There are a few things that, when combined, serve to make a business powerful and durable in it’s marketplace. It’s not so much about specific nuts and bolts – it has everything to do with the basic guiding principals of the business in question. Neither does it matter too much what industry the business is operating in; the principles of business are true regardless of the specifics. That’s the great thing about principles – they apply broadly even when the specifics are very different.
An example of this would be the need for a business to generate revenue that exceeds it’s costs. It doesn’t matter if you’re in the construction industry or the catering industry – this basic business principal holds true across the board. A business that doesn’t generate any revenue isn’t going to be a business for very long, regardless of what industry it’s in!
Now, the obvious argument against this is the example of Snap (Snap Chat) – a business that, although is generating revenue, isn’t actually making any money at the moment (despite being floated on the stock market). Here’s the thing though, that can’t and won’t continue forever. At some point, if the company doesn’t start making money (revenues exceeding costs) then investors will lose faith and pull out their investments which will cause the stock value to crash and burn. This would undoubtedly be the end of the company, so they’re under pressure from their investors to turn a profit sooner rather than later.
Another example of this is Amazon. They didn’t make any money for years when they first floated, and the first time they posted profits was the fourth quarter of 2001 – baring in mind that the company was founded in 1994 and was first publicly traded in 1997. But again, this could only have continued for so long, as investors wanted to see a return on their investment and the company did eventually start to make money (profit).
So what are the guiding principles that add power and durability to any business?
Quite simply, they are flexibility and self-disruption.
Let’s look at each of these in turn.
Flexibility is super important because it allows for change. Change is the ONLY thing that’s 100% guaranteed in life, and so it makes sense that as individuals and business we set ourselves up to expect and to embrace change – it is coming for you and your business, so to not prepare for it is simply ridiculous. You must be set in your goals, but flexible in your approach.
Technology is constantly evolving and changing how we interface with our inventions. Societies across the world are morphing and bending to the changing philosophical mood of civilisation – what we want it changing, and how we want it is changing too; no longer do we spin vinyl records on a turntable in our spare time, now we’re downloading information from platforms like iTunes U directly into our ears from our smart phones.
Shining examples of this approach are companies like Ford and Apple. Henry Ford was famous for saying that if he’d have asked the people what they wanted from his company they would have said a faster horse! Steve Jobs was the epitome of forward thinking, with his products being the first to get rid of the headphone socket on their devices in favour of bluetooth connectivity, and in creating a platform for the dissemination of music and other digital media that literally floored the record labels and music stores. Apple got it right, and those companies who failed in the wake of changing times failed to endure because they were largely rigid in their thinking and this stifled change. Another great example of what happens to companies who aren’t flexible is Kodak – they actually invented a digital camera that sat in their archives for years before Nokia beat them to market and decimated their market share. They had the product and the technology, yet they failed to bring it to market because they were too rigid in their thinking; they played it too safe, and it killed them.
If you want to build a great company that endures over time, be like bamboo!
Being flexible is also important for facilitating the next principle; self-disruption. If you’re not prepared to be flexible, then you certainly won’t be prepared to disrupt yourself!
But what does self-disruption actually mean?
Jay Sammit wrote an excellent book on this subject which I highly recommend you read if this subject is of interest to you. It’s called Disrupt Yourself (hit the link to get yourself a copy from Amazon).
Put simply, this is the practice of constant and never ending improvement to your product, your service and your business through the art of looking at how you could possibly make a better product, deliver a better service, or even change your product or service based on new technology and changing needs. Kodak would have disrupted themselves if they had have brought their version of the digital camera to market, instead they were disrupted by Nokia who brought it to market before them.
Let me make this clear; you have two choices – either disrupt yourself, or be prepared to be disrupted by someone else. There’s only so long you can sustain the status quo, because there will always be a new person/business on the block who sees things differently, and is small and nimble enough to take their new version of the world to market. This is why both flexibility and self-disruption are so important – the new person coming into your space is both, and they are your fiercest competitors! To stay on top you need to be at least as flexible, and disrupt your own business before someone else has the opportunity to come along and disrupt it for you.
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