Business Rescue: Part II
Every company is as unique as a strand of DNA, but on the larger scale, it is not as hard as you think to read the signs of a rapidly approaching upheaval. There are four flashing warning lights that indicate faster, more flexible competitors are about to reshape the competitive landscape:
1. When you are operating in highly regulated markets, like the taxi industry, hotels, or healthcare.
2. A few key players have consolidated all the power. They played the game and won before the rules changed.
3. Customers are growing more price sensitive and acutely aware of what value these companies provide. Brand loyalty loses to less expensive, more reasonable options.
4. Customers have expressed that they are not happy with their options. Business anthropology was much harder before social media. Now all you have to do is spend a few hours online to get a general sense for the attitudes of your most influential customers.
Look carefully for situations like these developing in your industry or adjacent sectors. For example, the Airbnb effect on the hospitality industry, driven by new technology, peer-to-peer payments, and cost-sharing for underused resources, is now sparking new business models in the traditional real estate industry. That in turn is setting off ripples of change in construction materials and urban planning.
In the first part of this series, we discussed why leaping to the next S-Curve is a business survival skill. In fact, you can’t neglect your current S-Curve in favor of your next one, either.
Detail oriented teams need to innovate around efficiency and productivity to get the most profit or growth from your current S-Curve. But at the same time, you have to put assemble a creative team who can innovate around future capabilities and find your next S-Curve.
The point of improving your business and prolonging your current S-Curve is to build up the resources you will need to make the next leap intelligently. You will need resources like money, brand reputation, intellectual assets, a digital ecosystem of partners and a supply chain with access to natural resources. You prolong your value proposition through incremental innovation and jump to the next is with radical innovation. Simply concentrating on one or the other won’t save you.
Prioritizing gradual improvement in the here and now will leave you vulnerable to sudden, unexpected shifts in the market. On the other hand, jumping into innovations without knowing if this is the right direction for your business is like rolling the dice on your future.
When you begin searching for new S-Curves, you will fail. In fact, you need to fail and that is OK. You should not be afraid to fail. Do it as fast and as cheap and as often as possible, but you absolutely must do it.
The perfect example of a company that has recognized the value of learning from failure is Adobe, the creator of many things essential for business. You probably recognize them as the ones behind the ever-present Portable Data Format, or PDF. You have certainly heard of Adobe Photoshop, the photo altering software which predates the world wide web and has become so popular that it got its own verb in the dictionary.
Adobe has found ways to reinvent themselves many times, always centered around the creation of multimedia and creativity software.
Adobe’s VP of innovation, Mark Randall, praised failure in saying, “It’s actually ideal when someone’s first attempt at a new product or feature is a failure. It teaches people how to respond to what customers need or want—which is often not what you’d expect they want.”
You could also listen to a man who has had more than his share of failures yet remains among the most wildly successful business leaders on the planet, Bill Gates. He said, “How a company deals with mistakes suggests how well it will bring out the best ideas and talents of its people, and how effectively it will respond to change.”
Use caution here. While failure is a path to success, but it is irresponsible to advise business leaders, as so many others have, “Go ahead and fail. You have nothing to fear.” That’s not true.
The wrong kind of failure can be devastating. You must learn how to contain and channel failed experiments to end up with valuable learnings. You must fail in the right way, under conditions that will allow you to learn from it without damaging the company’s future.
Failing in the right way begins when you conduct well-designed experiments under real conditions in the real world to discover what will work — given your company’s specific profile of unique capabilities. No one can tell you how to succeed and you can’t follow your way to the top, but you can get there by using your existing resources more intelligently, stretching them to their optimal levels. From there you create a new “why” for your business that returns positive reaction from the market. There is your individual sweet spot, where you are not competing with anyone else because you are the very best at providing something the customer truly needs.
Never forget, though, that the sweet spot you have discovered is not a destination. It is just another S-Curve that will grow, level off and fade away eventually. This is why your long-term strategy must include a plan to continually search for and nurture S-Curves, both for the areas where you excel today and in completely different areas where you could excel in the years ahead.
In Part III of this series we will tackle a process for finding S-Curves that match your company DNA.