/ Business Survival: your actions today determine your existence tomorrow!

Knowledge Base Article
Article Type: Blog
Author: Fiona K

Business Survival: Your actions today determine your existence tomorrow!

An army of innovative start-ups are attacking traditional markets due to the technological and data revolution and the increased accessibility to funding. In 2015 alone, 70 start-ups achieved unicorn status (worth $1bn+)! Consequently, so many once successful businesses, are falling one by one, after spending years to build their company and reputation. But what exactly are the failing ones doing wrong and how are the survivors still competing in this ruthless jungle?

 

Which one are you?

 Leading Cheetah        

   Business Survival - Cheetah

Queen-Drama Chicken

   Business Survival - Chicken

 Arrogant Ostrich

Business Survival - Ostrich

Response to disruption

“How can we use new technology to perform better and faster to compete? Let’s do some initiatives on the side to test what works best!”

“Oh Gosh! They are going to steal our clients! Let’s change our technologies and strategy immediately” We should buy the latest robotic AI machine  to boost our operations!”

“Ah! This is temporary, I have been trading for years and I have worked hard to now have my 20% of the market! Ignore these time wasters, they will fade soon!”

What do they do?

– Create innovations focused on customer pathways by constantly testing new approaches.

– Allocated time, financial resources and talent to create and execute scalable strategy to act when disruption was first spotted.

– They now have a delighted and loyal customer base and they perform 2.91 times better than other companies. Their bottom-line boosted by more than 50% and they have paid back their investors within the first year

– Usually keeps being swayed by the hype and allocates huge budgets on new technologies

– Ready to spend on the acquisition of an innovative start-up.

– In their frenzy, they ‘forget’ to plan for change in organisational structure, processes and approaches. Soon they run out of cash and have to shut down the company

– Ignore the threat and continue as usual.

– Within 6 months, this company’s thriving product category has been displaced, experienced increasing number of complaints and major decline in market share.

– The daily firefighting was difficult to deal with, destroying significant value of the business when responding to urgency of crises.

– In less than 5 years, the Ostrich’s company was kicked out of the market and they were forced to either sell the business for a very small amount or file for bankruptcy

Example

A great illustration of a Cheetah is Apple, dominating 40% of the US market.

They refocused their efforts in the late 90s when they spotted disruption. They narrowed their portfolio to stay one step ahead of disruptors: rather than continuing to spend on raw technology development, they created a program building on others’ innovations to provide added value.

They have also consistently spent far less on R&D as a percentage of sales than the median company in the computer & electronic industry!

A huge budget of $590m was spent by Cisco in 2009 to enter the camera business.

The company wanted to move fast due to the high disruption in its industry. Cisco hastily bought Flip, the maker of popular Flip Video camcorders.

But it did not take the time to really look at what the other players’ were planning: Apple’s camera-equipped iPod Nano completely wiped out any chance of Cisco’s Flip. They attempted to create a new product, “WiFi Flip”, but were too slow. Competitors had already claimed their share of the market.

Cisco eventually shut down the Flip business unit in 2011.

In 2000, Blockbuster was the king of the video rental market until disruptor Netflix entered the space with a small, niche service and started to pull in a large proportion of the market.

After 6 years of denying the danger, Blockbuster decided to finally react by changing its late fees policies and launching Blockbuster Online – this would cost around $400m.

Unfortunately for the King, it was too late and they filed in for bankruptcy in 2004.

Survival of the fittest: unleash your Cheetah!

Regardless of your size, responding like the Drama-Queen Chicken or the Arrogant Ostrich, puts you in danger. Digital disruption has brought new rules to the game and the ones who are still playing the old-fashioned way are soon to be wiped out by young innovators and cunning Cheetahs!

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