It happens almost every year. Some upstart overtakes the incumbents to become the most valued enterprise around, even if it’s competing with the most iconic of brands. Netflix took the hassle out of movie rentals, Airbnb disrupted the hotel industry, and Hollar and TheRealReal are now taking the dollar store and high-end consignment, respectively, online.
In other words, success often comes to those who innovate outside the existing rules, and that usually requires a change in business models.
If you want to stay competitive, you must be willing to adapt and implement something new.
In fact, Mitch Kapor, a venture capitalist and partner at Kapor Capital, witnessed 15 to 20 percent of the companies in his portfolio go through radical changes, so change is the norm. Small businesses that haven’t realized that will need to do so.
Nothing Stays the Same
Change, of course, is hardly ever easy. It requires retraining, retooling, and repackaging. In most cases, all three of these activities will put a strain on resources — be it capital, people, or time.
That’s why, for instance, it takes a long time for new business models to launch and gain traction in a very fragmented residential real estate industry. One such example is the agent flat-fee brokerage model. Instead of the agents sharing the commission with their brokers, they either pay a flat-fee per transaction, a monthly management fee, or a membership fee. This model results in agents producing and earning more, a more attractive model for agents to buy into.
No matter the industry, new business models will constantly come along and offer new solutions to existing structures and challenges.
The following are three lessons that you can use to ride out the next storm:
1. Not all change is good.
It takes time for a new business model to validate its place, gain meaningful traction, and be accurately assessed. Therefore, don’t discount innovations or adopt new business models immediately. Instead, give them time and track their progress closely.
While innovation is a constant, success is still dependent on the right timing, funding, and talent to implement. A shortage of these three elements will stifle or hinder explosive growth.
2. Patience is a virtue.
Innovation takes time to gain acceptance, so a competitor’s groundbreaking announcement about a new product or service doesn’t mean you’ll be out of business soon.
It often takes upward of five years before innovation finds recognition, five to 10 years before it gains critical mass, 10 to 15 years before it dominates an industry, and 15 to 20 years before it redefines an industry. Give your new model room to grow and reach its full potential.
3. Think beyond early adopters.
Change may be constant, but it’s not absolute, and seldom do the spoils go to the first movers. Oftentimes, the big winners are those that come in just behind the first movers and apply innovation in practical and timely ways. That allows existing market players and forces to transition into the new way of doing things.
And with only 28 percent of people being early adopters of new technology, learning to adapt to new innovation and implementing technology, rather than just adopting it, could save you enormous headaches. It’s the implementation of the innovation — not the innovation itself — where the true winning strategy resides.
Innovation is the foundation of business, forcing incumbents — even iconic ones — to reimagine their positions in the market. As you rethink and reinvent your approach, remember that your goal is to be better, be more effective, and deliver an enhanced customer service. Don’t change for the sake of change, as no one wins with that sort of thinking.