Tim Wood Powell     The value of knowledge

Stop me if you’d heard this one.

“[COMPANY] is in the final stages of preparing a bankruptcy filing, clinching a long fall for a company with humble beginnings that helped change the way Americans buy [PRODUCT], but failed to keep pace with the [CHANGE] rocking every corner of the [INDUSTRY] landscape.”

Today (February 12, Wall Street Journal) the missing words are ‘Borders’, ‘books’, ‘digital transformation’, and ‘media’, respectively.  Tomorrow there will be another company in another industry that pays the ultimate price for not “seeing” what has been going on for some time.

I put seeing in quotes because seeing has two major dimensions—perceiving what is happening at an organic level on the one hand, and incorporating it into a world view and subsequent actions on the other.  Social scientists have long documented that cognitive dissonance, the human mind’s ability NOT to perceive what it finds contradictory or threatening, is a powerful force.

We like to think that organizational intelligence is the eyes and ears of the organization, and in a very literal sense it is just that.  But what the eyes and ears capture—physical sight and sound—must be processed by the human brain in order to yield meaningful images.  Likewise, so must relevant signals in the competitive environment not only be swept in by the organization’s eyes and ears, but also processed and analyzed by a sense-making and action-taking capability.

Maybe it will go away

Most people with a basic understanding of our world realize that digital media are taking over the roles formerly played by books and other ‘hard’ media, and that this has been going on for a while.  So how did Borders—whose very existence depended on knowing this—miss it?

I remember my conversations with publishers as long as 20 years ago about the digital tsunami that was about to hit their industry, and would transform it completely.  They saw this with their eyes—but not with their brains.  They didn’t want to hear the message, and were adept at avoiding what seemed obvious to many around them.

What drives this willful ignorance of negative signals?  From my business clients, the answer I heard most often was that doing digital projects would ‘cannibalize‘ revenues from existing products.  To me, this sounded tantamount to, “If we ignore digital, maybe it will go away.  We’re making too much money doing what we’ve always done.”

You cannot build a meaningful future around only what has worked reliably in the past. Especially if you’re in the middle of a major structural transformation.  And in my experience, most industries continually experience some level of structural change—be it greater or lesser.  (My previous post discusses this further.)

Today it’s Borders.

Tomorrow, who?  Your major customer?  Supplier?  YOU?

PS:  I just received Margaret Heffernan’s book Willful Blindness, which goes into these and related areas in much more depth.  It looks terrific!

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