Rosetta Stones and Strategic Balance

Everyone is looking for the Rosetta Stone that solves a problem quickly, easily, and consistently. They want heuristic solutions, which often work and are less brain-taxing, so they don't ask "why" and they don't think through a more balanced, nuanced solution to a difficult problem.

Steve Jobs made this point in an interview:

"Throughout the years in business I found something, which was, I'd always ask why you do things. And the answers you invariably get are, 'oh, that's just the way it's done.' Nobody thinks about things very deeply in business -- that's what I've found."

In the excellent book Creativity, Inc., by Ed Catmull (the CEO of Pixar), there's a chapter titled "The Hungry Beast and the Ugly Baby." It's a great example of deep thinking about corporate imperatives. 

Catmull talks about how growth and success can create the compulsive need to "feed the beast." As a company's sales grow, so also do its costs and employee numbers, creating the need for new products to: cover costs, keep employees busy, and continue growing. Corporations usually expand the product portfolio by making safe choices based on what's succeeded in the past (a movie sequel, for example, is a safer choice than an original new movie). As the pressure to quickly create increases, and the product portfolio expands, product quality tends to decline. 

A strategy that feeds the beast is often favored by sales and marketing people trying to safely drive increased sales. These folks tend to resist original new products or needed product changes that threaten existing sales, often leading to the company's demise at the hands of entrants following a new market or low end disruptive strategy. See Concepts page and discussion of Clayton Christensen

Safe products often feed the beast at the expense of original but fragile "ugly baby" projects. New projects look risky and ugly, especially relative to safe, high-returning product extensions, so they get rejected. Catmull says companies must learn to protect these new, fragile projects, at least for a time, giving them the chance to become great original products that help propel future growth. Although Catmull doesn't explicitly say so, it seems likely ugly baby projects are favored by people who design and engineer original new products.

Catmull says companies should respect the beast, because it creates a sense of urgency and promotes forward progress, but they should also respect and protect -- at least for a time -- the ugly babies that can become great products that propel future growth. Too much focus on the beast leads to an overemphasis on efficiency and short term returns. It also leads to derivative products and declining product quality. Too much focus on the ugly baby, and too much protection for new projects that aren't panning out, leads to poor focus and a declining sense of urgency. The beast can be destructive, but it’s still needed to push forward progress.

The key is to strike a balance between feeding the beast while still giving new, original projects reasonable time to grow into great products. Organic growth through a balanced approach is more sustainable than growth through a derivative, expanding product portfolio that's too focused on feeding the beast.

When it comes to corporate strategy, there is no Rosetta Stone, there is no simple heuristic. Managers must think, and must try and balance competing corporate needs.