Machine
Most companies began before Amazon built their success on one brilliant innovation they made a long time ago. After that super-lucky and destiny-defining moment, many shied away from ground-breaking inventions, and seemed complacent with minor improvements afterwards, here and there, year after year, and sometimes limited to only the packaging.
Building Block 5: High-Velocity & High-Quality Decision-Making
Another systematic flaw with legacy management systems: decision- making happens at what feels like a glacial pace, with a “one-size-fits-all” approach applied to almost all matters requiring a yes or no. All kinds of frustrations litter a typically lengthy approval process composed of numerous executives and committees and decision are further stalled by all kinds of politics, backstabbing, gaming-the-system, and the routine charades of maximizing requests on resources, and minimizing commitments on results. All of us are probably familiar with this from our own experiences.
Building Block 6: A Forever Day 1 Culture
As they get bigger, most legacy companies find they have long lost the initial speed, agility, and vitality commonly found in start-ups. They have become rigid, slow, and risk-averse; complacency and bureaucracy have crept in. Some could sustain for a while, some would gradually fall into oblivion or irrelevance, some would become the prey for aggressive acquirers, and only a few could continuously refresh themselves.
About the Authors
Ram Charan
Ram Charan’s 27 books have sold over three million copies and include the New York Times bestseller Execution. He is a world-renowned advisor to CEOs, business unit managers, and boards of directors who value his practical solutions to complex business problems. Dr. Charan earned MBA and doctorate degrees from Harvard Business School, where he graduated with high distinction and taught as a faculty member. A noted expert and award-winning teacher of business strategy, execution, building a high-performance organization, 21st century leadership, corporate boards and succession, he has worked with leaders of some of the world’s most successful companies, including Bank of America, Verizon, Coca-Cola, 3M, GE, Merck, Amgen, Novartis, Aditya Birla Group, and Tata Group.
Julia Yang
Julia Yang is a trusted advisor to entrepreneurs, founders, CEOs and executives. She was previously a consultant at McKinsey and a private equity investor at Bain Capital and earned her MBA from Harvard Business School. She serves on the faculty of the joint MIT-Tsinghua MBA program.