Blockbuster. Borders. Nokia. Motorola. Kodak. The list of large scale corporate failures has been long in recent times. Brands that held strong market leadership positions for decades are on their last legs or gone altogether. In their place have risen the new stars – Netflix, Amazon, Samsung and Apple – with new modern business models and service delivery methods.
In the end these big guys failed because they all eventually became irrelevant in their marketplaces and their customers decided to buy better offers elsewhere. It didn’t happen overnight. But neither did the rise of the competitors who ultimately destroyed them.
Why didn’t they act sooner and make the changes necessary to protect themselves? Why did they sit back and allow these upstarts to grow and eventually usurp them? Why didn’t they use their significant resources to develop and implement the ‘next big thing’ themselves?
Why? Because it’s hard to ‘pivot’ when you’re managing a business that is going well. It’s even harder to spend money on activities now that, in the future, may cannibalise your existing profitable core business. It’s a lot more comfortable keeping your head down and staying focused on keeping the gravy train moving along and believing that the market minnows will fail and your own position is unassailable.
This approach eventually runs out of steam however. And continuing it for too long has led to the demise of many companies – large and small. What is important to understand is that customers don’t care if your current methods make you money or how much it would cost you to ‘pivot’ and head off in a new direction. All they want is ‘better, cheaper and faster’ solutions than they had last month and they’ll support the companies that give it to them.
To do that it’s necessary to spend time, effort and resources in re-imagining the future and anticipating what customers will respond to favourably in the next 2-5 years. You can’t do that with both feet stuck in the past or by being solely focused on protecting your legacy business. You have to do more than worry about optimising your current business model – you have to be prepared to invest in NEW business models well in advance of when might be comfortable for you. It’s a fine balance but ultimately is the only way to remain relevant and important to your customers. With the benefit of 20:20 hindsight I reckon the former chiefs of Blockbuster, Borders, Kodak etc. would agree with me…