Manage Challenges Coming from New Visions for a Company’s Future

As core markets mature, companies are identifying new visions for their future and they are taking steps to bring those visions to fruition. This brings challenges. So, as the future unfolds, handling the situation well can make a major difference between success and failure.

It is easy to opt for a vision that is rather different from the company’s mature business, especially if the vision seems to promise high growth.  Pursuit of the vision often leads to acquisitions intended to add expertise that the company would not otherwise have. This is done with the intent to steer the business in a new direction thought to represent a more prosperous future.

But, it’s not always that simple. Companies may incur large losses as they try to learn the business comprising their new vision. This loss laden process may take longer than originally expected. And, some stakeholders may start to question whether the new vision is right for the company.

Furthermore, if the company is publicly held, activist investors may push to modify the vision or to spin off acquired businesses. Sometimes what the activists propose will make sense for the company, but sometimes it won’t. Sometimes what the activists call for would have made sense if it had been recommended before the company plunged into the acquisitions for which spin off is now proposed. If time has passed and an acquisition is already heavily integrated into the company, a called for divestiture can be much tougher to implement. It might actually be better to build on what’s already there to ultimately reach a point where what didn’t fit well initially is now deeply intertwined with the company’s operations, seemingly with good future potential. When this occurs, the value of divestiture can be less clear.

What is the lesson here? When plotting changes for navigating the future, companies need better up-front thinking. They need to better assess whether possible visions really are or are not a good fit. As I’ve seen in my 25+ years researching business success and failure patterns, there can be very effective ways for companies to expand when a business reaches maturity. Nonetheless, it’s often tempting for companies to chase idealized high growth futures, rather than identify and pursue areas most likely to succeed. Companies need to avoid this temptation and to concentrate on what is truly a good fit.

 

Do you want help with your company’s options for the future?  If so, just contact us.

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Patterns Shatter Myths about Successful Startups

I’ve recently written about how idolizing the risk-taking daredevil image perpetuates myths about the rewards of high risk. Another example of misleading imagery, however, is the notion that successful startup companies have relatively young founders. Like the myth of high Continue reading “Patterns Shatter Myths about Successful Startups” »

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Falsely Prepared for Disruption

I have written previously about the downside of companies panicking due to fear of disruption. And, most people are well aware of the terrible fate that can happen, as it did at Kodak, when disruptive threats are essentially ignored.  However, besides panic and being Kodak-like, there is yet another scenario that companies dealing with disruption can face. Companies actively working to prevent disruption can falsely Continue reading “Falsely Prepared for Disruption” »

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More Evidence of Paper’s Value in Today’s Digital World

These days, it is said that every company must become a technology company. However, as companies strive to strengthen their technological capabilities, taking the right approach is essential in order to achieve success. Thus, when adopting the latest technology, companies must do so in ways that are well suited to their business. This means integrating the new with the old, and recognizing if and when an older way of doing things might still play a valuable role.

Along these lines, we continue to see situations where paper, which can be perceived as old fashioned in today’s digital world, can still make an important contribution to business success. For example, the retailer Nordstrom learned the hard way that paper mailings still have value. This is discussed in “Nordstrom Cuts Direct Mail Program, Loses Sales” by Melissa Campanelli in the May 23, 2019 issue of Total Retail, which is an article I noticed on LinkedIn thanks to my connection Kristan Rowland of William Blair & Company. The article revealed that, according to Yahoo Finance reporting about a Nordstrom post earnings conference call, “the company stopped sending rewards ‘notes’ to its loyalty customers by mail in an attempt to get the program on line and reach customers faster. That shift caused a reduction in foot traffic at all of its stores.” Additionally, the Total Retail article mentioned that there have been other examples of the value of direct mail.  And, the article raised the question, “Is direct mail seeing a resurgence?”

In my view, Nordstrom’s situation is just one more example of what we have been seeing for a while now.  I wrote previously that Penney’s brought back a mini version of its paper catalog. And, I’ve blogged about how even highly successful internet marketers, like eyeglasses e-tailer Warby Parker, have done paper mailings. As I have written before, if an older technology still has value, there will continue to be a role for it in the marketplace. And, from what we are seeing, paper mailings still have value.

The lesson here is that, although new technology can bring many benefits, companies must think through their approach with its adoption.  They’ll want to be sure they reap the benefits of new technologies and not get left behind. Yet, it is equally important to evaluate what advantages the older technology might have offered and take care not to inadvertently discard something valuable when shifting to the new. The value of paper direct mail has been enduring. This is much like what we have also seen with the rise of  omni-channel retailing, where bricks and mortar continues to live on along with newer online technology.

Thus, yes, it’s true that in today’s world, every company must become a technology company. But, at the same time, every company must realize that there can sometimes be serious unintended consequences from abandoning the old way.  Nordstrom’s experience cutting its mailings illustrates the potential value of retaining some of the old and integrating it with the new.

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New Coke Risk Lessons Are Still Easily Misunderstood

New Coke is back. No, it’s not back as a product that consumers can buy in stores, though it will be available online in limited quantities. Instead, New Coke, a high-profile failed product which was on the market briefly in 1985 to compete with Pepsi on taste, is back for promotional Continue reading “New Coke Risk Lessons Are Still Easily Misunderstood” »

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