In this last article about systems archetypes, we talk about three that are the result of the balancing loop: escalation, drifting goals, and underinvestment. Let’s look again at the archetype diagram:
Many of us will remember the arms race of the 60s through to the 80s, where NATO countries stockpile more missiles in reaction to the Eastern Block’s arsenal growth. This then triggers the escalation of tension between the two until it comes to a head. Unless someone unilaterally decides to de-escalate the situation, taking the risk of becoming a target, the situation might blow totally out of proportion. The fact is, escalation happens in many situations in business, and every time we take action in retaliation for a competitive move, we may unwittingly create the conditions for such escalation. My fix, in other words, becomes your nightmare, which then requires you to fix your situation, which then becomes my nightmare. A vicious cycle indeed. Yet, what this results in is a diversion of precious resources away from building new business and into maintaining a current competitive one. This waste will come back to haunt you.
Another outcome of the balancing loop is the drifting goals archetype. Remembering that there are time delays in systems, and this delay may result in a settling for less, company performance will to start drifting downwards, leading ultimately to its doom. This is not uncommon. There are countless companies who have failed to react to changes in the economy, continuing to offer the same products and services, all the while hoping for something better. Yet while they wait for something better, they settle in on a cost structure that cannot be sustained. The more they wait for a solution, the more the company’s performance drifts; hitting the point of no return and they implode. All businesses need to recognize this sign and stave off drifting goals by jumping onto something new, something innovative, and something novel. Innovation is the antidote.
Ultimately, if a business fails to recognize drifting goals, then it would lead to underinvestment, and ultimately, to its demise. Yet investment cannot come in when the business is failing, it has to come in when it is growing. It should always be on the lookout to creating a disruptive model, a new product, an exciting future. Investment can come in only when there is money to be invested. So don’t wait until its too late; look to reinvest at every opportunity.
When one looks at the diagram above, it seems like underinvestment and decline are inevitable. That will happen to all companies if they do not take innovation seriously. Innovation is not simply a nice-to-have these days, but a must-have. If you don’t have an innovation plan, then you have a plan for decline. Which one is yours?