I learned the danger of excessive caution long ago, when I consulted to huge Fortune 500 companies. The single biggest problem I encountered — shared by virtually every large company I analyzed — was investing too much of their time and money into defending old ways of doing business, rather than building new ones. We even had a proprietary tool for quantifying this misallocation of resources — which spelled out the mistakes in precise dollars and cents.
But senior management hated hearing this, and always insisted that defending the old business units was their safest bet. After I encountered this embedded mindset again and again and saw its consequences, I reached the painful conclusion that the safest path is often the most dangerous. If you pursue a strategy — whether in business or your personal life — that avoids all risk, you might flourish in the short run, but you flounder over the long term. Sad to say, that’s what now happening in the music business. Keep your head in the sand long enough, and you suffocate.
The leading companies in music had many chances to reinvent themselves over the last quarter century, taking bold action that might have transformed themselves and the entire culture. But they didn’t want to take any risks. They could have invested in new technologies — but didn’t, instead allowing Silicon Valley companies to swallow up most of the profits from music in the 21st century. They could have signed and nurtured new talent — but didn’t, preferring to invest in 50-year-old songs. They could have embraced exciting new sounds — but didn’t because the algorithms and dominant formulas reward rehashes of the old sounds.
Ted Gioia, “Is Old Music Killing New Music?”, The Honest Broker, 2022-01-19.
April 20, 2022
QotD: Innovation and risk-taking are anathema to Fortune 500 companies
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