Experience is one of our best learning tools because we learn by going through difficult situations. Experience is not academic. It is about experiencing life and business challenges, and either overcoming them or giving in to them.
When we take a test, we either pass it or fail. Logic says that the second time we take the same test, we should do better. But do we?
In the business world, companies are continually going through tests; tests that mean success and survival, or failure. Many companies that failed to pass their test or failed to learn come to mind: XEROX, KODAK, POLAROID, TOYS R US, KMART, EATON’s, RIM (Research in Motion), to name a few‑—and each one flunked the test.
One of my favourite examples is NETFLIX, an upstart company that offered movie rental by mail over 20 years ago. NETFLIX offered to sell to BLOCKBUSTER for $50M. BLOCKBUSTER was the leading video rental company at the time. NETFLIX had +/- 300’000 subscribers while BLOCKBUSTER had millions, and at its peak, had over 9,000 stores in the US. BLOCKBUSTER did not acquire NETFLIX. It did not see value or potential in NETFLIX. Fast forward to today: NETFLIX has 200 million subscribers and is valued at +/- $100B. BLOCKBUSTER has today one store in Bend, Oregon.
All these companies had experience, brand presence, customers, capital, and much more. Why did they miss the mark? Those analyzing business disasters focus on the failure to innovate, a board that was caught sleeping at the wheel, or the complacency pattern when companies take customers for granted. These are good reasons, but fundamentally three things caused their misfortunes:
- The companies did not have a strategy. They were just in survival mode, on the theme of “don’t rock the boat”, or
- They had a sound strategy but failed to execute on it ...or
- They executed on the wrong strategy!
So, the key question should be how do you guard against these three mistakes? I offer three specific recommendations:
- Make sure you have a strategy. A strategy is about predicting the future. Not easy to do of course, but you need to think about what the customer wants, what the competition is doing. and how you think the market will evolve. Add the element of time through “when” and the “why” to better understand the market drivers, and then you can strategize where you are and where you want to be. Once complete, it’s a good idea to confirm you have the right strategy by seeking advice of trusted advisors who have experience and will be honest with you.
- Execution: Once you have a strategy, you need to execute on it—and I might add—execute with excellence. Not perfection, but excellence. Likely, those who designed the strategy may not necessarily be the people who implement it. Executing with excellence requires strong leadership, teamwork, people skills, resources, following-up with discipline, etc., in short, skills that are not the same as researching the market and designing a strategy.
- Innovation and staying up to date: Once you succeed in executing on your strategy and getting to where you want to be, you need to protect your success: remain humble, continue to innovate, and stay quick on your feet. If you get too comfortable, fall asleep at the wheel, and start taking customers for granted, you risk the same traps we listed above. Remain flexible and adaptable, and always be prepared to change with the times.
Maybe the companies above didn’t learn from their own mistakes, or the mistakes of others—but you can!
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