The Fountain Pen People: when businesses die
In the 1920s the average lifespan of an S&P 500 member company was around 65 years. Today, according to Professor Richard Foster of Yale University, that average has fallen to just 15 years.
Over time, businesses come and go. Some run out of money, lose their customers, make bad choices or just become obsolete. There are a few who manage to celebrate centenaries – and some who even get along to 150 years – but that’s rare. Business is more often conceived and nurtured in a window of opportunity that is bound by fashion, economics, science, tradition, technology and the changing forces of demand and expectation in society.
Those that survive their first five years are usually fairly solid businesses. But it’s these very same businesses that may fail further down the line when they meet – not some canny competitor – but that frightening uncertainty called ‘change’.
The power of innovation
Businesses die typically for a multitude of reasons – but the saddest reason is always the one that could have been most avoided – and that is innovation. When, after 30 years the goalposts are suddenly moved, there is no point ignoring this calamity in the hopes it will go away. If you have your eye on the game, you should be prepared for an adjustment to the rules.
Most disconcerting is the fact that some companies can clearly see the changes approaching but cannot make the adjustments to their business that would allow them to adapt. Not only adapt but meet the new competition with bruising force, nifty footwork and a feisty rabbit from a hat.
For those businesses who see the danger but fail to act in time because of reluctance to meet the challenge, they lose the chance to learn, experiment and test the waters of new ideas. They prefer to stick with what they’ve got, to run it to its last ounce of life. And then to die.
The story of the fountain pen
There is the famous, possibly apocryphal story of the head of a fountain pen company who, upon being shown his first view of the new-fangled, upstart ballpoint pen, remarked: “Nobody will want to use that.”
While there are still fountain pens produced today and they continue to rank as popular collector pieces, their sales figures against the ballpoint are infinitesimal. Just imagine if the fountain pen manager had said instead: This looks interesting; let’s look at the pros and cons; let’s ask some young people what they think; let’s run the idea past our clients and ask for opinions; let’s work out if we can introduce such a product into our line as an alternative, a choice. Let’s try it out. And above all: Let’s see if we can make it more exciting.
How to turn around a business in decline
- Firstly, admit that something is wrong. If you remain in denial, you’ll never plan your changes in time. Low sales is a key indicator. Low employee morale can be equally devastating to your company. Keep an eye on cash flow. No business is ever caught by surprise – they are caught by complacency and lethargy.
- Pay attention to your business. Never rest on your laurels. Negligence is a death knell to any business. Make sure you have people to whom you can turn for advice because building a business is a continuous process. If you don’t feel you have the experience to turn your business around, use other people’s.
- Always nurture and anticipate a capacity for reinvention because the need for transformation will always be there, in the shadows of success.
- Don’t be greedy! Always give your customers value for money – and always reward your employees when they’ve done well. Keeping all the profits for yourself usually signals a downward path for any business.
- Create a culture of innovation – and reward that innovation when it comes from your staff. Be positive about failure. Through failure we learn what not to do – or how to do something better. It’s often the route to eventual success.
- Look for ways to keep your offering unique – in other words find something that none of your competitors offer – a small gift, free information, a fun competition. Jazz up the interaction with customers.
- So many businesses work under the false assumption that cheaper prices are all it takes to differentiate their business. Price is the traditional route – and quite boring – rather look to making your customer’s experience unique in your store or service. Make it more interesting and exciting through fresh ideas and constant change.
- Monitor the marketplace and develop a mission of constant improvement. Don’t be too important to learn something new. Keep an open mind, be curious and investigative. Don’t be a fountain pen person.
Business transformation is always about innovation
Keep ahead in the discipline of business transformation by constantly evaluating imaginative methods to avoid a premature demise. Innovation does not necessarily imply a wildly revolutionary approach – or even the invention of entirely new products. Improvement can be small but continual, creating effects that become noticeable to your clients over time as a better experience when they engage with your products or service. Innovation can be in business systems and processes or in marketing or in attitudes and behaviour. The way you interact with staff, customers, and the inevitability of change will determine how your company will retain viability in a changing world of threat and opportunity.
Change is part of our business
At Foster Wealth change is our daily fare. The volatility of markets, unexpected events and fluctuating values continually take us to new levels of interest and possibility. Constant re-assessment and evaluation are how we keep ahead of the curve – but our hard work, professionalism, attention to detail and personal attention are the hallmarks of our business and will never change.
Find out more about us at: www.fosterwealth.co.za