In recent years, there has been a lot of business innovation, especially running on information technology advancement. Client expectations have understandably spiked in response to these changes. The fact that you sell the best product around town is no longer good enough by itself. It is even becoming less and less important to the consumer that you have been in business for many years, if you cannot warm up to the changes going on around and re-package your product offering accordingly.
The failure to adjust your approach to business and suit it to emerging and changing consumer needs is part of what is called strategic risk. You do not have to do anything wrong to meet head on with this danger that is intensifying with advances in technology and demographic changes. It just takes getting comfortable with your age-old strengths and waiting upon these strengths to deliver the victory you are accustomed to, and soon enough your business will fold.
Business sectors that are tech-intensive suffered the blow long ago. Kodak, for example for nearly a century commercialised the camera like no other company could. The advent of digital technology however turned all this around and the software, file sharing, and third-party apps that Kodak did not wake up to early enough did nearly irreversible harm to the business. Starting in the late 1980s, Kodak has since tried expanding into many other areas including pharmaceuticals, document management, healthcare imaging and more recently smart-phone manufacturing, but the former glory may never return.
Similarly, Motorola was a pioneer in mobile phone technology but failed to focus on smart-phones that can handle e-mail and other data and rapidly lost their position to newcomers like Apple, LG, and Samsung.
Such experiences may visit you soon enough even if your business is not as technology reliant as the above examples, and other businesses that have paid the price of overly enjoying the comfort of past victories. There was a time for example when it was acceptable for clients to line up in banking halls for as long as 30 minutes and wait to be served. Then the client queues shifted to Automated Teller Machines (ATMs) before online banking set in.
Needless to say, some banks for example reaped a lot from ATM transaction charges in the past. However I do not see the tech-savvy client of the future lining up to use an ATM or moving around to locate one in the first place. If you run a bank that has survived on habitual and social benefits such as requirements by employers that their employees should hold accounts with your bank and some projects are necessarily banked with you for reasons that do not relate to your advanced service offering, you need to start finding your way out of this dangerous position.
Traditional strategic alliances are being overtaken by events and clients demand more and more convenience in your services. With advances such as Facebook Libra possible, the banking experience of lending to clients and handling their transacting needs may as well get eliminated with time and with it many other conventional banking practices. Banks will have to rethink other means of making money and surviving. The bank of the future could be entirely an electronic enterprise, rendering the physical spread of any bank, even across borders, irrelevant.
In a similar manner, all enterprises must look forward to and prepare for a time when clients will not visit their premises or be concerned about the location of their physical offices. If your business has advantages accruing from having physical presence in many major towns and trading centres, this advantage will erode with time as technology eliminates the relevance of physical distance in many business sectors. Generally, even if you are the number one player in the market, you will not survive if you remain doing your business the way you did to get in the lead.
There are many celebrated businesses of today which will lose their splendour by the dawn of the coming decade. They will not have stopped implementing the wonderful work methodologies that got them to their coveted positions. These methodologies will just have ceased to be good enough. Every business that wants to own the future must break free from the comfort of their historic gains, critically analyse what is upcoming and continually innovate to meet changing market needs. Even when investing in technology, companies should consider whether the technology will easily adopt to future innovations without significant cost implications.
Raymond is a Chartered Risk Analyst and Risk Management Consultant