magnitude, activity, or direction

Change can involve magnitude, activity, or direction, and the first step toward a clearer vision for change is to clarify what form of change should be considered:

• Magnitude: “We need to enhance our execution of the current path.”
• Activity: “We need to adopt new ways of pursuing the current path.”
• Direction: “We need to take a different path.”

Companies that have doubled down on flawed or outdated business strategies, for example, Kodak, Nokia, Xerox, BlackBerry, Blockbuster, Tower Records, and J.C. Penney are guilty of believing that a change of magnitude was sufficient instead of either a change of activity, such as adopting new technologies or distribution channels, or a change of direction, such as exiting certain businesses altogether.

Contrast these examples with companies whose ambitions led to risky changes in direction when their context called instead for changes of activity or magnitude: GE’s attempts to be a first mover in green energy and the industrial internet of things through Ecomagination and Predix; Sony’s move into entertainment content; or Deutsche Bank’s efforts to become a global investment bank.

Many of the most impressive and successful corporate pivots of the past decade have taken the form of changes of activity — continuing with the same strategic path but fundamentally changing the activities used to pursue it. Think Netflix transitioning from a DVD-by-mail business to a streaming service; Adobe and Microsoft moving from software sales models to monthly subscription businesses; Walmart evolving from physical retail to omnichannel retail; and Amazon expanding into physical retailing with its Whole Foods acquisition and launch of Amazon Go.

"Changing How We Think About Change" by B. Tom Hunsaker, Richard Ettenson, and Jonathan Knowles. MITSloan Management Review. August 13, 2020.