These days, business models go in and out of fashion like clothing lines. One day your company’s at the cutting edge, the next it’s old, slow, and one bad decision away from liquidation.
Some industries - like entertainment retail - have been almost unfairly hit with turmoil. In a matter of years, established organizations, like HMV and Woolworths, were expected to dump everything they’d been doing for years and dive headfirst into on-demand streaming.
Yet their management at the time had no idea about online video players, what they knew about were the best strategies to sell CDs and DVDs. In that sense, their demise was inevitable. By the time they’d started to react to those innovating within the space, it was too late and they just had too much ground to make up. Woolworths went into administration in 2008, with HMV following suit in 2013.
You would think that the failure experienced by those companies would act as a blueprint for how not to react to change. But the nature of technology means that reacting to change - however similar it may appear to a former failure by another company - requires a different strategy every time it’s approached.
A number of successful companies - including Shell - use scenario based planning to help identify future extreme events. The method sees companies purposefully simulate possible future events so that they can react to them as if they were playing out in the real business environment. It’s been touted as an excellent way for organizations to demonstrate why and how things could go wrong quickly, and as a method to improve the ideation process.
An aggressive approach to technology adoption can also be a good way to navigate change. The problem is, most companies can’t afford to continually purchase new tech, let alone put it into practice. Companies which have the purchasing power to experiment, however, should do so, as it can be used as a part of scenario based planning to help negate future threats. Innovation is, after all, built on technology adoption, with companies continually making amendments to their product in order to keep it relevant.
It’s never been possible to plan with complete accuracy, even when the entire marketplace consisted of two or three fairly dormant competitors. Now, competition comes from all angles, from companies which weren’t even in the picture two months ago. But that shouldn’t deter companies from thinking strategically - if anything it should encourage them to do it more - as methods, such as scenario planning, can and often do help companies become more agile.
One of the most important things for companies is to not let technological evolution pass them by; they must act quickly. There is, of course, a tendency to think that if you ride it out that your established business model will stay the course. Sometimes it might, but most of the time it won’t. Take solace in the fact that if you’re an established company you should have the resources to adapt and if possible, get the necessary people in that can help drive the process.
If change is coming, remain vigilant. Make sure you have the expertise to deal with it and combat it head-on.