The Universal Arc

The Evolutionary Approach

The Evolutionary Approach

Why do smart leaders fail over and over again to change despite the overwhelming case for it?

MOST organizations follow a universal arc of creation, momentum, growth, and stagnation.
This same arc occurs across communities, industries, corporations, non-profits, cities, and nations.
a fundamental pattern
The arc begins with a divergent idea - someone's vision of the future.

This divergent thinker finds first followers to build out their vision - an emergent team that believes in it, advocates for it, builds it. This is followed by a period of operational growth, where the idea leads to an actual organization being built, which engages in activities to support their scaling - hiring lawyers, accountants, human resources. If it thrives and successfully moves past this stage they enter sustain and defend mode, where all the money and value of the organization is created.

Fortunately (or unfortunately), now the organization has something to defend - but this state is likely to lead to it becoming more convergent and set in its ways, a state of successful stagnation. On the outside things are going well, but on the inside it's all about complexity, maintenance, and internal dynamics. Top line growth is gone, leading to actions like acquisitions, staffing cuts, strategies to show shareholders they are still offering the expected financial return or impact.

But at some point a disruption that happens, often technological, that can impact society, and when the world shifts around organizations, they are no longer relevant and fall the fastest. If they have not created a culture that fosters experimentation and divergent thinking, the organization will enter the stage of desperate decline.

It doesn't need to be that way (hint: check out our video Diversify, Select, Amplify).

The Evolutionary Approach

Blockbuster & Netflix

DIVERGENt idea
Blockbuster Video had a divergent idea: We are going to own the video rental market space by leveraging new technology--computers--to organize the stores and customer experience across a network. An emergent team took this idea and made it happen.

At one point, a new Blockbuster Video store was opening every 24 hours. They got to the top and owned the rental market.
SUCCESSFUL 
STAGNATION
At this point they entered sustain and defend mode, and then into successful stagnation. Blockbuster no longer had top line growth anymore, and moved to making an estimated 30%-40% of revenue off of late fees. They actually wanted customers to turn in their movies late because it was the easiest way for them to make money. It wasn't about diversifying, it was about how much money they could extract off of customers.
DISRUPTIVE DILEMMA
It's at this stage that Reed Hastings had an idea to build a DVD rental service that didn't charge late fees. He gathered an emergent team to build out a website--Netflix was immediately successful. Several years later they approached Blockbuster to buy them for $50M. Blockbuster, totally reliant on late fees, was unable to see the opportunity.
HOLDING OFF DECLINE
When Netflix hit the defend and sustain stage, instead of slipping into successful stagnation, they kept returning to divergent ideas - streaming, original production, and have been able to continue growing. It's only now that they have entered successful stagnation. With a track record of divergence, they have a good starting point to break out again. Only time will tell if they can reinvent themselves yet again.
DESPERATE DECLINE
This was not the case for Blockbuster, the disruption that was Netflix caused Blockbuster to go into desperate decline. To survive and thrive what Blockbuster needed was not money. They needed people who could go out and invent the future of their business. But by then it was too late.

Is this destiny?

NO. BREAK THE PATTERN.
Once you see the arc, you see it everywhere. In populations of cities, in religions like the Catholic Church, in classical music.

Subculture Systems can give you techniques and approaches to help you break free of the arc. Connect with us to discuss strategies for your organization.
connect with us