The world is constantly changing and businesses have to adapt to survive. When those changes are small or incremental it is not that hard to keep up. The processes that have been put in place over the years allow the company to adapt to these small changes. But what happens when the change is not small, what happens when a new technology or a new business model comes seemingly out of nowhere and starts taking away your customers.
That has happened to far too many companies that were Fortune 500 icons who completely dominated their industries. I worked for one of them, but Kodak was by no means unique when its signature film business was gradually eaten away and then completely destroyed by the advent of digital photography.
We only need to look at other once grand industries such as the steel industry, the recording business etc.
Clayton Christensen, in his book, "The Innovators Dilemma, discusses this situation and provides many similar examples. Confronted by a dramatic change in their market space, many companies go into denial mode. They dismiss the upstarts as of little importance and ignore their potential to completely transform the market.
Even when they realize the significance of the change, they often seem powerless to act as they are frozen into business models that no longer work.
Kodak judged all possible new businesses against the huge margins of photographic film and dismissed them when they could have taken action. They were always looking for those high margin businesses to appear from nowhere like a white knight to rescue them, but the white knight never came.
At Opportunity Associates we teach a process for evaluating opportunities outside of a companies traditional business - We call the traditional business space the "Business Comfort Zone" and we encourage companies to carefully evaluate and compare the other opportunities against each other instead of against some arbitrary and possibly unattainable standard. It is our contention that if companies make small but targeted investments in these new areas they will have something to draw upon when large and unexpected changes start happening in their industry.
One of my favorite stories is about the office furniture company who made very expensive conference room tables in our area. When the office furniture market collapsed locally they decided to sell their tables in Boston or Washington. What they did is what we call a Quadrant II action, selling existing products to new customer sets.
Note that any change whether in markets or products involves risk. And the risk averse elements in management will always seek to pull the company back into the business comfort zone. Their arguments seem strong-After all it can be clearly shown that an investment in Quadrant I will yield a predictable return where as a flyer in new area might cause a loss. But too listen to the "ostriches" in a company will leave the company unable to change and may force its eventual end.
To learn how we can help you develop new opportunities before you need them to rescue your business contact us at www.opportunity-associates.com