Entrepreneurial Extinction

The other day it was raining. I usually walk outside – I’m a step-counting junkie – and treadmills don’t do much for me. So, I put on my walking shoes and went to a nearby mall to warm up my Fitbit. There was only one problem. The mall was closed. It was Sunday morning and apparently the mall doesn’t open until noon on Sunday. Needless to say, I was perplexed. During 2017 more than 5,000 stores closed across the nation and purportedly 5,000 more closed during 2018. I say purportedly because I haven’t seen any sort of “official” final tally for 2018. Some media sources report that more than 12,000 stores closed that year. Regardless, bricks and mortar retailers are fighting for their collective lives. They are up against the likes of Amazon and Walmart to name two of their biggest competitors. Amazon is open 24/7 and Walmart stores seem to be open most of the hours people are awake. And yet, the mall I mentioned doesn’t open until noon on Sunday and 10:00 AM on Monday through Saturday. Store (or mall) hours aren’t the only problem for bricks and mortar retail, but they certainly have to be on the list of troubles.

This experience got me to thinking about how some businesses simply fail to change with the times. This isn’t anything new. But by now one would think that the ability to adapt would be case study Numero Uno in the school of entrepreneurship. Let’s look at another example – this one is in the educational sector. For years, we’ve seen tuition spiking at public universities and colleges. According to the College Board, tuition has increased approximately 5% per annum over the past ten years. Meanwhile inflation has averaged 1.66% per year for the same timeframe. Why has this happened? Government-insured student loans have been a major contributor to the upward movement of tuition. Universities have known that they could just keep pushing tuition because students could borrow cheap money to finance the cost. There’s only one problem. The student loan bubble will burst someday, and maybe sooner rather than later. Public funding for higher education has been under pressure for years. Meanwhile, colleges and universities blithely continue to build new buildings and act like the good times will roll forever. There’s scant evidence that leadership is plotting how to adapt to what could become a very scary situation.

The landscape is littered with the carcasses of companies that failed to adapt. During 2018 we saw the death of Sears, Mattress Firm, Brookstone, David’s Bridal, Rockport, Nine West, Claire’s, Toys R Us, iHeartMedia, Gibson’s (the guitar maker) and Bon-Ton to name a few. Many of these companies had accumulated too much debt. Others grew too quickly and saturated the market with stores (Mattress Firm comes to mind). Others clearly kept plodding along with a business strategy that no longer worked.

The Netflix vs. Blockbuster Video story is common knowledge. Blockbuster never came to grips with the fact that streaming services was going to be king of the mountain, pushing the business of renting videocassettes into the abyss. Eastman Kodak failed to understand that digital photography was the future – not film and photographic paper. Yahoo blew it when Google was offering everything for free; yet Yahoo thought it could charge for e-mail and file sharing.

When we as entrepreneurs become comfortable and believe that we have the best idea, we’re probably headed for a fall. Because there’s absolutely no doubt that someone else is already working on the next best idea and may roll it out as early as tomorrow. Dr. Ichak Adizes, CEO of the Adizes Institute and one of the world’s leading management experts has developed a concept he calls the Corporate Lifecycle. He identifies a “Mature” organization as one that is about to experience “The Fall.” He goes on to say, “The leaders of The Fall companies are starting to feel content and somewhat complacent. This attitude has been developing for some time. The company is strong, but it is starting to lose flexibility. It is at the top of its lifecycle curve, but it has expended nearly all the “developmental momentum” it amassed during its growing stages. The rocket is slowing down and starting to change direction and head down the lifecycle curve. The organization suffers from an attitude that says, ‘If it ain’t broke, don’t fix it.’ The company is losing the spirit of creativity, innovation, and the desire to change that brought it to Prime (the ultimate phase of the corporate lifecycle). It has sown the seeds of mediocrity.”

There are many lessons to be learned here. As our organizations continue to grow and become rocket ships, it’s critical that we maintain our spirit of creativity, innovation and the desire to change. Always. Every day. Forever.

You can also listen to a weekly audio podcast of my blog. What you hear will be different than what you read in this blog. Subscribe on iTunes or wherever you get your podcasts. You can also click on this link – Click here to listen to Audio Podcast 133 – Five Reasons Exponential Growth Can Be Elusive.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Curveballs and Changeups

Major league baseball pitchers throw some amazing pitches. Their repertoire includes the breaking ball, changeup, forkball, screwball, slider, curveball, knuckleball, four-seam fastball, split-finger fastball, cutter, sinker, two-seam fastball and probably some other customized versions of all of the above. These pitches range in speed from 70+ to over 100 miles-per-hour. How a batter can even see a pitch that is screaming in at speeds above 90 and dancing all over the place is an incredible feat. And the fact that such pitches can be hit for home runs is even more stupefying. How do they do it?

