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  • Are You Chasing Too Much New?
  • Experimenting with many new things is common during times of rapid change. However, much of what is tried will not work. So, companies that try a number of new things often abandon them because what is tried fails to bring the desired result. There’s nothing wrong with trying some new things. After all, change can be crucial in today’s times. And, in many instances, it can be necessary to try and try again in order to discover what works. Nonetheless, it’s well worth learning from those who have attempted many tries and ended up cutting back on what they were trying.

    Experimenting with new things can take various forms. Sometimes, companies embark upon what I call a new products/new ventures phase. This entails going into many new areas, generally because a company’s core business is weak and it is hoped that new pursuits will bring the growth that the current business no longer seems to offer. During a new products/new ventures phase, losses are generally incurred because learning new businesses takes time, especially since the new products and new ventures are often far different from what the company knows and understands. Yet, companies often neglect their existing business, hoping that their many new endeavors perform far better than the stagnant business they are in now. As a result, the neglected existing business often experiences more rapid deterioration, but the new endeavors merely bring huge losses instead of the desired growth.

    In other, less extreme situations, companies may try a number of new things and soon recognize that much of what they attempt isn’t working. If they need to curtail what they tried, and if they didn’t badly neglect the existing business, it can be somewhat easier to terminate the excess new with less dire consequences than what often occurs in a new products/new ventures phase.

    That’s why there is value in thinking through proposed changes before moving forward with major innovative efforts. If it’s not too costly, and if severe unintended consequences are thought to be unlikely, some experimenting can be worthwhile. If a huge investment is required, or if new endeavors have the potential for big losses or can lead to serious neglect of the existing business, a company needs to be more cautious about moving forward.

    There are some recent examples of companies trying new things, then curtailing their efforts. One example is Kroger. According to the November 22, 2019 Wall Street Journal article “Kroger Dials Back Store Overhauls” by Jaewon Kang, “Kroger is facing increased competition from all sides” ranging from ecommerce to discounters and “Kroger established a plan to reinvigorate its business.” The article says, “The company aimed over three years to overhaul stores and invest in technology including sophisticated ways to mine customer data.” “The profit bump hasn’t materialized”, according to the article, and after trying many new things, the company is now cutting costs and “plans to renovate stores more gradually, leaving more fully operational to maximize sales.”

    Another example is Ferrari. Ferrari has a powerful brand image associated with being expensive and top of the line. The November 11, 2019 Wall Street Journal article “Ferrari’s Chief Remakes Brand as Car Business Shifts” by Eric Sylvers, discusses how Ferrari CEO Louis Camilleri is dealing with auto industry changes associated with electronic vehicles and self-driving cars. According to the article, “the changes are particularly tricky for Mr. Camilleri and Ferrari because of the nagging doubts that people will shell out hundreds of thousands of dollars for an electric self-driving Ferrari”. The article says, “Electric cars have fewer moving parts” and this is “making it harder for Ferrari to showcase its engineering prowess.”

    As the article points out, Ferrari has been trying to remake itself as “a luxury-goods brand that makes a range of products from apparel to leather accessories.” But, according to the article, “Mr. Camilleri plans to terminate half of the licensing agreements and products that carry the Ferrari logo, which has proliferated on items ranging from key rings to coffee mugs. Products getting the ax include Ferrari branded computers, credit cards and fragrances.”

    As I see it, Ferrari responded to the shifting market in a way that is not unusual for companies facing challenging circumstances. Ferrari tried putting its name on a number of new products with which the company was not experienced. It is not surprising that the company ends up axing many of these products. And, the lesson here is that rather than trying so many new areas at once, it can make more sense to identify the few that might actually be appropriate for the brand.

    The above examples illustrate how easy it is to overdo the new when companies face challenges. There is often encouragement to experiment with many new things, and in some companies, failure may even be encouraged. But, companies should not forget the value of recognizing beforehand that most new initiatives of this nature fail. They need to remember the value of identifying and focusing upon those new areas most likely to succeed, and going at a more gradual pace that is less likely to be destructive to the existing business. Although companies can’t sit still, and change is necessary, chasing too much new can have undesirable consequences.

    If you’d like a workshop that enlightens your group about getting innovation right, just contact us.

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