Red Giant Syndrome - How to turn around a tech juggernaut on the verge of implosion.

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We all know huge tech companies suffering from Red Giant Syndrome: Yahoo!, Research In Motion, AOL, Nokia. Companies, once dominant in their markets, that continue to sell a huge number of products …

We all know huge tech companies suffering from Red Giant Syndrome: Yahoo!, Research In Motion, AOL, Nokia. Companies, once dominant in their markets, that continue to sell a huge number of products and services yet are losing consumers and customers at an alarming rate. Barring radical change, each is bound to collapse within a few years.

We call this situation Red Giant Syndrome. The term, borrowed from astronomy, originally refers to when a star exhausts the supply of hydrogen that has sustained it for millions of years and begins gobble up any bits of matter it can convert into fuel to sustain its existence. Consequently, they grow to hundreds of times their original volume while dramatically dropping in density. Over time, this imbalance leads to collapse.

But it doesn't have to be that way. IBM and Apple - both once "Red Giants" - successfully came back from the verge of implosion. How did they do it? We explain the 3 critical steps in this Slideshare. To read the accompanying article, head over to Forbes. http://blogs.forbes.com/jump/

Design by: Laura Polkus, http://www.laurapolkus.com

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  • 1. How to turn around a tech juggernaut on the verge of implosion By Peter Mortensen Jump Associates, October 2012.
  • 2. once mighty tech companies are speeding toward sudden irrelevance at an unprecedented pace..
  • 3. nokia’s revenue is off 15%. 2011 Revenue Growth: -15.7% 2011 Net Income Growth: -64.8%.
  • 4. Research in Motion’s revenue is down 8%. 2011 Revenue Growth: -8.5% 2011 Net Income Growth: -66.9%.
  • 5. And Yahoo!’s “growth” is negative 16%. 2011 Revenue Growth: -16% 2011 Net Income Growth: - 2.8%.
  • 6. Given these numbers, and all the negative press, you’d think these companies’ revenues were just 200 dollars last year..
  • 7. but YAHOO! HAD ALMOST $5 BILLION IN REVENUE IN 2011. 2011 Revenue: $4.99 billion 2011 Net Income: $1.1 billion.
  • 8. rim pulled in nearly $17.8 billion in revenue in 2011. 2011 Revenue: $17.8 billion 2011 Net Income: $1.1 billion.
  • 9. and NOKIA EARNED NEARLY $50 BILLION IN REVENUE IN 2011. 2011 Revenue: $48.3 billion 2011 Net Income: -$3.25 billion.
  • 10. While the growth engines of these massive enterprises have run out of fuel, they continue to survive thanks to scale and inertia..
  • 11. They have become the business equivalent of Red Giants – stars that try to postpone their deaths by consuming all the planets around them. (This will happen to Earth, eventually.).
  • 12. Unless something changes, these companies will go nova – scattering patents, people, and profits as they go down..
  • 13. Unless something changes, these companies will go nova – scattering patents, people, and profits as they go down. Understanding that you’re at risk of becoming a Red Giant doesn’t stop it from happening..
  • 14. RIM treated touchscreens as a niche market, and accordingly just created one touch phone. (and a terrible one, at that.).
  • 15. Nokia took too long to select a next-generation OS..
  • 16. And Yahoo!’s acquisitions could have worked if it didn’t sit on them. ( flickr could have been Instagram, for example.).
  • 17. So what’s a CEO thrust into the position of leading a Red Giant to do? Is the company doomed, or can a new direction help?.
  • 18. Apple successfully grew its revenue from $9 billion in 1996 to over $100 billion in 2011. 1996 2011 Revenue: $9.8 billion Revenue: $108 billion Net Income: -$816 million Net Income: $25.9 billion Revenue Growth: -11% Revenue Growth: 62.8% Net Income Growth: -92% Net Income Growth: 97.5%.
  • 19. And IBM, with revenue at $64 Billion in 1991, successfully turned itself around by 2011, to rake in over $107 Billion. 1991 2011 Revenue: $64.5 billion Revenue: $107 billion Net Income: -$5 billion Net Income: $15.9 billion Revenue Growth: -1% Revenue Growth: 7% Net Income Growth: -78% Net Income Growth: 7.5%.
  • 20. How did Apple and IBM reverse course on the edge of extinction?.
  • 21. Here are 3 leadership imperatives to save a Red Giant.
  • 22. Here are 3 leadership imperatives to save a Red Giant 1. Figure out what makes you great and organize accordingly..
  • 23. Here are 3 leadership imperatives to save a Red Giant 1. Figure out what makes you great and organize accordingly. 2. Buy time to reinvent the business with incremental innovations..
  • 24. Here are 3 leadership imperatives to save a Red Giant 1. Figure out what makes you great and organize accordingly. 2. Buy time to reinvent the business with incremental innovations. 3. Place big bets on a few adjacent markets, then double-down until you hit..
  • 25. 1. Figure out what makes you great and organize accordingly..
  • 26. Steve Jobs shut down everything outside of integrated hardware and software. IN: Beautifully integrated Out: everything else (all businesses killed in 1997 or 1998) hardware and software Video Games Clones Business and Newton Standalone Apple’s mid-1998 product line Consumer printers Software.
  • 27. 2. Buy time to reinvent the business with incremental innovations..
  • 28. Apple released the iMac in late 1998 – it went on to become the fastest selling Mac ever built. It created good PR for the company until OS X could be launched in 2001..
  • 29. Motorola released the RAZR in 2004 and it quickly became the company’s hottest phone ever. It restored Motorola as an innovation leader..
  • 30. Motorola released the RAZR in 2004 and it quickly became the company’s hottest phone ever. It restored Motorola as an innovation leader. But, Motorola had no sequel, which allowed Samsung and others to grow until the iPhone lowered the boom..
  • 31. RIM released the Blackberry Curve in 2007. It was their first big consumer smartphone and actually outsold the iPhone for the first year on the market..
  • 32. RIM released the Blackberry Curve in 2007. It was their first big consumer smartphone and actually outsold the iPhone for the first year on the market. This bought the company time to create and launch a proper response to the iPhone and Android, but RIM never did..
  • 33. 3. Place big bets on a few adjacent markets, then double-down until you hit..
  • 34. Over time, IBM has entered a number of new businesses that have become its new core. 1994 2011 Hardware & Software Hardware & Software IT Consulting Business Consulting eBusiness b2b Internet Integrated Solutions Vertical Internet Business Intelligence PwC Aquisition Smarter Planet Initiatives Big Data.
  • 35. 1. Figure out what makes you great and organize accordingly. 2. Buy time to reinvent the business with incremental innovations. 3. Place big bets on a few adjacent markets, then double-down until you hit..
  • 36. Red Giants don’t have to end in death and destruction, they can also lead to reinvention..
  • 37. w jumpassociates.com T @JumpAssociates F JumpAssociates.