A little over seven years ago, a strange thing happened. A technology company, with nothing but a list of failures in its recent past save for one device, introduced a change in the sale of music – they took it online. Record labels said that would never work, and ignored the trend until much later. And so it came to be that online music sales today are dominated not by any music label, not by any artist, but by a technology company we know by the name of Apple. What did record labels do wrong? They ignored the changing trend. Music sales were going online.
Not changing your business to meet the changing world can have drastic effects. Change, therefore, is the sole focus of this article.
“They need to keep innovating and providing users AND developers real value. As myspace has shown, when platforms stagnate they can easily fall apart and the decline can be fast and devastating.” – Fred Wilson on The Present and The Future.
Every so often, business owners will start to rest comfortably. If revenues meet their expectations, they begin to stagnate. That is really where their downfall starts.
Think Myspace and Orkut vs Facebook. Anyone who had deleted his account on Facebook three years ago and signs up again today will barely recognize the new Facebook. That is the amount of radical change it has undergone – constantly. Note that ‘constantly’ is the key word here. Myspace has undergone a change too. Facebook took so much traffic away from it that it was forced to totally rebrand itself as a place for music lovers to get together, rather than a general social networking site. Orkut never managed to keep up with either of these services, and is today barely used. While both these services underwent change, they did so only when the competition forced them to.
Unless you constantly change your business to meet the demands of customers, you will stagnate and lose out to competition.
Too many business owners are content with taking what works currently and building on it. To put it in the words of Fred Wilson, “…what is going on today will not be going on a year from now and certainly not five years from now.”
The market changes. So do Customer needs. We have seen unprecedented changes in the music industry, in the social media industry, in the mobile industry… practically in every industry.
When Blockbuster started, for example, the internet wasn’t even around. It was content with its rental services. The changing face of the music industry, after the launch of iTunes Store in 2003, should have given it sufficient warning. But Blockbuster chose to neglect the writing on the wall. As it turns out, the Video rental industry was to take a similar course to that of the music industry. As Netflix took the entire business online, Blockbuster floundered.
Failure to spot opportunities
Sometimes it is not so much as about innovating as about spotting new opportunities. Case in point: iPhone.
Steve Jobs has admitted that work on the iPad started much earlier than on the iPhone – way back in 2004. As engineers developed the OS for iPad, Steve Jobs took one look at it and went, “My God we can build a phone out of this.” And there it was – a new opportunity. While the iPad by itself would have been a great idea, 2004 or 2007 was probably not the best time for it. The iPhone ended up becoming more famous than anyone could have imagined, and changed the course of the mobile phone industry forever.
If Steve Jobs hadn’t spotted the opportunity then, we might have been still fiddling away at T9 keypads and Apple might have never made a foray into the mobile phone industry.
Failure to withstand competition
“Every entrepreneur starts with an idea that they believe makes sense. But then your customers start using your products, your competitors come out with new offerings and your business partners decide to launch a similar product rather than working with you. You’re forced to ‘pivot’ on a regular basis” – Mark Suster, What Makes an Entrepreneur -Ability to Pivot.
Think Blockbuster. Think Yahoo!. Think Hotmail. Think iPhone. We could go on with the list, but we believe we have made the point.
Competition today is fierce. It doesn’t take long before someone realizes how well your idea is working and starts copying it, or offering something similar. iPhone was once the must-have phone, but that was before dozens of other companies started making similar devices. Hotmail was once the email service provider of choice, before Gmail came along and offered users a much better experience. Yahoo! started out providing people with information about websites much before Google was even formulated. Yet Yahoo! Search lags today at a market share of around 6 to 7%. And Blockbuster filed for bankruptcy even as Netflix stormed ahead with its online streaming.
That is competition. If you don’t change your business as rapidly as your competition, you might just as well go the way of Blockbuster, Yahoo! Search, Hotmail, iPhone and thousands of other small and large companies.
Innovation is the key
This mantra has been chanted so often that we say it at the risk of repeating a cliché – innovation is the key to success. Customers will remain satisfied with your service or product for just so long. If you don’t innovate, your competitors will.
Innovation is what happened when Lloyds rolled out the first publicly accepted ATM in 1972, when eBay took shopping online in 1995, when Apple invented the iPod in 2001. Innovation is what is happening now in 2010, with Online’s gaming system.
Companies are being forced to either innovate or shut down.
There is a constant hullabaloo in the world around us. The market is constantly changing. Not only do we need to accept change, but encourage it. The ability to adapt and pivot your business is no longer an advantage, it is a necessity to survive. We will leave you with one insightful quote by Andrew Waldeck:
“Understanding your customers is required for successful innovation.”