In the business world, it doesn’t matter if you were first, and it doesn’t matter if you are currently on top. What matters is that you keep pace with your customers and with what they want.
If you look at the list of companies that made the very first Fortune 500 list in 1955, more than 90 percent have been bought out by other companies, gone bankrupt, shrunk in size or simply gone out of business. These companies failed to re-invent themselves.
In his book Reinventors: How Extraordinary Companies Pursue Radical Continuous Change, Jason Jennings writes, “Your job as you know it and your business as it is currently run will eventually change. The only chance any of us have for prosperity is to constantly reimagine, rethink and reinvent everything we do and how we do it in order to remain relevant. We must all become re-inventors, and we’d better do it quickly.”
Reinventing your company takes some forethought, some planning and some luck. Owners of re-invented companies are innovators who are not content to stay still. They realize that a downward turn can become permanent if they don’t have a plan in place to turn things around.
Sound too dire? Just think about Kodak, which had an 89% market share of U.S. photographic film sales in the in the 1970s. Despite being responsible for the invention of much of what is used in digital photography, Kodak was slow to see the explosive growth of that same technology. A serious decline in sales resulted in the company filing for Chapter 11 bankruptcy protection in 2012. In order to emerge from bankruptcy, Kodak left the camera business to focus on the corporate digital imaging market, and it had to sell more than $500,000,000 in patents to other companies to do so.
Need another example? Consider Blockbusters, which at its peak in 2004 had up to 60,000 employees working in more than 9,000 stores but failed to do enough soon enough to compete with significant competition from video on-demand services such as Netflix and Redbox.
In their book Stall Points, Derek van Bever and Matthew Olson point out that once a company runs up against a major growth stall, it has less than a 10% chance to fully recover. In fact, they authors refer to figures that show two-thirds of stalled companies are at some point acquired, taken private or forced into bankruptcy.
Most companies that fail to reinvent themselves do not fail to realize what is happening in their industries. Quite the opposite, in fact. What they do fail to do is act upon the knowledge that things are going in a different direction – or at least act quickly enough. There is a certain tendency among all of us to ride out the storm, in the often mistaken belief that things will turn around. By the time, some companies realize that things are not going back the way they were, it is too late to do anything about it.
Let’s look at several companies from different industries and different timeframes that rose to the challenge of re-invention. Their stories are both surprising and encouraging.
Here are the companies that have stayed relevant by Re-inventing
Watch movies about the two world wars, and you are bound to see references to telegrams and to the then ubiquitous “Western Union Man” who often delivered bad news by bicycle to the front doors of America.
Founded in 1851 as the New-York and Mississippi Valley Printing Telegraph Company, the organization merged with competing networks that jumped on the new telegraph technology and, as a result, later changed its name to Western Union. At its peak of popularity in 1929, Western Union reportedly sent out more than 200 million telegrams.
The advent of cheaper long-distance phone service put the nails in the coffin of the telegraph business, but Western Union was able to not only survive but thrive. How? By having diverse interests and keeping up with the times, Western Union started its money transfer business in 1871, started an early fax business in 1935 and launched (literally) the first commercial communication satellite in 1974. Western Union was responsible for Easy Link, one of the earliest email services, in 1982. Today, it is the world’s largest money transfer service with more than 515,000 agent locations throughout the world.
In 1984, IBM had already re-invented itself from the world of the typewriter and was the king of the PC world. Not trying to do everything itself, as Apple was, IBM bought hardware components from other manufacturers and shipped its PCs preloaded with software such as Microsoft Windows.
This very strategy that led to this success almost led to its downfall. Many competitors began undercutting IBMs prices and knocking off its products, and by 1993, IBM posted a then staggering $8 billion loss. In a bold move, the company decided to abandon its core business model in order to focus on providing IT expertise and computing services to businesses. It worked. Last year IBM was the top seller of enterprise server solutions in the world.
Many print magazines have come and gone since The National Geographic Society published its first magazine in 1888. With its gorgeous photographs of exotic people and places and its familiar yellow binding, National Geographic was a staple on America’s coffee tables for decades. When it began to lose subscribers at an alarming rate in the 1990s, however, the company didn’t wait to suffer the same demise as magazines such as Life.
Instead CEO John Fahey looked to reinvent the National Geographic brand by, among other things, creating the National Geographic Channel in 2001. National Geographic successfully lost its once stuffy image with new reality TV shows including “Ultimate Survival Alaska,” “Border Wars,” “Naked Science” and “Brain Games.”
Most Generation X-ers and Y-ers who grew up playing with Lego would be surprised to learn that Lego was close to bankruptcy in 2004. All the internet-oriented game technology left Lego with more than a billion dollars of debt. But Lego did not go down for the count. Instead it revised its strategy to focus on what the company does best: toys that emphasize creativity. The company developed new and relatively inexpensive methods of interacting with its youthful customer base though new newsletters and through new Lego-designing competitions and contests.
You may question why the fast food giant is on this list, but make no mistake the Golden Arches were in a bit of trouble when in 2002, the chain suffered its first ever quarterly loss. The popularity of the book Fast Food Nation combined with a national trend of looking down the nose at fast food in general caused consumers to look for more health-conscious choices in their fast food.
Starting in 2003, McDonald’s began a radical slowing down of the number of new stores it opened and concentrated instead on revising its menu. The corporation conducted extensive research to find out just what its customers would like to keep and what they would like to change.
The wildly successful Dollar Menu is a result of that research as are the fast food giant’s new coffee drinks. The shift caused McDonald’s total revenue to increase from $50.8 billion in 2004 to $77.4 billion in 2010. McDonald’s also invested more than $1 billion on an overhaul of its European menus.
Why is being ready to reinvent your business so important? Sooner or later every business will experience a slowdown in its growth. Technology will change. Competitors will introduce an innovative alternative product or service. Demographics will change. The economy will slow down.
Change, as they say, is the one constant in life. When you accept that change as a reality, and, in fact, prepare for it, you will put yourself in the position to grow. How could you re-invent your business if necesary?