Major league batters expect to adapt. They know that they are going to see a wide array of pitches that are surgically placed in different locations in the general area of home plate. Thus, every at-bat requires them to adapt to a host of variables. Top-flight big leaguers have an uncanny knack for successfully adapting their vision and their swing to hit the ball and get on base. They go to the plate knowing with absolute certainty that they must be able to adapt or they will strike out, fly out or ground out.

As entrepreneurs we would be well-served to study successful major league baseball players and observe how they adapt. Sometimes they shorten their swing. At other times they become supremely patient. They may try and push the ball to the opposite field; they may bunt, and they might also time their swing in order to pull the ball. All of this happens within a split second.

We entrepreneurs often work hard to create elaborate strategies and backfill with a host of tactics. We plan and we create extensive systems and processes. All are absolutely necessary to succeed. But sometimes we forget that we must expect to adapt. There is nothing negative about holding this expectation. The game plan provides a roadmap for us to follow, but it doesn’t account for every possible instance where we may need to be flexible. Over the years I’ve tried to muscle my way through a plan that I was convinced was the only way to go. Most of the time it led to failure or at least results that were less than stellar. I realize that I was being resistant to adaptation.

What I wish I had understood at the time is that the need to adapt can offer some incredible opportunities. And my resistance caused me to miss those opportunities. It’s easy to say, “OK, I have a plan and undoubtedly something will knock me off-course.” What goes unsaid is the thought that, “Then I’ll do whatever it takes to get back on-course.” But what if we had a mindset of expecting the need to adapt and actually turning it into a desire?” Think about all of the wonderful inventions that have occurred in the past. If you’ve ever read the story of Steve Jobs, you’ll know that he was a master of adaptation. Through his flexible nature he embraced the chance to make changes to the iPhone and the end result was, “WOW!” It’s well-documented that the initial vision for this technology would not have been nearly as phenomenally functional as what was eventually developed.

When we rejoice at the prospects of adapting our ideas, our creativity increases exponentially. Then we are positioned to achieve greatness in whatever we choose to do.

 This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

willie mays

Disruption

What do World Book Encyclopedias, the Sony Walkman, public pay phones, cassette tapes, flopping disks, Palm Pilots and manual typewriters have in common? OK, I realize it’s an easy question – they are all obsolete products. But the real question is why they became obsolete in the first place. You may be thinking, “Other more advanced products came along and replaced them.” True again. But why didn’t the makers of these products create newer and more advanced versions? And therein lays the dilemma. I’m going to make a sweeping generalization here to prove my point – and the individual situations may have been more complex than I am purporting. The bottom line – there was a failure to embrace change and a desire to embrace the status quo.

For many people change is scary. It’s filled with uncertainty and risk. Think of all the businesses you know about that have adopted the philosophy, “If it ain’t broke, don’t fix it.” Yet, maintaining the status quo is actually falling behind. Why? Because we’re in a highly competitive age where information flows more quickly and more substantively than at any time in history. Someone is always looking for a better way to do everything all the time. What steps should we take to avoid becoming the next World Book?

Step One. Constantly stay in touch with the customer. We need to mine every customer interaction for the data that can be produced. And we need to create customer interactions outside the regular purchasing process through surveys, focus groups, etc. What do our customers like about our product or service? What don’t they like? What do they like and dislike about our competitor’s product or service?

Step Two. From our ongoing customer feedback process we can continuously fine tune our product or service offering with incremental improvements. This enables us to keep from falling behind in the competitive race.

Step Three. In addition to staying in touch with the customer we should also be totally immersed in what is happening within our industry. Trade publications, conferences, blogs and ongoing relationships help keep us on top of trends, opportunities and threats.

Step Four. This one is the biggie. We can make a choice as to whether or not to be a disruptor or be the disrupted. A disruptor is an innovator who turns an industry on its head with a radical idea. Those who choose to stick with what they are already doing are vulnerable to becoming a victim of this marketplace disruption. Some industries rock along for years with little or no disruptive innovation. In others (technology, for example), disruption occurs daily. Even if we don’t create a huge and splashy disruption of some sort, the fact that we continue to try and do so will often be enough to keep us on the cutting edge.

One of the most prominent disruptors of our time is Sir Richard Branson of the Virgin Group. He has a mindset of looking at various industries and seeing an opportunity to innovate. Then he does it. Often it works – sometimes it doesn’t, but few can argue the success he has had with more than 400 companies.

Resting on the laurels of success is a dangerous game. I imagine at one point in time Walkman sales were off the charts and the folks at Sony were feeling pretty good. And then, BOOM, the ride is over. It’s important to keep our foot on the metaphorical gas pedal. Keep marketing no matter what. Build a backlog. Take the utmost advantage of good times. But . . . always remember and practice Steps One through Four. It’s the best vaccination for obsolescence.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

manual typewriter

Keep the Change

I once heard a saying that when one door closes another opens . . . but until then it’s hell in the hallway. Doors opening and closing are metaphors representing change. However there’s no discussion in these analogies about who is opening and closing the doors. Perhaps that’s where we ought to start our discussion.

