Companies that choose not to look to the future face almost certain death. Those that embrace innovation and change will stay ahead of the curve and flourish.
We recently spoke with a senior leader at a leading manufacturer for consumer power tools–while I won’t give the name, I’ll say you definitely know the company well–about its innovation agenda. The company challenged us to come back with ideas that were “out of the box,” ideas that would be radically different from anything the company could come up with inside its walls.
It became clear to us quickly that redesigning the tools was not where opportunity lay. To modernize the business, innovation would need to come from rethinking the business model, or at the very least, exploring how a new business model might complement and enhance the existing business.
Within a couple of weeks, we were back at the table with an idea that would disrupt the entire power tools marketplace. The idea was essentially to develop a sharing platform that would unlock an entirely new rental and DIY market–an opportunity not being pursued by any of the company’s competitors. The pause on the other end was followed by intrigue, and we spent time discussing the nuances of the business. It wasn’t the business the company knew. It would require it to consider a new kind of marketplace and a new business model.
Discomfort in the unknown led the company to stay its course. Instead of changing things up, it’s remained focused on things like new color schemes and batteries for drills.
Many heritage brands face a similar dilemma when it comes to completely rethinking their core business. In fact, it’s the same dilemma faced by all organizations today. The idea of pivoting is often paralyzing. The sad truth is, a vast majority of people within organizations choose to clip paychecks. Their threshold to push against the system and fight for what’s right is often diminished by their need for self-preservation. The music industry was one of the worst offenders in the late ’90s–its focus on protecting its assets rather than distributing them led to Spotify and Apple’s dominance in the category.
Paying lip service to the concept of disruption is not enough. You have to demand breakthrough thinking, rather than foster safe innovation.
Every industry needs to shift from protecting its existing business to rethinking, reimagining and refocusing its efforts on the future of its business. Few legacy companies are able to operate with one foot in today and one foot in tomorrow. Meanwhile, some demand it of themselves and their company. Just look at Mark Fields from Ford in his presentation at this year’s CES. He’s pushing his organization to lead the automotive industry by converging Ford’s expertise with many of the advancements being made across mobility, connectivity, and other areas of exciting exploration.
Here are three industries that have been resisting innovation–and are running out of time.
1. The cable industry
The internet is your last stronghold into the home. All you have to do is look at what happened to the “Ma Bells” to see that the profits you’ve enjoyed, the ones connected to the pipes into our homes, are going to continue disappearing. Services like Apple TV, Netflix, Hulu, and Amazon Prime, and countless over-the-top content offerings are destroying your core business and at the same time, the cost for connectivity gets cheaper by the day. Rather than playing copycat and creating additional OTT offerings littered with intrusive and nonrelevant advertising, it’s time to focus on building a new business. If you want to remain relevant, you’re going to have to restructure how you operate, change what you offer, and rethink how you generate revenue. The days of charging $200 a month and up are coming to an end. And the triple bundle? No one’s interested.
2. The airline industry
Let’s face it, the overall experience of flying today is awful. With the exception of JetBlue’s Mint and Virgin’s hip vibe, airlines companies have set a new bar even for snake oil salesmen. Charging for luggage and food, reducing legroom, asking people to pay more for specific locations in the same cabin class, and providing seats that recline less is only opening the door for newcomers to snatch away your business. Just as the rising cost of hotels gave rise to companies like Airbnb, the declining quality of airline travel is setting the perfect stage for outside disruption. And when it happens, they’ll all be scrambling. JetBlue andSouthwest disrupted pricing and service once. Who’s going to be next to change the way travel happens all together?
3. The hotel industry
The hotel business is enjoying some of its best years, but the tide will eventually turn. With the rise of platforms like Airbnb, which offers alternatives to hotels, and bargain shopping sites such asLastMinute.com, hotel pricing will continue to face downward pressure. When we travel on business, we find it significantly more economical and more enjoyable to choose a place from Airbnb. Whether to accommodate leisure travel or business travel, hotels are all trying to reinvent their experience to attract customers–but they’re forgetting that what they also need to do is work just as hard to rethink their financial model.
Lots of companies consider their direct competitors to be their main threat. What they really need to start doing is looking at the culture of consumer empowerment that’s emerging as the force that will change the buy side of the equation. To save your company from certain failure, it’s time to be disruptive–and that starts by encouraging your employees and teams to rethink the business you’re in and the value you offer.