A Crisis Is A Terrible Thing To Waste

Samsung preaches the gospel of perpetual crisis. That’s why forty percent of
employees work in research and development looking for the next
breakthrough. That’s why deadlines are never changed. It’s why design teams
volunteer to live and work 24 hours a day in their Innovation Center. They
pursue perfection against the clock until they deliver. The result? Over 1600
patents each year, the industry’s lowest costs, highest profits, and weekly
announcements of the "world's first" or “world's best".

People need some reason to make tough choices. Organizations find it even
harder to make progress without knowing that it "has to", and will usually wait
until a real crisis comes along before getting on with the hard stuff that is
essential to moving forward.

A crisis is not the same as a disaster (although a disaster may prompt a crisis). It is
as a ‘crucial or decisive point or situation’ or a ’turning point’. Such turning points
force a choice between inertia and innovation. When faced with a crisis ask: How
can we use this crisis to inspire innovation?

IKEA’s history is a sequence of such choices. Competition with other mail order
firms led to its first showroom. Supplier boycotts led to it designing and building
its own furniture. Transportation problems led to the flat pack concept. A
showroom fire led to a much bigger showroom concept. Insufficient numbers of
sales people at the showroom launch led to the self-service idea. It would have
been easy to waste each crisis but instead they inspired innovation.

Waiting for a real crisis to drive innovation may not allow enough time or
resources for new ideas to save the company. By the time anyone recognizes a
real crisis, it may be too late to do anything about it. Even if the company
survives, the real crisis does not happen often enough to motivate continuous
improvement, progress, or growth.

• You can look into the future. What may endanger your company? What
products could your competitors launch? What new laws may challenge the
way your company does business? How will customer-needs develop?
What do you have to better to thrive in the future?
 • You can look into the past. What has threatened your company in the
previous years? What has killed other similar companies? What threats
have there been to your country? Or your

• You can look at the present. What events of the day encourage a sense of
urgency? How will political victories or losses impact on your plans? How
do new discoveries challenge your markets? What can you learn from the
successes and failures of others?

Intel also believes in using crisis to drive innovation. Since computers don’t really
wear out, the only way to convince customers to buy a new one is to make it
twice as good. To achieve this Intel aims to double the speed of its computer
chips every two years. They decided that the only way of innovating fast enough
is to use fear of future events to motivate urgent focus. It did this by encouraging
what it calls a ‘culture of paranoia’. Everyone worried about real and imagined
threats. Everyone practiced ‘constructive confrontation’ to express opinions
bluntly to subject proposals to aggressive, desk thumping, red-faced criticism. All
in the hope that it would force tough action before a real crisis wiped out the
company.

There are limitations to such a culture. Being paranoid may mean that you notice
threats but it does not mean you know what to do about them. Nor does it mean
that you can get the company to do what you think has to be done.

Paranoid Intel has known for decades that its success in chips for personal
computers was getting in the way of developing new chips for other gadgets. It
has tried and failed many times to do anything about the impending crisis. Yelling
is not the same as open discussion. Vitriol is not an effective replacement for
reasoned argument. Is it likely that people with the most valuable opinions will
also be those with the loudest voices? Won’t managers be most likely to win?

The strength of the Samsung approach to ‘crisis culture’ is that it builds in urgency
and focus at the start of the project. This is where it has the greatest impact. First,
it seeks to avoid the main reasons innovations fail – because they are late or
incomplete. Second, simplifying and improving the design at the start helps every
stage of production. Third, it only demands paranoia from small groups over a
short period. This is crisis culture that is attempting to be effective, flexible, and
sustainable.
References

Grove, AS, 1999, Only the Paranoid Survive: How to Exploit the Crisis Points That
Challenge Every Company, Currency

Michell, T, 2008, Samsung Electronics and the Struggle for Leadership of the
Electronics Industry, John Wiley & Sons

Griffiths, P, 2006, Intel Inside, BusinessWeek, January 6 2006

Kamprad, I, & Torekull, B, 1999, Leading by Design, HarperCollins

Lewis, E, 2008, Great IKEA!: A Brand for All the People, Cyan Books