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Tech firms: Quit while at the top - or regenerate

Tech firms: Quit while at the top - or regenerate

History indicates that the leaders in one wave rarely survive to dominate the next, says Gartner.

The pervasive role of technology now exposes every company, not just technology companies, to increasingly rapid technology-driven life cycles, which are typically less than 10 years, reports Gartner.

“Long-term expansion cycles influence all businesses, and your major competitor in 10 years - if you survive that long - probably does not exist today,” says Steve Prentice, vice president of the analyst firm.

Your major competitor in 10 years - if you survive that long - probably does not exist today

Steve Prentice, Gartner.

History indicates that the leaders in one wave rarely survive to dominate the next, says Prentice at the Gartner Symposium in Barcelona. “To compete in this environment business leaders must destroy and rebuild the very businesses they helped create.”

Prentice cites examples of IBM Personal Systems Group, Nokia, MySpace, Kodak, Borders, HMV and other companies that have struggled or even failed to remain relevant.

Nokia’s metamorphosis is an example of embracing the concept of destruction and reinvention, while the current business model still remains successful, he states.

"The divestiture of IBM Personal Systems Group to Lenovo and subsequent changes of company’s focus is another example.

"Apple is another company which almost came to extinction several times over its life, and then dominated the next technology wave through significant changes to its operations.” To survive and even prosper beyond the first decade requires continual reinvention.

He says timing is a key challenge for companies that want to reinvent themselves.

“The idea to ‘quit while at the top’ or to regenerate, may seem counterintuitive, but may be the only winning strategy,” says Prentice. “It requires total commitment from the board of directors and other stakeholders, ongoing support from the workforce, but above all, the conviction in the correctness of the course of action being taken.

“The most challenging aspect is the need to destroy or walk away from what appears to be successful, but will rapidly turn into a crippling legacy which prevents regeneration.”

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