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I expect it was something we might have said to ourselves a lot four years ago when we were asked to stay at home during the repeated pandemic-related lockdowns, to make us remember that all things shall pass.
But when we look at our business, what attitude do we take? When we apply for finance, the provider will often look for stable business performance to offer their most preferable terms, but whilst this is desirable, is it sustainable for the longer term?
Our history is littered with examples of companies winning for today without consideration for the impact it could have on the future. The Victorian factory owners paid little mind to the pollution of our towns and cities when the industrial revolution took place. Whilst I recognise that this is a very relevant challenge from an Environmental, Social and Governance perspective, it’s not what I want to discuss today. Whilst I fully appreciate that the preservation of our global ecosystem is vital to our collective survival, I want to look at this from a different angle, that of the survival of your business.
Businesses must adapt to survive
Think about how car companies have had to make their engines firstly more fuel efficient and with fewer greenhouse gas emissions, then to be hybrid and electric. This can be known as a pivot, where a business moves from one product line into another.
When Apple developed the iPod, they had seen the failure of the minidisk to take over from CD Walkmans. They needed a way to convey their product effectively to the market in a sentence and Steve Jobs therefore introduced it as “1,000 songs in your pocket”.
I owned two of them – a 2007 iPod Nano (third generation) and, after sadly leaving that one at the gym, a fourth generation iPod which was released in 2008. The 2008 version lies in my junk draw at home and I recently saw the 2007 version in a museum. But I expect you will not be surprised to learn that I have quadrupled my Apple product consumption with a phone, tablet, watch and earphones all now part of my everyday essentials.
Apple started as a desktop computer provider and then looked to innovate by pivoting from their base product into new lines, along with amalgamating products into a single one such as their iPod into the iPhone. When you look at your business service or product line, can you see a potential end to its current life cycle?
For example, if you’re a business that has a large amount of plastic within its products, how do you plan to manage the evolution of your business to be one that is free from plastic? Currently price is normally a deciding factor in this regard, although once the “herd” moves it can be very hard to continue with your current business model. Think about how quickly plastic bags went from something given free with every shop purchase to something you had to pay for, thanks to campaigns like ‘Banish the Bags’ by the Daily Mail in 2008.
But this cannot be a single step. Let’s look at another example. As a City worker, the Evening Standard was once a paper which people paid to read, then two rival evening newspapers appeared (London Lite and The London Paper) both of which were free and therefore threatened the existence of the Standard, which until then had had a monopoly on the London evening paper market. The Standard has outlasted them but is now free to readers, which would have meant a change to its finance model. This could just be a stay of execution though, as more news is now consumed in real time via smartphones. Perhaps the move must be away from breaking news that would have been missed by the morning papers to more editorial and thought leadership pieces which are less time bound, via an online subscription?
If you can pivot correctly, it will not be a dramatic change of direction but rather a managed one over a period of time. Two phrases sum up this point well…
“Mine the gold seam” – Look at your offering. Can you easily step into the seam either side of what you are currently receiving (mining) your income from? Is there another market that would like to receive your products (another market could mean the same product but being sold to a different territory) or could your products be adapted to serve a different customer base? For example, if you made a medical product for humans could this be adapted for the veterinary world, or if you already supply to commercial customers can you look to supply to private individuals as well?
“Evolution not revolution” – The need to pivot your business is clear, but it’s equally as important to ensure this is done at a pace which keeps all your key stakeholders engaged and committed to your business. Too fast and it could be seen as either reactive to the competition that has perhaps moved first, or under prepared which doesn’t allow enough time for your employees and customers to understand the reasoning for the change. If we look to follow the evolution metaphor, it will be a slow gradual change which will allow your business to at least retain its market share and potentially increase it if you are able to evolve better than your competitors.
I have given a few examples, but there are plenty more from other industries and if you trace back your company’s or your own career history it will show examples of where your company or your working practices have evolved. Some might be for the better (my early insurance career involved trying to fax 50-page proposal forms, so I’m glad those days are gone), but then the move to home working has made illusive insurance underwriters far harder to track down, when they would have previously (at least) started their underwriting day at “the box” in Lloyd’s of London (the insurance and reinsurance market located in London).
So, as a call to action, look at how you have evolved in the past and think about where your next area for evolution will be to ensure your business continues to be one that is relevant today rather than one that could soon be present in a museum or a history textbook.
