3 Things That These Iconic Companies Taught Us about Change Management
It is not the strongest or the most intelligent who will survive but those who can best manage change.
– Charles Darwin
History is littered with stories of companies who have identified the need for change or simply ignored it, and have fallen behind by not acting upon the Darwinian need to adapt. It has been and always will be necessary for companies to remain on top of relevant economical, technological, consumer-driven, government, legal, environmental, and competitive changes. Brand power is no longer lending itself to an immunity of competitive advantage, as research and development are becoming less valuable, and crowd-sourcing and open innovation are on the rise, and value chains are making room for value networks. This write-up is not a “how-to” successfully implement a transformational strategy within business, but rather draws upon historical examples of missed opportunities to emphasize the need to embrace the idea of change in certain situations, and to provide some insight into how to identify when these necessary adjustments should be made to implement organizational change effectively.
The Danger of Complacency
There are few things more comfortable than stagnancy. Often times we see companies who have succeeded in their markets, only to become too comfortable where they are and fall quickly, as other players prey in their blind spots.
Sears Holdings Corporation is an all-too-easy example of a colossal company that had identified many trends, adapted as needed, and had been extremely successful for decades. However, the company failed to recognize relevant socio-economic changes in the latter part of the century, and has not recovered.
Sears grew from a mail-order company that provided goods to families in rural areas, into a staple in American malls. Recently, however, Sears has closed 300 stores in the US and lost 1.36 billion dollars in 2013.
Sears became comfortable in its positioning as a middle class outfitter that provided durable clothing that was “in” for the period. Sears did not identify the changing atomization of the American population into individualized beings who expressed their own identities through their choice of clothing, which they preferred to be much less expensive. Nor did Sears identify with the affluent, and they were stuck somewhere in the middle with a smaller audience with whom to try to relate.
Disruptive innovations can be, well, disruptive. This word, however, carries with it a negative connotation that could be eliminated if these innovations are understood as opportunities instead of challenges. With the right amount of research and foresight, these innovations can often make themselves fairly obvious. It is much easier to ignore these changes, rather than embrace them as it seems safer, but this can often be riskier than adapting.
In the early 2000’s, Blockbuster sat comfortably on a 6 billion dollar share of the home movie rental business in the United States. Netflix was a young, seemingly unintimidating entry into the market with a lousy IPO. Blockbuster paid no mind to them and continued on its merry way. What Blockbuster had not considered, was that Netflix was offering a more convenient and less expensive alternative to their current offering. Had Blockbuster spent more time, energy and resources into researching into the business model that Netflix had developed, they could have likely identified its potential and possibly bought the small company out or emulated its own digital concept.
By the time Blockbuster released a digital version of its product, Netflix had captured much of the market and had positioned itself as a much more innovative company than its plummeting former leader.
Ultimately, we cannot presume that any current strategy, model, process, system, knowledge, product or service of any business is going to function in the same successful capacity forever, regardless of the results that have been experienced up to that point. No one is safe enough to grow stagnant, even with a strong brand, when surrounding variables are constantly changing.
A niche market could end up being the early adopters
In another classic example, Kodak, failed to understand the importance of the shift from paper to digital formatting in all facets of business and personal life. The digital revolution took years to emerge and did not do so quietly, as other trends sometimes do. Kodak was not blind to these developments either and had spent substantial amounts of money and resources into R & D for a digital camera prototype, but they were convinced that this kind of development would cannibalize sales from their film. Meanwhile, other companies such as Canon, quickly lassoed the opportunity and became a leader in digital camera development. By the time Kodak attempted to enter the market, they were too far behind in research and development and were viewed as a lagging new-comer.
In conclusion: Capitalize on your strengths while staying in tune with sources of challenges and opportunities
It is easy to look into the past and see how companies failed to capitalize upon the need for changet. It is, however, much more difficult to identify the source of these short comings and prevent them within our own personal lives or businesses. One can use these examples and attempt to draw comparisons in order to provide better foresight into the future and gain insight into the potential of change management.
The most dangerous phrase in business is, “we’ve always done things this way.” As Anthony Robbins put it, “if you do what you’ve always done, you’ll get what you’ve always gotten.” In addition to this, we can see from the examples that many companies do what they’ve always done and lose. It is important for all businesses, from small start-ups to enterprises, to never become complacent, to pay attention to disruptive innovations, and to respect new competitors, no matter how small or unintimidating they may seem. We must constantly be tuned into out relevant outlets of information to determine where the next opportunities may arise.