Live or Die on Transitions – Tivo, Blockbuster, Sgi, Dec, Palm, Cisco

Recently SeekingAlpha.com ran the article "Time for Tivo to say Ta Ta."  The author (a professor) took the point of view that Tivo had filled a need, but now there were ample new options – such as on-line downloads – making Tivo obsolete.  As a result, the company should fold up its tent and let the employees move on.

I was struck, because the good professor did not seem to think it might be possible for Tivo to change its business model and move into the other growing opportunities while simultaneously maintaining the traditional Tivo set-top business until the market figures out what customers really want.  That sort of predicting future markets is dangerous for 2 reasons:

1. the inherent assumption that Tivo can be in only one market is flawed.  There is nothing stopping Tivo from participating in the marketplace robustly with mutliple solution offerings.  It can even cannibalize its own "base" revenues if the market shifts into other solutions.  Tivo could remain top of the market – regardless of what solution dominates
2. predicting future markets is a fools game.  The good professor may guess some of these futurist positions right, but he's sure to get many wrong.  Any business that bets its product development or investments on future predictions is destined to eventually get it wrong – and possibly destroy itself.  Good leaders use scenarios to realize there are multiple possibilities, and then participate in several of them in order to be assured of growth.

Fast Company points out in "Avoiding Corporate Death Spirals in a Sea of Change" that all companies hoping to remain long-lived MUST learn to transition with shifting markets.  The article parallels this blog in discussing failures at Blockbuster Video, Silicon Graphics, Digital Equipment – and more recently dramatic share declines in Palm.  All are attributed to management Lock-in on early wins, then trying to Defend & Extend the early Success Formula too long.  Market transitions killed them.  The article goes on to point out that Cisco Systems, a company held up as an example of Phoenix Principle Management here, has succeeded and grown principally because it has learned how to adjust to market shifts.

No company needs to give up.  But all companies that want to survive HAVE to learn to manage market transitions.  There is no other choice.  Shift happens.

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