I’m a pretty boring guy. I’ve been married to the same woman since 1974; lived my passion with the same company since 1975, and resided in the same house since 1978. But that’s where the constancy ends. Most of my business life has been about change and much of my personal life has been as well. Where some people see change as foreboding, I wholeheartedly embrace it. Why? Because I’ve generally found that change leads to bigger and better things – whatever they might be – and especially when I’m instigating the change in the first place!

As you might imagine, I’m going to suggest that how change impacts us starts with our mindset. Many see change as the start of a transition from one thing to another. Perhaps a broader view would be to see change as a transformation. To me, transitions are a bit mundane. But transformations are exciting and offer countless possibilities. Think about your own life. Do you want it to be a transition – almost plodding from one circumstance to the next? Or do you want your life to be transformed from something lesser to something greater? Assuming we only go around once in this amazing journey, don’t we want the experience to be as expansive as possible?

I’m not advocating change for change sake. But I am suggesting that seeing change as an opportunity for transformation has many inherent rewards. It inspires us to think much more creatively than we would if we are seeing change in a transitional manner. It nudges us out of our comfort zone which adds to the richness of our lives. It allows us to move past some of the fears that have been holding us back. And transformation immerses us in multi-dimensional options and alternatives from which to choose. Lest you think this is an exercise in the abstract, allow me to illustrate it in more concrete terms.

Let’s suppose that you are an entrepreneur with a product that has seen a steady decline in sales over the past few years. You sell other products that do fine, but this particular item just isn’t cutting it. Your team has pushed all the right buttons but the needle isn’t moving. The transitional approach might be to simply dump the product and move on. This would represent a change from the status quo – a sad, but common footnote in the history of products that eventually failed. On the other hand, a transformational approach might be to acknowledge the failure of the product, but to use it as a springboard to look at your overall product line from top-to-bottom. Could the same fate befall any of your other product items? Why exactly did this particular product fail? What is the lesson to be learned from its failure and how can that be translated into something positive for the rest of your products? In the end, this single product failure could become the catalyst for a complete transformation of your entire product offering, making your company stronger and able to gain additional market share.

Change can be viewed as a transition or a transformation. We make the choice to pick which path we want to follow.

This blog is being written in tandem with my book, “An Entrepreneur’s Words to Live By,” available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.

Butterfly-Transformation

The Moon Shot

Question: It seems like everything is always in a state of change. This can be disconcerting at times. How do I keep up?

Answer: Entrepreneurs embrace change. We’re sort of like scientists in a sense. A scientist who is looking to discover a cure for a disease runs countless experiments. With some experiments the cure formula is changed incrementally. In other experiments it’s changed dramatically. Regardless, the formula keeps changing until the solution is found.

For us change is exhilarating. Why? Because it’s a way to make things better. It’s a way to find out what works and what doesn’t work. If we view change with trepidation or fear it will be difficult for good things to come about. But if we see change as a golden opportunity we can meet and exceed our goals. I love change from a business perspective because it creates inefficiencies in the marketplace. The opportunity I see is to react to such inefficiencies in a profitable way. Look at the companies that figured out how to successfully adapt to changing conditions in our society. Xerox got its start selling photography paper. Tiffany’s was a purveyor of stationery before it became world famous for jewelry. LG sold cosmetics before the days of flat screen televisions. Now look at companies that failed to change – Eastman Kodak recently filed for bankruptcy as did Borders Books and Blockbuster Video.

A key to understanding change is the word “pivot.” I played basketball as a kid. Our coaches taught us how to pivot in every practice. We would keep one foot anchored to the floor and rotate our body around that foot in different directions. In business as well as our lives, we should always be on the lookout for opportunities to pivot. Perhaps a slight change in direction will yield better results. But remember, a pivot should be undertaken with a clear objective in mind. In basketball the objective was to pivot into a position to score or to pass the ball to someone else who could score. If we just pivot around and around with no objective it’s likely that we won’t score.

One final thought on change. I have found that to be able to thrive on change as an entrepreneur, I need certain constants in my life. Remember that pivot foot in basketball stays anchored to the floor until I dribble, pass or shoot. I’ve been fortunate and blessed to be with the same wonderful woman for more than 41 years; be with the same company for more than 37 years, and live in the same house for 34 years. Look for something in your life that is a constant or a positive anchor – faith, family, friendships – and then shoot for the moon where change is concerned. Happy flying!

This blog is being written in tandem with my book, An Entrepreneur’s Words to Live By, available on Amazon.com in paperback and Kindle (My Book), as well as being available in all of the other major eBook formats.