CEOs must get box 1 right or their tenures will be short. To be sure, the work of preservation-the day-to-day execution of the existing business model-is vitally important. Forces of destruction and creation are overshadowed, outmatched, and out of luck. Striking that balance is the CEO’s most important task, but most companies overwhelmingly favor box 1. With those forces in mind, put your organization’s initiatives in the appropriate boxes: those intended to improve today’s business performance in box 1 those aimed at stopping something-underperforming products and services, obsolete policies and practices, outdated assumptions and mind-sets-in box 2 and those that prepare your organization for the long term in box 3.įor companies to endure, they must get the forces of preservation (box 1), destruction (box 2), and creation (box 3) in the right balance. Consider all the forces of change your industry faces-technology, customer demographics, regulation, globalization, and so on.

Next, take a few minutes to imagine your industry in five, 10, or even 20 years-as far out as you can reasonably foresee. Then create three boxes and label them “Box 1: Manage the Present,” “Box 2: Selectively Forget the Past,” and “Box 3: Create the Future.” To assess your company’s vulnerability, try this diagnostic: On separate index cards, write down all the important initiatives under way in your organization. Success today does not guarantee success tomorrow.

The simple explanation is that many companies become too focused on executing today’s business model and forget that business models are perishable.

Why do established corporations struggle to find the next big thing before new competitors do? The problem is pervasive the examples are countless. To learn more about applying the three-box approach in your organization, please read “ Transforming Your Organization with the Three-Box Approach.” Now ask yourself, why wasn’t Google created by Microsoft? Netflix by Blockbuster? Skype by AT&T? Concrete Cube (black), 2003, cast concrete with black pigmentĬonsider a few of the great innovation stories of the past decade: Google, Netflix, and Skype.

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