Levelling Up In Life, Avoiding Complacency

It is very dangerous for a business to rely on one particular technology or hero product/service line for it’s continued success. There is a strong temptation to stop innovating when your business comes across a technology product/service idea that takes it to the top.

Lake Tekapo Air Safaris Grand Traverse

Blackberry and Nokia are examples of companies that rested on their laurels and fatally took the temptation to coast along enjoying the good times. Now they are learning, perhaps too late, that complacency was one of their biggest weaknesses.

A wise approach for any organisation or individual is to see every piece of good luck or success as a great occasion that must be leveraged swiftly to generate more success in the future. In gaming terms this approach is called “levelling up“.

According to a recent article in New Scientist Level-up life: how gaming can enhance your reality:

“Sophisticated video games have had demonstrable effects on their players. For example, people who frequently play action games often outperform non-gamers on measures of perception and cognition. Other studies have found that intense video game practice improved players’ ability to carry out complex hand-eye coordination tasks and their contrast sensitivity.”

“This shouldn’t be a surprise, says Mark Burgess, a neuropsychologist at University College London. “The brain is constantly reconfiguring itself. Everything new that we learn means that some connections in the brain have been added or altered, even if temporarily,” he says.”

“As a result, Burgess says, the brain is continually creating “schemata” – behavioural ruts that have become entrenched through repetition.”

I haven’t played video games for several years but I did play them for about 15 years. Some of the in-game strategies definitely rubbed off into how I have approached IRL (In Real Life) situations since then.

The kinds of games I enjoyed most were in the real time strategy genre like Dune 2 which required making strategic moves that would pay off in the long term, exploring unknown territory to find and harvest resources that would be accumulated and spent wisely on defensive/offensive measures.

Clearly Blackberry and Nokia are companies that failed to “level it up”. They were happy with their status and resources, so declined taking on risky quests to build new skills and strengths. In the meanwhile their competitors were quietly innovating and building an army of products to attack the complacent market leaders.

Respected mobile industry analyst Horace Dediu from Asymco recently noted that there are “historic consequences of a dip into negative operating margins for a phone vendor”, namely that “there are no examples of vendors who recovered from a position of loss making” which Nokia has recently entered.

Nokia’s result for Q1 2012 was a $1.8bn loss and details show that it is burning through cash reserves, which caused credit rating agencies S&P and Fitch to downgrade Nokia to junk status.

As for RIM’s Blackberry devices their path in the future is also uncertain.

While the Bring Your Own Device (BYOD) trend has meant a lot of organisations have been forced to allow employees to use their iPhone and Android smartphones at work, Blackberry’s security credentials mean it is still mandatory for some kinds of organisations especially government and defence.

We will have to wait for announcements from the annual Blackberry World event May 1st-3rd to see whether the press and analysts become more confident. In the meanwhile analyst Horace Dediu says of RIM that all their “growth since [2005] has been in consumer segments. By abandoning that trajectory RIM is effectively giving up on growth. And giving up on growth is simply giving up.”

It would have been far more sensible for these companies to recognise that things can change quickly in the tech sector and it would be wise to invest a significant portion of earnings from a winner idea at the peak of it’s success into looking for new opportunities that could provide new diversified sources of income.

Jean-Fran├žois Manzoni, Associate Professor of Management at IMD International in Lausanne and founding director of the INSEAD-PwC Research Initiative on High Performance Organisations wrote a great magazine article “The Battle Against Complacency” (PDF) which is well worth reading

In it he outlines several ways that can help individuals and organisations battle complacency:

  • Keeping a clear focus on the target and/or the vulnerabilities – one of the best ways is to focus on a specific competitor, even if they are #2 or #3 in your field and you are leading in position #1.
  • Continuous search for better practices – never decide that you have become an expert in an area to an extent that you don’t have to learn how to improve in it further. Remember you can learn from people who are not in your specific field as well.
  • Listen carefully – to what customers are saying and allow new employees to make anonymous reports at the end of their induction about organisational procedures that seemed inefficient/illogical etc.
  • Face reality – Do not punish staff who speak their minds and warn about risks up ahead if they can back up these fears with evidence and a track record of good judgement.
  • Allow Spare Bandwidth – Give yourself and staff time in their schedules to have energy to contemplate the future rather than treating them like hamsters on a wheel. People exhausted from “firefighting” spot fire problems all the time are much more likely to miss a looming crisis approaching in the future.

