If your business fails, someone will have put you out of business. The only question is who was it: you or someone else? In most cases, you will have put yourself out of business due to your actions or, more probably, your inactions. The failure to embrace the concept of Adapt or Die is often fatal. A variation of this concept is attempting to hold on too long. There are many examples of market leading companies that, for one reason or another, did not adapt, feeling confident in what they were doing based on their past success. Examples of companies that fell into that trap include: Digital Equipment, with their almost total dominance of the mini-computer market took too long to embrace PCs; Research in Motion with their once revolutionary Blackberry smart phone has become a minor player; Nokia, at one time, was the world leader in cell phones is out of that business as is Motorola, who invented the portable cell phone. The list goes on and on.
On the other hand, Apple’s iPhone 1, with sales still rising, was put out of business by the iPhone 2, which was put out of business by the iPhone 3, etc. Amazon started out as an online book seller and is now the dominant e-retailer and is also a major player in providing cloud-based computing services. IBM, the dominant mainframe supplier became a best-in-class, vertically integrated, manufacturing company and now is a dominant force in enterprise consulting services. In all of these cases, the companies were willing to leverage their expertise and develop new products and core competencies to move into different markets and continue their profitable growth. They made these transitions before “they had to” due to an eroding position. They adapted while they were still on top.
Besides you, others can put you out of business. Sometimes it can occur remarkably fast. Here are a few of the companies that have fallen by the wayside. Unfortunately, more occur every month. Adelphia, Arthur Andersen, Borders, Enron, Global Crossing, KB Toys, Kodak, Lehman Brothers, Madoff Investments, Motorola Mobility, Nortel Networks, Palm, Pan AM, Polaroid, Walden Books, Washington Mutual, Webvan, and Worldcom. Although there is story behind each of these companies, all of their failures can be divided into one of four categories:
- Competition: They simply fell behind other known competitors
- Relevance: Their offering no longer was embraced by the market
- Mismanagement: They selected and followed a plan that failed; ignoring warning signs that appeared along the way
- Courts: They violated the law, often though small “slippery slope” actions that grew out of control
If these well-respected market leaders can fail, so can any other company. What can you do to avoid a similar fate? It may not be foolproof, but a good way to hedge your bet and turn the odds in your favor is to sit around a table with key employees, board members, and trusted advisors and ask one question: “What could put us out of business?” Then:
- Ask the question of each individual in the meeting in a round-robin fashion.
- Write down every response. Do not debate any input.
- Only allow others to ask questions to clarify the statement and not discuss its merits or probability.
- Continue the round-robin exercise until no one has any other possible issues.
- Group the responses, eliminating any common or very similar issues.
- As a group, identify what actions the company could take now to mitigate the risk.
- Encourage individuals at all levels in all disciplines to participate.
- Never shoot the messenger!
- Assign a person to monitor each item and any follow up actions.
- Meet regularly to remove items from the list or add new items as appropriate.
Be sure to have a cross section of employees participate in this exercise. If only the CEO and a few other senior staff members are involved, there will surely be blind spots. After all, this is the group that most probably set the strategy and is implementing it every day. Ask individuals at other levels and certainly in all disciplines to participate. For example, including someone from purchasing or manufacturing with their normal interactions with their vendors may be aware of trends long before the C Suite.
Another technique that can uncover potential vulnerabilities is to pretend that you left the company under somewhat hostile circumstances. With a totally vindictive motive, assume you joined a competitor or started a company to directly compete with your past employer. With your intimate knowledge of your past employer’s weak spots, develop plans on how you would take advantage of them. Is there, for example, a key employee or customer or patent loop hole that you could exploit? This exercise may not be as unlikely as it first appears. Key employee turnover is an issue that virtually every company faces.
Although these processes may seem defensive and negative, acting on the results will make the company stronger and far more likely to thrive than merely survive or fail. Think of these activities as preventive medicine for the company. We all embrace preventive medicine for ourselves and most of us will live longer than the companies we work for. Inject some preventive medicine in your company and extend its life.