I was reading The Last Retailer Standing by George Minikakis recently and it quoted some statistics that really brought home how quickly business landscapes were changing. Among all ‘top’ companies, back in the 1920’s, the average lifespan for any specific firm was 67 years. This is where the multi-generational firm had it’s heyday. By 2010, the average lifespan of a firm had dropped from 67 years to 12.5 years for ‘top’ companies (think of the S&P 500). Taking this trend to the smaller more vulnerable firms one can easily see how the 12.5 year lifespan could easily drop to 5-8 years. Just last month Future Shop and Best Buy announced the closing of 15 stores across Canada. I believe this is the tip of the iceberg and that within 5-7 years these two well known brands will cease to exist as we know them. The cause of such a lifespan decline for so many companies- remaining relevant.
Remaining relevant involves all aspects of your value proposition. Yes, it is what you sell, but increasingly important is how you sell it, at what price and what innovations is the market looking for (or already receiving from your competitors)? So many business owners and managers hang onto the old ways that have lead to success in the past, as to leave these takes you to the unknown, and this is a cause for fear for most of us. But just ask the former employees (and stockholders) of such companies as Eaton’s, Nortel, BlockBuster and they will tell you the price they paid for hanging on far too long to the ‘good old ways’.
While occasionally a disruptive change will blow a company or sector out of the water, (Roger’s Video and Blockbuster Video with NetFlix) most business changes are incremental – a bad month here, reduced margins there. It is death by a thousand cuts, most of which can be prevented by researching what is happening in your company and sector and being proactive to any trends and changes you see. Culture to permit change and defining a sustainable competitive advantage are keys to your success – and we will discuss these in the upcoming weeks.