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  • 01.23.12

Adapt Or Die, The Enduring Rule Of Innovation

Why can’t every company learn to leverage what they have to offer into success and profits? Because they are using an old business models with high overhead and a mindset that says “We’ve always done it this way, so why not continue the same way?” Don’t be that company.

This is guest post written by Kate Logan, president and CEO of Logan & Company, Inc.

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Apple was
a game changer for the music business. Meanwhile, the U.S. Post Office has been dying a
slow death since the advent of email. Cellular technology killed the phone booth. Thousands of stores, from small mom and pop shops to big box
retail, have shuttered over business lost to internet competitors. 

It has been an ‘adapt or die’ world
since anyone can remember. It’s
not all bad news, of course. Radio
did not completely die with the advent of television. People will still read, listen to music, and watch
entertainment content no matter how they see, hear, or experience these
things. People will always need to
eat, wear clothes, and transport themselves. But having seen so many companies go from bad to worse, and
seeing some go out of business altogether, it is worth examining what factors
play a role in the survival or death of a company.

As experts in bankruptcy
administration, we’ve seen many successful behemoths as well as smaller
companies whose businesses failed to adapt, and were eventually forced from the
competitive marketplace. One such example was Montgomery Ward, who started as an innovator in 1872, offering products
via mail order to customers in hard to reach places. Wards was the Amazon of
its day. Even with stiff
competition from Sears Roebuck and others,
Wards held its own through much of the first half of the twentieth
century. But failing to innovate,
to do what their successful competitors were doing (move out of downtowns and
into the malls), they started to decline. Wards lasted more than 125 years, and its origins would
indicate a natural fit for the e-tail business of today, but sadly, they did
not adapt fast enough to technology and after a slow death, finally closed their
doors in 2001. 

It is reasonable to assume that adapting to technological
advances is much easier for the small and light-on-their-feet companies, than
it is for older entrenched behemoths. But then again, larger companies have deeper pockets, so they may be
better positioned to invest in technical upgrades. Each size has its advantages, but what it comes down to is
whether a company continues to innovate. First, small bookstores caved to the big boxes with their volume
discounts, but now the big boxes are giving way to the e-tailers, so there are
winners and losers on both sides of the scale. Online purchases may have been a huge boon to companies like
UPS, but as the number of books being downloaded begins to outnumber those
being shipped, how will UPS position itself so that it doesn’t end up as the
next incredible shrinking business a la the United States Postal Service? Even the U.S.P.S. is now belatedly
examining other revenue streams, like issuing driver and hunting licenses. They must adapt, expand the
possibilities of the delivery of goods, and move into other arenas if they are
going to survive. 

Google, once a startup
innovator, has become a huge international corporation. But Google no longer has to invent
great new technology, it just has to recognize it, and then purchase the
smaller innovating companies, kind of like the way we buy our groceries. Apple, once given up for dead, now lets
other software writers create content and applications for their hardware, and
then profits from the sales. This
isn’t to say they aren’t still innovating, but they aren’t dependant on only
one thing for their revenue stream. Even Wikipedia and Craigslist provide valuable services without letting
a little thing like profits (or lack thereof) get in their way. Both seem to be surviving with models
that all the experts say were bound to fail. 

So why can’t every company learn to leverage what they have
to offer in the marketplace into success and profits? Because they are using an old business models with high
overhead and a mindset that says “We’ve always done it this way, so why not
continue the same way?” 

Well, the world is constantly changing, and people change in the way they
respond to the world around them. A grocery chain that has been around for decades can trade on its name
recognition only so far. One such
chain found itself stuck between the high-end Whole Foods brand and the
low-end discount Wal-Mart brand. Which way to go to survive? By closing lower revenue producing stores, renovating, and upgrading some
key stores in key markets, they have been able to capture some of their
customer base back, people who are loyal to the brand but with higher
aspirational shopping habits than their parents had. 

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Our basic needs don’t change, but our tastes and how we get
them satisfied do change.  If
customers are passing you by because your competitor delivers to their home,
then maybe you should think about starting a delivery service. If your customers have left the suburbs
now and moved back to the downtown area, follow them. If the market is no longer clamoring for your one great
product, start developing another product or service. You can adapt…or not. 

[Image: Flickr user Adam Foster | Codefor]

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