The Perils of a Pat Hand
Howard Sosin, master of some of Wall Street's newest and most complex financial products, is "always doing things an order of magnitude more complicated" than anyone else, says a competitor. "As his business grew and rivals began to muscle in on the turf of AIG Financial Products, (he) always managed to push on to new territory," the Wall Street Journal reports.
What's the big deal? Someone gets a hot idea. He makes big bucks. Others smell opportunity. They invade his newly won turf. He upgrades. It's day one in Econ 1.
But things have changed. The pace at which "they" invade has increased dramatically in any market you can name. (Telling recent statistic from Harper's Index: days between the 1978 Jonestown tragedy and the first made-for-TV movie about it, 513; days between the 1993 Waco disaster and its first TV movie, 34.) As a result, the rate at which you must upgrade has increased. And, more important, the nature of upgrades has changed. That is, modest tweaks to your new restaurant or new software are not enough to fend off intruders; you must, like financier Sosin, constantly engineer order of magnitude shifts.
All this struck home during a recent discussion with old friends who run a business north of San Francisco. The trio started about six years ago, and their high-end sporting-goods store knocked the socks off the competition—and became the keystone for altering the tenor of a raggedy three-block collection of shops.
They welcomed the occasional snoopy visitor trying to figure out what made them tick. Then, about 18 months ago, an energetic challenger opened up a mile away—and leapfrogged my friends' operation. Now the newcomer seems to be taking business away from them at a pretty good clip. (I guessed the two were in separate markets. I was wrong.)
My pals are still passionate about their work; they chose the business based on love first, commercial prospects second. And over the years they've steadily added new wrinkles. Moreover, they're prepared to keep at it.
But they aren't prepared to more or less abandon their time-tested formula and aim for a quantum leap or Sosin-like, order-of-magnitude departure.
Given their track record, I'm rather certain they could come up with a sizable chunk of capital, if necessary, for a wholesale repositioning. What's missing is an emotional commitment. What's present is denial.
Oddly (all three are very bright), they don't seem to get it. They've worked like hell to secure what they created (more than any dared dream, financially or artistically). They still unflinchingly put in yeoman-like hours. So why should they, in effect, have to scrap their baby and do something brand new?
Their problem is also faced by IBM, Procter & Gamble, Apple, Kodak and Sears—among many, many others, including virtually every receptionist, insurance-claims processor, physician, engineer and executive.
The nutty world now demands wholesale reinvention of darn near everything and everyone, every few years (three? five? seven? two?). It's not enough, as individuals, to constantly "upgrade" our skills. It seems as though routine (an odd use of that word) repotting is called for. We must branch into whole new fields, and assume nothing less than a four-career career, or something close to it.
So what can we do? For my friends, I suspect the choices are: (1) take six-month (minimum) sabbaticals doing something weird, and see if that whets the appetite for genuine revolution; (2) bring in a new general partner, from somewhere rather far afield, as an equal, even if it significantly dilutes hard-won equity; or (3) sell the business and avoid future emotional and monetary losses. Each strategy constitutes strong medicine, but will less astringent remedies do?
The challenge for someone trudging through a corporate career is similarly daunting. She or he (or you?) might, for example: (1) launch a three-year, night-school program aimed at acquiring a complete new set of skills (with or without employer support); (2) angle for a lateral, or even downward, job shift that catapults you into a brand new arena; or (3) seek a thankless, high-risk assignment (opening the new subsidiary in, say, Moscow) that forces you to sink or swim.
All these strategies take guts. Or do they? Look around, and you'll see that those individuals and organizations who've sat on pat hands or puttered at incremental improvement have been punished in recent times. And the forces at work administering that punishment are barely loosed. Bitter medicine or heady challenge (depending on your beliefs), what's the alternative?
(C) 1993 TPG Communications.
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