Nicely Put

In his Financial Times article Why Sony did not invent the iPod, John Kay notes that there have been many cases in which large corporations saw correctly that massive structural changes were about to hit their industries–attempted to position themselves for these changes by executing acquisitions or joint ventures–and failed utterly. As examples he cites Sony’s purchase of CBC Records and Columbia Pictures, the AT&T acquisition of NCR, and the dreadful AOL/Time Warner affair. He summarizes the reason why these things don’t tend to work:

A collection of all the businesses which might be transformed by disruptive innovation might at first sight appear to be a means of assembling the capabilities needed to manage change. In practice, it is a means of gathering together everyone who has an incentive to resist change.

I’d also note that the kinds of vertical integration represented by the above mergers don’t exactly encourage other companies–which were not competitors prior to the merger but have become so afterwards–to participate in an ecosystem.

Kay references the work of Clayton Christensen, whose book The Innovator’s Solution I reviewed here.

2 thoughts on “Nicely Put”

  1. Culture eats Strategy for breakfast.

    Attributed to Peter Drucker. I haven’t been able to find a primary source verifying the quote as his, but it’s true regardless of who said it first.

  2. The combination of culture, organization structure, and incentive structure determines what strategies can actually be executed, and indeed determines what strategies are likely to be seriously proposed/considered.

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