Is your company stuck in the past…is your industry slowly (or quickly) changing?
Have your customers’ needs moved away from your old product/service offerings?
These changes can build up, and then erupt.
Companies become Stuck in Another World if:
- They don’t recognize or react to evolving industry forces and trends
- They have lost their core strengths and competitive advantages
- Products/services have become indistinct commodities
If this is the case, what can you do about it? For those readers who have successfully dealt with these challenges, what are some successful tactics you can share with the 9Stucks readers who find themselves in this predicament?
Just this summer, conversations I’ve had with CEOs and private equity investors have quickly gravitated to their laments and frustrations about either: 1) customer behavior; 2) new competitors; 3) industry dynamics; 4) product/service offerings; or 5) all of the above.
The chatter is loud. Here is a sampling from the conversations:
- Industrial Components: “We are at a critical juncture in our company’s history”
- Professional Services: “We have a new set of competitors. There is more and more clutter in our space.”
- Regional Distributor: “Economic forces beyond our control are damaging sales”
- Paper Products: “Our products are now commodities; no more premium prices”
- Specialty Printer: “Why are we losing money all of a sudden?”
- Health Products B2C: “Our traditional, established sales methods don’t work anymore”
- Industrial Equipment: “Our products will be obsolete in 2 years; this company will be gone if we don’t overhaul our offerings”
These Stuck in Another World conditions are not new and have caused the demise of many once well-known companies:
- Newspapers: (this wave is rolling in)
- Tech: Digital, Wang, Compaq, Palm (remember any of these?)
- Consumer: Polaroid, Circuit City, Kodak
- Transportation: pick an airline
- Finance/Professional Services: Bear Stearns, Arthur Andersen, numerous law firms
There will be more coming (RIM?).
What can you do if you sense your company is Stuck in Another World? First recognize that the possible remedies are not overnight fixes. Some of the solutions are pretty basic, some will require major restructuring and implementation of large change programs.
One: Be objective and realistic about the industry forces
If significant change is happening, you should not ignore it any longer. If your team has been telling you that the world is changing and you still don’t believe it, see the list of companies above…time to remove head from sand!
Two: Create new core strengths
Where do you start? There are numerous viable action plans that can revamp your company’s core strengths; here are just a few suggestions:
- If you have a narrow business model in a cyclical industry, try to find a way to diversify geographically or move into adjacent markets…but don’t add new, unnecessary complexity.
- Have you heard feedback from customers and/or your sales team about where things are lagging but you aren’t sure how to respond? Examine your business processes…all of the connection points to your customers.
- Understand your customer’s evolving needs. Specifically identify what things your company has to add or change to meet those needs.
- Upgrade old equipment and systems to provide your customers with new capabilities and better service.
- Understand your entire value chain and figure out ways to excel across all aspects of it.
- New product or service innovation – is it flexible or cumbersome?
Three: Convert the commodities to premium products/services
One of the CEOs noted above kicked off an aggressive change program. He:
- knew that his company’s value would plummet if he didn’t convert a stale product mix into new innovative offerings
- allowed 2 years to complete the product line overhaul and he’s ahead of the curve
- created a new product development group consisting of outside advisors (fresh eyes) and outsourced engineering and design talent
- is open to equity from new outside investors if needed
What are you doing? What have you done? Please share ideas or personal experiences.