Innovate Or Die
Today, businesses are struggling to keep revenues going. Businesses across most, if not all, industries are experiencing declining revenues. In order to compensate, businesses have been cutting costs, mostly in the form of getting rid of employees. Such action has been effective, even delivering “earnings beats” in many areas driving a huge run in the stock market. But, the question remains, in a weak economic environment, where does the increase in revenue come from? Is “waiting for the economy to bounce back” a good enough strategy?
During the boom years, the “pie” of business was growing which easily supported the businesses going after pieces of the pie. Companies with similar products or services were able to get their piece and make money, support employees, earn a living. Now, that the pie has been shrinking, the game is completely different.
The Ugly Business Environment Today
Because of the shrinking pie, and an excess number of business all pursuing the same shrinking volume of business, a number of new developments are taking place. Some companies decide to slash pricing in an attempt to win more business. Customers, in an attempt to save money, encourage the slashing of prices. Unfortunately, winning business on lower margins necessitates an increase in volume; but this is not happening today. Many companies are winning less business and the business that they are winning is on lower margins.
So, what is the strategy for a business trying to compete in this tough economy? The answer is to innovate. Companies must find new ways to do business, new ways to deliver value, new ways to service their customers in an attempt to both differentiate from competitors but also offer a product or service that is nonexistent in the rest of the marketplace.
Where / What / How Do We Innovate?
Only you know your business, but there are some key questions to ask. Is there a technology that could render your service useless (think about the way Expedia and other online travel sites put out of business travel agencies)? Is there a software solution that could change the way your business operates? Could you sell that software to other companies like yours?
A good way to view the future of business is a platform-focused view. Don’t try and be another player in the field of many; instead, come up with a platform that will enable the players to compete better. Be the platform, not the manufacturer. Be the platform, not the retailer. For example, Google provides an advertising platform with their Adsense product which facilitates advertisers and publishers at the same time. Can you extend this concept to your niche industry? Think outside the box a little bit and see what you can come up with. You might surprise yourself.
To grow your business, you must innovate. To get more of the pie whether its a shrinking pie or growing pie, you must innovate. If you’re not making progress, you’re probably losing ground because your competitors are innovating. Don’t just sit by and pray that our politicians will fix our economy. Improve your business and make it happen yourself!