Stop Doing What Is Working

I have never eaten at a Long John Silver’s restaurant, but I do know the 56-year-old brand has historically specialized in seafood. So, it was surprising when Long John Silver’s recently announced that it is engaging in what is called creative destruction, by switching their product focus from fish to chicken.

Creative destruction, a term I have not seen the Long John Silver’s team use, was popularized in the 1940’s by author Joseph Schumpeter in his book Capitalism, Socialism, and Democracy. It occurs when a company decides to change a core part of their business to create a path to new growth.

As an interesting aside, when Long John Silver’s announced their recent change, the 2025 Nobel Prize in Economics was also announced, awarded to three economists for their research into creative destruction. Even an old concept can be improved.

Long John Silver’s changing its focus to chicken is about as core of a change as a company can make. Apparently, their research indicates that chicken is the consumers’ protein of choice and there is a huge market for it, much bigger than fish. I have no inside information regarding how they made their decision, but you can be sure this change was a tough one, with lots of debate. However, you can also be sure the team at Long John Silver’s believes that creative destruction is necessary, even if it is hard.

And yes creative destruction is hard, and it can also be very disruptive, since it often “moves cheese,” to use a concept developed by Spencer Johnson in his classic book Who Moved My Cheese? It is a sure bet that there are people, both inside and outside of their organization, who are very upset about the change at Long John Silver’s. Executing creative destruction, while necessary, takes courage.

One reason creative destruction takes courage is that outsiders often laugh at attempts companies make to change. Big changes like the one Long John Silver’s is making is often looked at with ridicule and skepticism until it works, then it seems obvious.

Some examples of companies who have executed creative destruction well include the following:

• Apple had one of the world’s most successful and profitable products with the iPod, but killed it with the iPhone. A willingness to make the iPod obsolete positioned Apple to dominate mobile computing and created trillions of dollars in value.  It will be interesting to see if Apple eventually applies creative destruction to its iPhone and what new products are created if they do.
• Many people with a Netflix subscription can remember when the company mailed movie CDs to your house. What now seems like a beneficial and obvious development, in-house streaming, was most definitely a tough change to make. Creative destruction of their model to streaming was very difficult for Netflix and customers were not happy when Netflix changed their pricing model to expedite the changes. Netflix could have easily been an organization that refused to change and avoid the criticism, but instead it destroyed its old business model and, like Apple, created tremendous value.
• Microsoft disrupted its business model under new CEO Satya Nadella’s “cloud first, mobile first” strategy by ending its traditional software licensing model and implementing a cloud-based subscription model. Nadella’s strategy was initially met with intense resistance from customers, partners, and even among his own team. The skeptics eventually realized that the new model resulted in faster innovation cycles and better security. Microsoft’s transition was hard but also created trillions of dollars in value.
• Lego underwent a long transition from being a toy company to a company focused on experiential products, but it seems to have worked. Lego’s brand was in a steep decline before it transitioned from a manufacturer of toys to a broader creative brand focused on entertainment and digital media. Lego is now a global power player in its market. As a private company, it is harder to know the value created by Lego’s strategy change, but most analysts estimate it is in the tens of billions of dollars.

In each of the above four examples, it would have been very easy for the organization’s leaders to resist the needed changes and keep doing what they had historically done. There are plenty of examples of well-known companies who wouldn’t change and eventually went out of business.  Fortunately for the four organizations above, their leaders had the courage to creatively destruct their business model and reaped huge rewards.

At the company I lead as CEO, Correct Craft, we have made several significant changes in the last twenty years to our hundred-year-old organization’s business model. We have transitioned from a product-centric business model depending on a single brand to a multi-brand model that is mission-centric. We have transitioned from an assembler of other companies’ components to a vertically integrated organization bringing primary suppliers in-house. We have separated disruptive innovation out of our operating companies into a new organization, Watershed Innovation. We have also transitioned from a yearly profitability focus to long-term stewardship model based on people, performance, and philanthropy.

Looking beyond these examples to today’s overall business environment, it seems clear that artificial intelligence (AI) is a form of creative destruction that is going to change industry in significant ways. Companies like ours are developing people in-house to have deep smarts in not only the tactical use of AI but also, more importantly, the strategic use of AI. I see AI in our organization not as an opportunity to reduce our staff but as a powerful tool that will make our team even more effective. However, for a lot of folks, the unknowns related to AI are very scary.

Other current tools for creative destruction are green energy, e-commerce, fintech, blockchain, and cryptocurrency, each of which will impact businesses, non-profits, and governments. The world is going to change in ways we cannot currently imagine, and those changes will be determined by those who are willing to creatively destruct their products, processes, or business models.

I have no idea if Long John Silver’s new strategy will work, but I am interested enough to stop in and try their chicken. It takes courage to do what they are doing, and it will be interesting to see how it plays out.

What creative destruction should your organization be considering? 

Written by Bill Yeargin. Have you read?
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