Playing it safe is not safe anymore… that’s the key lesson from Lean Startup author Eric Ries’ interview with McKinsey, the global management consultancy. In a world where, any kid with $1,000 in their pocket is able to, as Ries puts it, ‘rent the means of production’, established businesses and brands are no longer safe.
Whereas in the past these ‘Blue-Chip’ companies were able to spot challengers coming and decide whether to buy them or battle them, now they are simply being outnumbered by the scale of change. We’re seeing death by a thousand cuts – as not one challenger emerges but a host of nimble, fast competitors who are collectively targeting every part of a market. These challengers have no ‘sunk costs’ to concern them, no legacy systems to worry about and no ‘Cover your ass’ corporate structures to hold them back.
For start-ups like this the price of failure is low, so they’re willing to experiment and try new things, but for established businesses the price of failure seems high. But, as Ries argues, the price of not failing is higher – because not failing means you’re not trying hard enough and if you’re not trying hard enough someone else will soon overtake you.
Big brands must recognise that the world has changed – tweaking product or service offerings is no longer enough because it’s not about one potential competitor but ‘thousands or millions’. They need to embrace disruptive innovation – and with it the idea of ‘Productive Failure’ – in order to stay ahead of the competition and ensure they don’t go the way of the Kodak or Blackberry. It’s not easy but it sure beats the alternative.