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2/11/2010
03:50 PM
Rob Preston
Rob Preston
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Down To Business: No One Owns Market Leadership

Great companies re-earn customer trust and loyalty every single day, often using the most innovative and reliable technology.

Leadership guru Warren Bennis once offered that "companies which get misled by their own success are sure to be blind-sided." Has there ever been a truer corporate maxim? Market leaders never stay on top by basking in the glow of their reputations; even the biggest and most accomplished companies must re-earn customer trust and loyalty every day. And reliable, innovative technology is often integral to their brand integrity.

Consider Toyota, long the gold standard for automobile quality and dependability. Amid a massive recall of its cars for acceleration and braking problems--believed to be the result, at least in some cases, of faulty programming--upper management is now (finally) coming to grips with the fact that Toyota's short tenure as the world's No. 1 automaker is in jeopardy. (Read Toyota president Akio Toyoda's mea culpa in The Washington Post here.)

Or consider Boeing, which was positioned to leave Airbus behind in the commercial airplane market based on the $148 billion in orders it had received for its revolutionary 787 Dreamliner, a fuel-efficient jet based on an array of new technologies Boeing is developing with international partners. Today, Boeing is in a far more precarious position as numerous production and supply chain setbacks, including problems with the jet's flight guidance software, have delayed the Dreamliner by close to two years.

Companies rise and fall back based on their technical competency. Wal-Mart grew into the world's biggest corporation not because its greeters were the friendliest and its cashiers were the swiftest, but because of its unparalleled ability to fine tune its every process through unrelenting analysis of customer, supplier, and partner data. In many ways, Wal-Mart has become just another (though still very successful) big-box retailer because it rested on its technical "superiority" for too long. Competitors pretty much figured out what the company was doing--and in some cases are rivaling it with off-the-shelf rather than custom-developed technology--while Wal-Mart has been slow to raise the bar.

Within the IT industry, there are legion examples of the mighty falling or stumbling badly because of complacency and self-satisfaction; once pioneering companies such as DEC, Wang, Netscape, Gateway, Palm, and AOL come to mind. More current are the tribulations of SAP and Microsoft, still market-leading, highly profitable companies that must nonetheless shake themselves from their comfort zones if they're going to continue as market leaders.

In what my colleague Doug Henschen described as a "sometimes rambling, sometimes confessional press conference", SAP chairman and co-founder Hasso Plattner last week promised to start stripping away the company's bureaucratic decision-making and renew its commitment to technical innovation following the forced resignation of CEO Leo Apotheker. Microsoft was put on its heels as well last week when one of its former executives wrote in The New York Times that the company "has become a clumsy, uncompetitive innovator" and "is failing, even as it reports record earnings," mostly, he wrote, because Microsoft execs regularly sabotage internal innovations that marginally threaten their product domains. (For a rebuttal from Microsoft's top public relations exec, go here.)

The biggest step a company can take to get things back on track, as Toyota, Boeing, and SAP have done, is to admit there's a fundamental problem and get after it. The companies that then execute will continue to prosper; those that don't will make for good trivia questions someday.

Rob Preston,
VP and Editor in Chief
rpreston@techweb.com

To find out more about Rob Preston, please visit his page.

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