Is It Time to Reinvent Your Business?
The ultimate guide on how to reinvent your business.
We used to have saying in the 80’s and 90’s (before the Internet), that if your business was not growing it was dying. It meant that if someone asked you how your business was doing this year, and your answer was business is the same as the year before, that really meant your business was in trouble.
In business today, with rapid technology advances, competitors that can start-up quickly, more educated customers and clients, that saying no longer applies. It’s just not enough to be growing in sales, clients, customers, or even profit. What I now say frequently to entrepreneurs is that if you aren’t continuously reinventing your business, your business is at a great risk of failing, sooner than later.
As a business consultant, I often walk into troubled businesses and they ask me to fix some sort of problem. It could be that costs are too high, acquiring new customers and clients is too difficult or too expensive, there can be human resource issues, management issues, sales departments underperforming, unclear branding and marketing strategies, etc. I am happy to help solve all of those. But in many cases, the problems they are exhibiting are an early indicator that their business needs reinventing.
Why is it so hard to see that your business needs a reinvent? And why do many businesses wait too long to realize it, only to fail because they started too late? I illustrate two examples why, from the photographic industry where I operated my business for 28 years:
Eastman Kodak: The silver-halide film photography giant, once one of the largest most successful companies and brands in the world, invented the digital camera in 1975. They saw no use for a new product that would be so different from the film product that was generating billions of dollars in sales every year. They could have been the leader in digital photography. Kodak filed for bankruptcy in 2012 and have been trying an assortment of new technologies and licensing strategies as of late to try an recapture their glory days.
Sony Corporation: The Japanese mega-giant electronics company once held the lion’s share of the video camera market. I know someone who was actually in the Sony boardroom in the early 2000’s when their techs presented a concept for a portable POV (point of view) action camera. The board rejected the idea, not wanting divert attention away from the cash cow video business they had. By 2014 GoPro, which didn’t exist when Sony held that board meeting, had almost 50% of the video market and Sony’s share was less than 8%.
The lesson to be learned here is that business needs to be reinvented frequently. And the absolute best time to reinvent your business is when it’s at its peak. It’s a very hard thing to do since it will seem that all is great in your business world. In fact, diverting resources away from things that are selling well and generating a profit can feel a lot like working on the engine of a moving car at highway speed. But you need to do it when you have the most market share, momentum, resources and infrastructure to be a leader in a new business. If you wait until you have problems, your business is on the decline, or competitors are appearing, most likely it will be too late.
Today, companies like Amazon and Google seem to be aware of this concept and continually change, invent and sometimes buy up new technologies to keep their business fresh and out-front. Apple on the other hand, relies a lot on continued sales of iPhones. In Q3 of 2019, iPhone sales are down 13% and now account for less than half of total revenues. They have some other products such as services, Mac, wearables and iPad which are slightly up in sales, but does that sound like a company that will still be a giant in ten years from now?
While small and midsize entrepreneurial companies don’t have the humongous resources that these giants have, we can certainly use their powerful philosophy and reinvent our businesses when we are doing well and avoid the mistake of waiting until it’s too late. It’s the best way to ensure our survival and success.
So, how does one go about reinventing their business?
Having spent 28 years operating a business in the photographic industry and watching the disappearance of Main Street stores, one-hour photo labs, and camera stores, the emergence of the Internet and Amazon, and digital technology replacing film, I had to do two major reinvents of my business. And those reinvents led us back to profitability and ultimately a successful and beneficial exit for me from that business.
Looking back on how I reinvented my business, I realized that the methods I used can be applied to almost any organization. And as a business consultant, I have done so successfully, several times recently. So, I share here the concepts I use to reinvent businesses successfully that can work for you too:
• Recognize there may be a problem ahead even when things are going well. Back in the mid 1980’s we were a B2B business that sold most of our photo supplies to small retail stores, drug stores and one-hour labs. We were the largest photo distributor in the country. I can remember going to my local drug store at a strip mall, only to find out that the store had been bought-out by a major drug chain. That local store had been a customer for a decade. Soon after, the one-hour lab in the mall also went out of business because the chain drug store offered photo processing as well. For me, that was giant red-lettered handwriting on the wall. I knew we needed to reinvent what we were doing.
• Identify your strengths. If you have seen the problems ahead it is easy to get in panic mode and focus on what is wrong with your business. However, your business has been successful to this point, so you must be doing many things right. Identify those things so you can understand the assets you have which will allow you to pivot and reinvent the business. In the example above, while our customers were being eaten up or going out of business, we had a very strong organization. I had a very good facility, powerful and efficient distribution, an excellent staff, and valuable dealerships with many photographic manufacturers and suppliers here and abroad. Once you have done this, you can start to think about what those assets look like in the formation of something new.
• Think about what kind of new business your assets can do. This is the moment when you must be innovative and think about many possibilities, inside and outside of your business. Because we had the organizational strengths I mentioned above, I was able to pivot my business from a 100% B2B business of selling stores to adding on a B2C business of selling professional photographers and consumers. We used our expert distribution, dealerships, and high-level of service to very quickly (within 3 years) become one of the largest sellers of professionals in the country. In addition, because we were experts at distribution, I also added businesses selling health and beauty aids, baby and tot products as well as auto racing brake parts.
• Be bold, ignore the doubters, and just do it. Use the expert knowledge you have of your business and industry to come up with a new way of doing things or an idea no one has thought of before. In the mid 2000’s film was replaced by digital technology seemingly overnight. Camera stores were almost all gone. Both our B2B and B2C photo businesses were hurting badly. But I had a new idea about how to make a camera store successful again. So, against all the doubters, and the people who thought I was crazy, I created and opened a new experiential concept camera superstore in 2008. By 2013 we were one of the largest single location camera stores in the country and essentially every camera store that operates today uses similar concepts to what I created. Dig down deep and you can create something original too. And then ignore the doubters and haters and just do it!
While you are running your successful business, competition, technology, and market conditions are all conspiring to take your business away from you. The absolute best way to ensure long term survival and success is to continuously work on reinventing your business. And you should start that process today, before your company ends up in the graveyard of great companies that failed to react in time.
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