All companies and organisations have one primary aim, to help fulfill the needs of the people within them and those they support. For big corporations, this would be through revenue, profit, salaries and taxes. For non-profit organisations, it may be a sense of wellbeing or achievement. And when you’ve reached a state where your products and services are in demand, you’ll see a steady stream of success, perhaps even growth. But what happens to you when someone else or something else comes in and changes your market?
History has shown time and time again that no industry is constant. Even in large, long established markets, eventually a disruptive innovation comes about which changes what customers want and how they expect to get it. And those companies which aren’t able to adapt or take advantage of these changes will soon be overtaken by the more agile and brave ones which do. Take these examples:
- Blockbuster & Netflix: Innovation: Service – Internet Media Distribution
Up until a few years ago, if you wanted to rent a film you needed to rent a physical disk, of which Blockbuster was the market leader. However, as the broadband internet expanded, it was overtaken by Netflix, who showed customers a cheaper, faster and more convenient way by streaming films. In fact, Netflix offered to sell itself to Blockbuster around 1999 for as little as $50m, but Blockbuster passed on the opportunity
- General Motors & Toyota: Innovation: Process – Lean manufacturing
American cars used to dominate the US market. But when Toyota began offering cars at a lower price with better reliability, customers saw they offered better value. This was based on efficiency in Toyota’s manufacturing processes which gave consistent quality levels. As a result, sales shifted from American to Japanese models
- Sony, Apple & HMV: Innovation: Product – Portable Music & distribution
Sony was the world’s leading innovator in portable music players, exemplified by the Walkman and Discman. Apple’s innovation with the iPod was a combination between a simple and powerful product and a new way to purchase songs individually, through iTunes. Consumers loved the simplicity and convenience, and nowadays everyone’s music collection is digital. This also has led to further market changes such as consumers no longer buying music discs, leading to established retail stores like Tower Records and HMV going out of business
So why do some companies get overtaken? Often, they see innovative ideas as high-risk and unproven. Coming from a management consulting background myself, I’ve spent years on projects about reducing costs or making “business as usual” operations more efficient. But there is less appetite for future-facing projects which could change the business itself, in case it doesn’t work. Strong leadership requires a bravery to experiment with unproven ideas, as these are the only way to grow into the future. Otherwise they might end up with only memories of better times.
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