Entrepreneur Beginners Guide
“Adapt to Change Quickly”
Change before you have to.
—Jack Welch, former CEO, General Electric
The average lifespan of a Fortune 500 company is getting shorter and shorter, largely because of the ascendancy of disruptive technologies and companies. Small and nimble start-ups are often over-looked by big corporations and now have the ability with little resources to topple billion-dollar companies.
Substantive data show the increased attrition rate of big companies. An analysis of the major stock market indexes over the past few decades reveals that companies have shorter runs. For example, only a fraction of the companies listed on the Dow Jones Industrial Average in the 1980s remain on the list. What does this mean? Many things, but a closer look at the index’s rejects sheds light on why companies were removed: Many of the companies vanished for failing to adapt to changing times and evolving with customer demands. Thus, it’s safe to say that companies that do not embrace change and reinvent themselves are headed out of business fast.
Change is inevitable, but it is not easy. One of my favorite speakers and authors, Don Hutson, said this about change: “Change happens when the pain to stay the same exceeds the pain to change.” Although Hutson was speaking to a group of individuals interested in improving themselves, the same principle applies to business. A business that doesn’t change or reinvent itself periodically will experience the pain of bankruptcy. At that grim point, change is the only option.
Companies that have reached a degree of success are most likely to resist change and to stretch their pain threshold. If something is not broken, don’t try to fix it, right? Wrong. There are countless examples of large companies that dominated the market for long periods, but now are struggling just to stay alive. A prime example is Sears Roebuck and Co., which dominated the retail market for decades. Now it struggles to turn a profit. Sears rested on its laurels and missed opportunities to conquer the new business frontier in the 1990s: e-commerce. To Sears’s great misfortune, competitors like Amazon.com and Walmart aggressively pursued the retail market and are now winning big.
The question then becomes: How do you manage and cope with change, especially as times and technology move us fast? Each of my companies has faced the challenge of staying relevant and keeping up with the times. As a result, i have a healthy sense of paranoia. I now use a basic strategy that minimizes the risk of my companies becoming complacent and unwilling to change. I con-duct each company as if the way we do business is going to be obsolete in one to two years. To anticipate where the market is going and where we should invest, we do a bimonthly review and a report of all our systems and processes. The review allows us to identify and adapt to potential disruptions like new technology and competition.
For example, division heads provide a review and a report of how we can improve our products and services even if they are selling well. We also scan the competitive landscape to find any innovations that are threatening. In addition, we identify new technologies and resources that help us to stay ahead of the change curve. A recent company review, for instance, revealed how we can use Pinterest, a social media platform that became popular in 2012, to target new segments in our marketing campaigns that normally would be overlooked. We know from experience that the value of using such platforms is greater if you use them early. Waiting puts you at a huge disadvantage. This review and report process is one of the simplest ways to proactively seek change and to reinvent the way you do business, preventing you from becoming complacent and more vulnerable to obsolescence.
A business that ignores change is a business that welcomes its own extermination. The products or services you offer today won’t keep you in business tomorrow. The very nature of business includes changing to meet customers’ demands in a better way. If you have no strategy to proactively deal with change in your business, save yourself from a slow death and just shut down shop now.