We’ve all heard about those stalwart companies who continually lead their competition and become the envy of their market.
These are the enterprises that all companies try to emulate. These are the companies who become the market leaders. These are the ones whose design and innovation is beyond reproach.
Ultimately, these are the companies who continually raise the bar with ground-breaking product launches that capture the imagination of their market and its customers.
However, we also hear about those companies who are here today, gone tomorrow. We also hear about the ones who seem to rise and fall with each business cycle and who rarely stay at the top before crashing down to earth.
So, what separates these two types of companies? Can a company future proof its business so that it not only retains its top position, but more importantly, secures its long-term future? It can, but it requires a willingness to adapt to an ever-changing landscape.
Whilst a number of companies chart their own path to growth, there are far more who become resigned to their fate. History is strewn with examples of companies who’ve risen to the top, only to suddenly lose market share and implode.
One only needs to reflect upon companies like Palm who rose to the top during the late 90’s with their PDA (Personal Digital Assistants) offering that included their “PalmPilot Personal” and “PalmPilot Professional” product lines. Of course, they disappeared shortly thereafter.
An argument can be made that a similar fate awaits Research In Motion and their Blackberry smart phone, as it continues to lose market share to Google’s Android and Apple’s iPhone. Whilst these are perfect examples of both ends of the spectrum, they pale in comparison to entire industries that have been disrupted by competing technologies. After all, RIM can always bounce back if it has the will to do so. However, what do companies do when their entire industry is at risk?
To answer this aforementioned question, think of recent examples of Amazon. Think of how they’ve built their business model around selling hard to find products to an insatiable customer base, a customer base that continually comes back for more and is willing to purchase a large number of less popular items. This is what many refer to as the “Long Tail” demand curve which was popularised by Chris Anderson and is meant to explain the benefit of focusing on more robust, unique product offerings. Another factor at play is the “Free Economy”, a business model adopted by Google, YouTube and Facebook. These three seem to be offering free services to visitors, whilst in reality they are making huge profits from advertising. Each of these companies confronted the obvious direction the market was taking and created business models and strategies that disrupted the industry and brought companies -who previously would have been regarded as giants of media- to their knees .
Consider this a first in a series of blog posts that examine the impact of industries and companies who refused to acknowledge the obvious. The approach will be to review what industries are at risk, whilst continually asking why success or failure occurred.
Companies may not be able to guarantee that failure never occurs, but they can protect their own interests by being cognisant of the changes around them. Companies can emulate the success of others. The key is to emulate those enterprises with forward thinking strategies and not the ones with entrenched positions.