Business evolution is required. Or your business will die.
The blog post below was published in July 2015 and an article this week jolted my memory and the need to bring it back, when Inc. Magazine reported on Elon Musk's recent TED interview.
Elon Musk, inventor and innovator extraordinaire, states what many of us who understand business know, yet most business people don't get — the key to success in any field is to keep moving forward.
"People are mistaken when they think that technology just automatically improves. It does not automatically improve. It only improves if a lot of people work very hard to make it better, and actually it will, I think, by itself degrade,” Musk stated to the audience. “You look at great civilizations like Ancient Egypt, and they were able to make the pyramids, and they forgot how to do that. And then the Romans, they built these incredible aqueducts. They forgot how to do it.”
The report proceeds to sum up Musk's point in a single sentence: “If you're not progressing, you're regressing; so, keep moving forward.”
My blog post of two years ago touched on this very ideology, although the subject was business as a whole, and not just the technology:
When no risks are taken, there is no chance for a reward to be achieved. For a business model to continue seeing success, it needs to evolve over time because people evolve over time. Technologies are continually improving. If a business gets stuck in a world where they keep doing things because “that's the way we've always done things,” then that is a journey which will inevitably lead to failure.
Target Canada is a prime example of this. In just two years of operation, the 133 store chain has decided to leave the Canadian market for good. It's mistake? Assuming that operations in Canada would be similar to that of the United States. During the announcement, Brian Cornell stated that Target Canada had lost money every day.
More Marketing Doesn't Save a Business
Many executives have a theory that goes something like this: maybe if we spend more money on marketing and make ourselves attractive to [fill in your favorite customer demographic], we'll be more successful.
Unfortunately this thought rarely creates success. More marketing is not a substitute for ineffective business practices. If you've already got customers coming into stores like Target Canada had and they aren't buying things, what will happen with more marketing? You'll get more customers into a store that are still choosing not to purchase anything.
Sometimes going on social media is the approach. Engaging customers is a great tactic to use, but it also comes with a certain risk. People generally talk about the negative experiences they have with a business online and rarely talk about positive experiences. Businesses are expected to provide a positive experience. Engagement usually creates some feedback that is difficult to hear, which means it is ultimately ignored.
Social media must be part of a holistic approach. You've got to change the actual dynamic. You must choose to innovate. Once that happens, then you can begin a new marketing effort
Businesses Choose Whether or Not to Become Innovators
Change means risk. There is a chance that a risk may not pay off. Circuit City discovered that the hard way by losing over $100 million on their DivX product. Sometimes ideas are ahead of their time, like Microsoft's tablets, which came out a decade before the iPad. Even looking at the struggles of McDonald's right now show how quickly a company can begin to decline when changes aren't received as well as expected.
Small businesses are not immune to the need to change. Failing to innovate and change is one of the top reasons why small businesses fail and die. Innovation has to be a component of change, which means change cannot happen without risk. It is a choice that every business makes, whether they realize it or not. Avoiding a risk is a choice to not evolve or challenge history, tradition, or the other roadblocks that might stand in the way.
How to identify places where innovation can thrive can sometimes be difficult. Adapting new technologies into traditional routines inevitably creates growing pains. Throwing more marketing at a problem, however, doesn't make that problem go away. It just means more people become aware of it. This creates a negative spiral that inevitably ends in failure.
Evolving your business model can be uncomfortable, but it can also create enormous success. That's why change, not more marketing, is so important.