Recently here in San Diego, a famous sports bar chain located in prime spots around the city closed down, its stores gutted and employees laid off. While perhaps a more common occurrence in these lean times, I submit that the demise of this very well-known and once-popular business was primarily the result of its management team’s inability to recognize changes in their market.
Here are some reasons why I think this way. In the nearly 20 years that I frequented the chain, I never saw a change in its menu or décor one bit. Moreover, while this company was unquestionably the local pioneer of family-friendly sports dining in town when it opened, several competitors have since come on the scene and are now flourishing, bringing with it stiffer competition. I would venture to say that the chain’s executives never took these nuances seriously enough.
Market shifts are an interesting and guaranteed phenomenon in business. They often occur without great fanfare or forewarning. I’ve seen the same thing in our industry of television listening devices; with the level of competition from also-rans growing significantly since we launched our operations more than a decade ago. I believe part of the reasons for this was a bi-product of our own success; we at TV Ears proved there was a lucrative market to be had. Though I feel that these rival products on the whole are inferior to ours, it does not mean that I simply discount the signs they show. So before the next business executive scratches their head in wonderment of their company’s misfortunes, I offer the following tips to help them recognize when their market is changing:
- Respect competitors for the value they bring. Many companies disregard new competitors as not worthy of concern. Though that may in fact be the case, their presence can provide valuable information on emerging market trends that must be addressed, particularly if these competitors show traction for their price, feature or function differences in their product over the incumbents.
- Recognize the potential in looking beyond the current market. It’s not uncommon for a company to focus on a particular niche at the expense of larger opportunities. While getting a "toe-hold" in the early stages is important to gain interest, adoption and positive cash flow, disregarding other potential customers in the process could prove hazardous to the organizations’ overall future health. For instance, we knew early on that while we initially targeted our assisted listening devices toward audiologists and hearing health professionals, we would need to break into the retail market in order to continue our growth. That’s exactly what we’ve done over the past 10 years; for we knew that if we didn’t satisfy that base, someone else would.
- Recognize potential market convergences. I’ve seen instances when a company creates a new market with its product or service only to have some multi-national firm sweep in later with a comparable offering at a lower price and drive them out of business. Entrepreneurs can mitigate this risk by protecting intellectual property while also focusing on innovation and staying one step ahead of customer demands. If they’re successful at this strategy, several things can happen; among them being that the "Big Boy" stops competing with them altogether or makes an offer to acquire the upstart, thinking it’s better to join them than beat them.
They point in all of this is for an entrepreneur to act like one everyday and treat each day as if it were their first day in business. They should also never be satisfied with the current success of their product or service, but instead continually strive to improve. Of course, organizations should celebrate their achievements along the way as they are hard earned, but nonetheless keep up with the changing environment by using the skills that made them viable in the first place.