I agree with many of Associate Professor Manzoni’s points.

The case study I can supply from my own experience is recently passing earning $100,000 in total over the years from Google Adsense advertising revenue share on my websites, which is a significant amount of money for a solo operator. I was reluctant to share my story as an example but some business friends thought I should because it’s a good example of forward planning.

I looked ahead in late 2008 and saw several big potential risks including the $AUS rising against $USD (which would impact on the $US portion of Google advertising revenue share payments) and a high probability of an increasing flood of low grade web content being created by companies like Demand Media that would crowd out small operators like myself from ranking as highly in search results.

Adsense 100K

So I saved a large part of the money and 3 years ago while it was still coming in at a healthy rate I diversified into other business areas such as a separate travel/photography site The Road Less Travelled which is growing nicely, events photography, photojournalism and freelance writing for a range of magazines and news/opinion websites.

Fast forward to now and for the reasons I predicted Google advertising is still a useful source of revenue but not as much as it used to be. However that’s OK. I didn’t complacently coast along during the good times so have a diverse range of replacement revenue sources instead.


5 comments on “Levelling Up In Life, Avoiding Complacency

  1. cafedave on said:

    Thanks for throwing this together: having never really cracked the “making money from blogging” puzzle, it’s good to see that you bring the same level of careful thinking and planning to everything from Dune 2 to future revenue from adsense!

  2. Greg Edwards on said:

    Hey Neerav,

    Outstanding article ! I read a lot of these types of things from my NYTimes feed and a pile of blogs and sites and this was the most readable and interesting I’ve seen for a long time. Good on you for including your own business stats too.

    Yes the writing is on the wall for Nokia and Blackberry but there is a collective blindness and amnesia in those companies and their customers so they don’t see it coming. I have been the same, working for two large respected computer companies (Prime and SGI) in their final days. They were blind to what was coming and didn’t diversify enough and their competition ate them up in just a couple of years, although they linger on for many years with “legacy” customers and Customer Service contracts etc.

    There’s a rule of thumb that says in any business situation there’s only room for one big player, a second-order player to be the respectable alternative for the first, and a few tiny players to mop up the rest. Think Telstra, Optus and the rest. If you see the previous “big player” stumbling, and a new one overtaking them, there’s mathematically no way for the older one to recover, their dive is self-sustaining. The only example in IT/Tech history that beat that is IBM.

    And yes you should always look ahead and plan for when your current gravy train falters. That’s just good advice for all lives I think, your grandfather could probably tell you that, and his grandfather, but we must all learn it for ourselves. (Cripes, get me a bucket !).

    Cheers, GregE

    EDITOR: glad you found my article useful Greg :-)

  3. Kerry Scotland on said:

    I like this perspective – it resonates strongly. In my experience many companies forget about constantly reviewing strategy, inlcuding the relevant markets, new products, new trends, changes in buyer behaviour, competitors offerings and changes in direction, existing customers wants and needs and yes – culture. If the only view is a retrospective look at P&Ls and balance sheets, then things can start to go awry quite quickly, especially in technology markets. It doesn’t take long to be left behind and forgotten.

  4. smythjorde on said:

    Thanks for your personal marvelous posting! I genuinely enjoyed reading it, you are a great author.I will remember to bookmark your blog and will come back in the future. I want to encourage you to continue your great job, have a nice evening!

  5. johny on said:

    The article you have posted is a wonderful post. I loved reding it. It is a nice stuff. Thanks for sharing this post.

Leave a Reply

Your email address will not be published.

HTML tags are not allowed.