Leaders in denial

“640K is more memory than anyone will ever need” Bill Gates

Above is often quoted to show the glorious uncertainly of predicting the future. To me, it talks about the genius of Bill Gates in transforming the market. He was not blinded by his vision, kept his hand on the pulse of the market and rode the wave to create a company that has made more than 12000 millionaires out of its employees. However history has enough examples of great visionaries whose vision grew on them and suffocated their companies. There are leaders who couldn’t care less for changing realities and lost everything in the process.

Unquestionably, the most critical role a CEO has to play today is that of being a thought leader and change-agent. There is a well developed marketplace for talent and skills, however you cannot borrow or outsource Vision. You got to watch out for the curves because that is where your leadership may either be reinforced or compromised.

Following is an excerpt from HBR article “Are you leader in denial”.

"The stubborn refusal of theU.S. automobile industry to admit the changeability of consumer demand is one of the best examples.

The Model T was introduced in 1908, and over the next two decades the Ford Motor Company sold more than 15 million of these cars. But by 1927 sales had flagged so severely that Henry Ford discontinued the line in order to retool his factories for its successor, the Model A. To make the change, he shut down production for months, at a cost of close to $250 million. This chain of events was disastrous for the company, because it allowed Chrysler’sPlymouth to gain market share and permitted General Motors to seize market leadership.

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Ford’s blindness resulted from a conviction that he knew what customers wanted: basic transportation. He was equally convinced that this desire would never change. His favorite slogan about the Model T—“It takes you there and it brings you back”—captured this myopic view. What Ford didn’t grasp is that every product or service has two components: the core (the product’s primary purpose) and the augmented (additional functions and features). In every industry the border between the two inevitably shifts over time.

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By the 1920s, the world was changing, whereas the Model T wasn’t. U.S. consumers had more money and more leisure time. The automobile had become more than a machine; it was a status symbol as well. GM’s president, Alfred P. Sloan, Jr., recognized this and responded with the augmented-product strategy. GM’s cars came in a variety of colors, and its models changed every year. Sloan introduced an array of products that announced their owners’ standing in the world: As Fortune put it, “Chevrolet for the hoi polloi..., Pontiac...for the poor but proud, Oldsmobile for the comfortable but discreet, Buick for the striving, Cadillac for the rich.”

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Then, hit with oil shocks and stagflation in the 1970s, U.S.consumers returned to their original desire for basic transportation. The Big Three automakers couldn’t believe that the line between core and augmented was moving again—but the Japanese could. They swept in with precisely what Americans now wanted—cars that would get you there and back again reliably and cheaply. This time, an entire industry had been wallowing in the tar pit of denial, unable to imagine that eight-cylinder behemoths weren’t the last word. But history teaches us that there is no “last word.” Is the automobile industry—in its failure to heed the shifting tides of consumer demand—exceptional when it comes to denial? Hardly. Just consider the growth stalls at Kmart, Digital Equipment, Firestone, and Bear Stearns, to name only a few. Denial has involved many other issues as well, from ignoring external forces such as technological innovation and demographic change to overestimating a company’s own capabilities and resources."