Tuesday, November 20, 2012

Business Failure 7: Adapt to Change Too Slowly

Hostess BakeryThis continues our series outlining reasons businesses fail so that you can avoid them

An increasing number of business fail because they do not adapt to change fast enough. New technologies and global markets generate rapid changes in products, markets, and consumer expectations. Businesses must adapt and do it quickly to survive. Owners need to stay aware of new demands and trends.

Examples of Failures

Let me share examples of businesses that failed to adapt appropriately:

  • Hostess Bakery announced closure rather than survive its 3rd bankruptcy because it did not offer healthier snacks and lost its market to Little Debbie
  • Sears, the innovator of catalogue and credit card sales, failed to adapt to discount and big box retailers like Wal-Mart, Target, and Costco. Sears continues to close stores
  • Borders failed to adapt to eBooks and online booksellers: closed all its stores
  • Pan American Airlines incurred too much overhead and did not adapt to discount airlines and failed
  • Circuit City did not adapt to online sales, big box electronics at Costco, and retailers like Best Buy. Circuit City (one of Jim Collins best companies) failed in 2009

Examples of Successes That Adapted

In addition, you may follow several examples of companies that adapted, survived, and thrived:

  • Apple adapted and reinvented itself several times: Mac, IMac, IBook, IPod, IPhone, and IPad. Each time expanding its market share
  • Dominos Pizza recently completely adapted it's pizza sauce to reengage consumer’s who claimed their pizza “tasted like cardboard”
  • IBM after almost completely failing at the beginning of the century adapted to a service model that did not include manufacturing computers a complete transformation
  • Hyundai and Kia adapted the style, type, and class of car they manufactured to begin to rival Honda and Toyota for their market

The Innovator’s Dilemma

Clayton Christensen describes the challenge businesses face in The Innovator’s Dilemma, The Innovator’s DNA, and other books. He shows that the success of a business may initiate its inability to open new products and services. He describes five principles you must consider. I suggest you purchase and read it.

Thursday we wish you a Happy Thanksgiving

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