Back in the mid-1980s, Intel corporation faced a major decision. They had two main product lines—memory chips and microprocessors—but at the time, the profits in the memory chip business were falling off a cliff due to severe competition from Japanese companies.
So one afternoon, senior executive Andy Grove is talking to his boss, co-founder Gordon Moore. Andy looks at Gordon and says, “If the board should kick us out and bring in new management, what do you think the new management would do?” Gordon answers immediately, “Get us out of memories.” Andy then says, “Why don’t we walk through the revolving doors, come back in, and do it ourselves?” And so they did.
The rest is history. Intel went on to become one of the greatest success stories in business and Andy Grove ranks as one of the all-time best CEOs.
Andy Grove embraced change. He implemented creative destruction before the marketplace did it to his company and as a result, he not only saved his job, but Intel went on to become one of the premier technology companies in the world.
Apple does the same thing. They come out with new products that cannibalize their existing ones all in an effort to stay one step ahead of the grim reaper. Pulling it off effectively can be tricky, though, so you have to be smart about it. Remember Netlix and the “Qwikster” fiasco?
Essentially, you have to ask yourself what I call the creative destruction question,
Knowing what I know now, if I was starting my business from scratch, what would I do?
The gap between your business today and how you answer that question is your “creative destruction gap.” Make no mistake; the gap will be filled. It’s just a question of who will fill it—you or your competition.
How big is the creative destruction gap in your business?
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