There comes a time in every business when it becomes apparent that your product, service or business model is no longer relevant.
How do you know that moment is at hand?
Great consolidation is afoot. Your competitors are joining forces. You are becoming a smaller fish in a bigger pond. You may be asking yourself, “How can I possibly compete with the big boys if they keep getting bigger and bigger?”
You don’t recognize your competitors anymore. There are companies entering your space—but they look completely different than you. They have new ways of making money, selling, distributing…. They are breaking rules that your people are telling you are sacred and unbreakable—and making substantial sums while doing it.
The competitive pressures on your business are increasing dramatically. Pressure could be a synonym for price, but it also could mean customer demands, speed to market and product or service customization. You are being asked why you can’t deliver the same levels of delight that the new kid on the block can.
Simple solutions are not enough to make people happy. Your customers are demanding higher and higher levels of product complexity.
Some customers are getting all the attention. You notice that more and more of your competitors are trying to serve only the best customers—the 20 percent that drive 80 percent of your margins.
Part of the market is being left behind. In an effort to follow the margin and money, there is a growing segment of the market that is being neglected.
You are losing your power to manage the supply and distribution of your product or service. For example, if the manufacturer decides to sell direct, where does that leave everyone else in the distribution chain?
It’s getting more complicated to do what you do. Perhaps regulations are increasing or there just seems to be more process hoops to jump through to serve your customer. Either way, it isn’t getting any easier and you’re not imagining it.
Do any of these symptoms sound familiar to you? If you are in higher education, health care, retail, media, financial services and other sectors, your answer should be “yes.”
And if your answer was yes, the question is: Now what?
There are three critical steps to take to make sure you don’t experience a Napster Moment—that extremely specific moment when someone with no business being in your business comes along and puts you out of business.
Get ridiculously close to your customer’s, customer’s customer. Do NOT leave it up to distribution partners or traditional industry experts to see the future needs of the end consumer. You must discover these needs for yourself. You must hear them directly from the consumers your product, service or business model is intended to delight. The company that has the deepest intimacy with the end customer has an unfair competitive advantage when it comes to what’s next.
Be agnostic. The end consumer wants something from you. Forget thinking about the business you are in today and let their wishes drive the business you COULD be in tomorrow. The one thing the most innovative companies have in common is that they think expansively about who they serve and how they may serve them. For example, what business is Apple in? Computers? Phones? Music? Money? The defense rests.
Make sure you have identified and deeply understand a segment and a significant need of that segment before you begin creating unique solutions. Most great innovation follows an adoption curve, which focuses on a small number of passionate consumers and ramps from there. Forget trying to come up with something for everyone. Instead, come up with a solution and experience that resonates with the right segment first and use their enthusiasm to drive market adoption.
One last point: If your company is full of imaginative people with an entrepreneurial mindset, you will likely jump to many solutions before you do the hard work of finding the right segment and the right itch to scratch. That would be a mistake.
On the other hand, if you’ve built a team that believes in operational rigor, you’ll likely focus on unimaginative, broadly targeted ideas that will fall flat. That signals the end of your business.
The magic is in the middle; you must strike a balance between imagination and execution. The three steps above will help keep you on track.
This article was originally published by Free the Idea Monkey