Winning Moves Blog

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” »

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.

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” »

So much has been changing. The Great Recession has had an impact. Technology has advanced, causing some industries to be disrupted. And, market conditions for many companies have shifted, often in ways that can challenge long established players and favor newcomers appearing to better meet today’s market needs.  All of this leaves companies dealing with the issue of the right way to change.  After all, change can unleash opportunity. But, it can also bring major disappointment.

Based on my 25+ years researching business success and failure patterns, companies are far more prone to mishandling their response to change when they face pressure to improve their situation. In contrast, companies less desperate to change, and better prepared for it, are more likely to see favorable results than their counterparts who face greater urgency. Times of urgency can easily encourage companies to overreact in the wrong ways.

Many companies were forced into an urgent situation by the Great Recession. The most recent issue of Harvard Business Review (May-June 2019) discussed this in the article “How to Survive a Recession & Thrive Afterward: A Research Roundup” by Walter Frick. The article tells of research done by Bain, as well as a study by McKinsey, and points out what distinguished the companies that thrived after the recession from those that stagnated. The article says, “The difference maker was preparation.” Regarding the stagnating companies, the article states that “according to the Bain report: ‘When the downturn hit, they switched to survival mode, making deep cuts and reacting defensively’.”

As I see it based on my research, recessions aren’t the only time companies suffer as they go into survival mode. Encountering any challenging situation may cause companies to react as if their survival is threatened. Thus, survival mode can be triggered by urgent times regardless of why the urgency arose.

This can happen, for example, when a company’s business stagnates for any reason—whether its products are maturing, its markets are shifting, or whatever. Treating these situations as survival mode can be quite tempting for companies. In these kinds of disappointing circumstances, companies are inclined to misuse their tendencies toward a bias for action, often acting in ways that are not in their best interest. This can entail companies pursuing financially disastrous directions, with the misguided hope that their new initiatives will rekindle stronger performance. In situations like this, companies often spread themselves thin by pursuing too many ill-fitting new areas at once, embarking upon a disastrous situation that I call a new products/new ventures phase, a temporary period that ends when the company realizes how much money the new pursuits are losing.

Companies can also be driven into survival mode when their long-established business is not doing as well as a hot new start-up in their industry. In this situation, a company is vulnerable to taking drastic action, and if the company yields to the temptation to overreact, performance can suffer. Furthermore, the hot new startup that established players are pressured to imitate may not even be able to sustain its impressive success in the longer run.

So, when companies experience urgent times of vulnerability, they should avoid succumbing to pressure to overreact. Companies do much better if they are prepared and use their know-how to react in ways that are strategically right, not in what seems to be desperation for survival. It doesn’t matter whether the vulnerable time is due to recession or to changing situations in the industry. Regardless, responding in a more prepared fashion and avoiding survival mode brings far better outcomes. Even when changing circumstances cannot be anticipated and last-minute decision making is required, companies should make choices that fit strategically and avoid desperate overreacting. That’s the way to thrive after urgent, vulnerable times.

If your organization would like a presentation on Harnessing Urgent, Vulnerable Times to Achieve More Successful Change, just contact us.

Over the last few years, many companies have slimmed down by spinning off businesses. Spinoffs have been said to keep companies focused, presumably for better performance. However, although a company can benefit from shedding what doesn’t fit at all, doing spinoffs will not always Continue reading “Not All Corporate Spinoffs Are Beneficial” »