It may have paid several times over in the 1980s. Management of DEC made two major blunders. First, it didn't aggressively change the business design to depend less on midrange computers and to concentrate more on the PC and the approaching client/server revolution in the late 1980s. Second, management was hesitant to totally embrace the Internet as a "bet-
the-company" future trend in the middle of the 1990s. Most businesses struggle greatly to cannibalize their current systems in order to reallocate assets to directly challenge e-start-ups. For example, if you are Toys "R" Us, it is challenging to overlook current assets—1,000+ retail locations—in order to immediately compete with eToys. Industry after industry is seeing
this same problem reappear repeatedly. The great conundrum management faces today.Changes in corporate design mixed with time's constraints to markThe value of any company comes from the needs it meets rather than from the goods it sells. Under this "back-to- the basics" approach, breaking out the value chain lets companies separate the means—
That is products from the ends
or consumer needs. Disaggregation calls for spotting, appreciating, and supporting the actual core of the company demands the products and services of the organization satisfy. This method helps managers to rethink basic capabilities, break out outmoded systems, and find fresh ideas and value sources of the best examples of the disaggregation and
reaggregation approach is Intel, whose constant innovation in chip design and manufacturing For business leaders like Intel, disaggregation is a vital tool since effective companies would have to discard previous paradigms—systems, strategies, products—while these assets have equity. Although it's dangerous, the foresight to cannibalize a thriving business concept takes
guts; the reward can be rather large.New technologies and et present major managerial problems. The existence of a corporation in the modern world rests on its capacity to predict, evaluate, and react fast to evolving consumer expectations. No amount of patchwork will help if the business design of a company is poor or based on outdated assumptions.
While working harder and longer
utilizing an antiquated business model results only in companywide dissatisfaction and risk, standing still and dreaming for silver-bullet solutions results only in grief when none is come. Neither strategy is practical for tackling a problem so basic to the direction any company should be headed: How should a company be built to manage the major problems provided
by new competitors This will help to ignite the spark of innovation in the present business models, therefore enabling the company to compete meaningfully in the new economy. Unless it creates a clear plan to fit the structural upheaval suggested by the e-commerce revolution, a company would find itself frantically trying quicker and harder merely to survive.
High Stake Transformation Why do profitable companies fail Companies which fail to evolve are treated mercilessly in the market History suggests those companies most suited to grab the future hardly ever do. As Alvin Toffler noted in Future Shock, either we react hardly at all or we react rapidly or insufficiently to the change all around us. He referred to our "future
Shock our helplessness in the face
of demanding change. Senior managers too often lack the capacity to effectively implement change and either grow overly confident or fail to foresee change. CompuServe and Prodigy. Their experiences are another illustration of market leaders who did not change fast enough. Established in 1969, CompuServe provided to its members hundreds of distinctive content
categories including unparalleled business and professional tools, industry-renowned forum areas, the most current news and information, and searchable databases. Prodigy arrived on stage in 1990 under the joint venture between Sears and IBM. Prodigy had two million members at its height and creative offerings that would be regarded as cutting edge even
now. Prodigy and CompuServe were both exactly positioned to profit from the Internet Regretfully, both stumbled. They watched as America Online, a nimble, fierce rival a fraction of their scale grabbed the Internet and eliminated market share. While internal management issues crippled Prodigy and CompuServe, AOL was bombarding the United
Conclusion
States with floppy disks. Within short time, AOL's management developed a strong brand and outperformed rivals. Sears sought to sell its share in Prodigy in 1995, as losses mounted. IBM was ready to purchase but felt the price was excessive. At last, the two firms sold Prodigy to staff members in 1996. Parent H&R Block sold CompuSever to AOL in Of the five major consumer internet services available in 1994, four were owned by significant
CompuServe and Prodigy's stories highlight the biggest issue businesses face: learning to live with constant change if they are to maintain expansion. Constant change means that companies have to produce a healthy uneasiness with the status quo, have the capacity to spot developing trends more quickly than the competitors, act fast, and be agile enough to generate new business models. Stated differently, businesses that want to flourish have to be
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