The Dinosaur Curve – Is Your Business Model Outdated?
Have you ever taken the time to think why the Blockbuster chain is not around anymore? Or the Borders book chain? These companies failed to embrace the changing trends in their industry and became a sad epitaph on outmoded business models when they closed their store.
In a similar vein, consider the struggles of existing-but-barely industry giants Kodak, Sears, Radio Shack, and Blackberry. These companies also refused to fully adapt to change within their industries and socio-economic trends and are struggling to remain relevant today. Companies that struggle to exist by not adapting end up being swallowed by the “dinosaur curve” of extinction.
There are many businesses today that will not be around in the next 5-10 years because of a similar lack of vision. If you glance across the landscape of companies, you can see many in danger. Restaurants that cater to an older crowd and losing sales as younger diners gravitate to more modern decor and cuisine. Retail establishments that have too much overhead for the ambiance, and also ignore online shopping in their model. Or sales organizations whose commission structure and sales model have not kept up with shifting costs and a more educated consumer.
Now, consider your company – is your business model outdated? Here are some key things to watch for to ensure you stay ahead of the “dinosaur curve”:
- Are you resting on pride and profit margin? A company that won’t change because their margins are robust and they feel they are the best, or biggest, will cease to be in that position for very long. That next innovative company probably already has it’s plan in place to overtake you, and soon.
- Have you adjusted for changing financial landscapes? If you can consider changes to discretionary income, cost trajectory, and commodities or raw materials, then utilize this information to make changes to your cost structure and revenue strategy. Just because a certain spend trend has providing good results to date does not guarantee they will continue in the future.
- Have your customer experience kept up with today’s consumer? Does your service offer customization in it’s products? Is the lead time or shipping time conducive to the the quick turnaround consumers expect? Is there transparency in the process? Are your return and exchange policies user-friendly or cumbersome to customers? Making the customer experience pop in a noisy and competitive market will make a huge difference for you.
- Is your management and staffing model sufficient? Consider how your management structure is – is it top-heavy and needs trimming to save money and keep the focus on the front line? Or do the managers need to be more hands-on to save costs and be more connected with the staff? Are the right people allocated in the right places? Do you have more people generating reports than you do in carrying out the initiatives these reports suggest? Your staffing model must reflect the best way for you brand to execute and grow. Make sure your most important resource is lined up correctly.
- Do you have the right product and/or brand? Is your brand a dinosaur like Howard Johnson’s, or A&W Root Beer stands? If your product is nostalgic or relying on it’s past (and past glory days), you will need to find a way to re-brand and become relevant to today’s consumer. This may mean adopting technology (think apps), reaching out to new customers (think Millennials), or morphing your products and services to be a unique extension of your trusted brand (think innovation).
Every business model has a life cycle. The great organizations (like 3M) adapt with the times, technology, and people. The companies that cannot will have their life cycles abbreviated and go the way of Blockbuster if they’re not careful.
Objectively run your business model through a 1,5, and 10-year trajectory to see if you’ll be in a challenging position during those time frames. If so, consider today how to stay ahead of the “dinosaur curve”.