Do you ever wonder why some companies achieve success while others struggle to survive? While it's true that your vision and business strategy play a role, other factors are just as important. Netflix, Amazon, IBM and other successful companies have one thing in common: They have reinvented themselves over and over again to keep up with the market trends. A reinvention strategy is often the only way to stay relevant and competitive in the business world.
What Drives Business Reinvention?
Every business starts with a vision that defines its identity. However, the market is changing at the speed of light. The global economy and technological advances are disrupting the business world. You never know what the market will look like five or 10 years from now. Who would have guessed back in 2000 that social media would take over the world?
Change is quicker than ever before. The only way to keep up and stay at the forefront of your industry is to constantly reinvent your business. Call it adaption or reinvention. Either way, you must be prepared to start all over and adapt your vision to the ever-changing market.
Sometimes, companies must be open to reinvention to find new, sustainable sources of income. Think about the coronavirus or the financial crisis of 2008, which affected the economy as a whole. In such circumstances, businesses must adapt to market conditions and reinvent themselves to survive. An organization that sits still for too long will eventually die.
As a small-business owner, you may find yourself making difficult trade-offs in uncertain conditions. For example, there may come a day when you will need to prioritize innovation over proven strategies, or you might find yourself pressured to offline to online. At some point, you may need to completely reinvent your products and reach out to a different market.
Act Before It's Too Late
Knowing when to take the plunge and reinvent your business is essential. If you wait for too long, you may become obsolete. Focus on your current situation and then make a decision accordingly. Ask yourself the following questions:
- What is keeping you from generating more revenue?
- What changes are necessary to gain a competitive edge?
- Is there anything you could do better?
- Are your products or services still in demand?
- Are you losing customers despite your best efforts to meet their needs?
- Are you keeping up with the latest industry trends?
- Where is the world going?
- What obstacles are you facing?
- Do you feel that something has to change?
Even if your business is successful, you still need a backup plan. With a reinvention strategy in place, you'll be prepared for the unexpected. Simply putting your products and services online or changing your marketing strategy isn't a reinvention. Tweaking your business model is risky, but with uncertainty comes opportunity.
Companies that continuously reinvent themselves are the ones that experience lasting success. As a small-business owner, you may lose your motivation or hit a glass ceiling. Perhaps the market conditions have changed. All are legitimate reasons to reinvent your business, even if that means starting all over.
Successful Brands That Reinvented Themselves
IBM, Amazon, Apple, Nokia and other brands managed to successfully reinvent themselves over the past decades. Netflix, for example, started as a DVD rental and sales business, allowing customers to rent unlimited DVDs and have them delivered by mail for a monthly fee. The company transitioned to online streaming about 10 years later and became the most popular service of its kind.
Amazon emerged as an online book retailer back in 1995. Over the years, it has expanded its product line and introduced new services. Today, it has offices and warehouses all over the world. Its line of products includes everything from books and household appliances to gym equipment, clothing and electronics.
Perhaps one of the most notable examples of a company that reinvented itself is the National Geographic Society. The company shifted from paper magazines to nature documentaries and reality series. IBM was initially manufacturing tabulating equipment and typewriters, but over the years, it has emerged as a leading computer brand. Today, it provides cloud services and advanced cognitive solutions, addressing the evolving needs of global enterprises.
How to Reinvent Your Business
Reinvention can take many forms, from shifting toward emerging areas to changing the core of the business. The first step is to determine why you want to make these changes and then establish your new vision. Consider your target customers and the value you provide through your products and services.
Amazon, for example, was originally selling books online, like hundreds or thousands of other retailers. What made it stand out was the convenience factor and a unique selection of books. That's how it became the go-to bookstore and later, the largest online marketplace. Customers care more about why you want to make a change and less about what you want to change.
Therefore, it's crucial to redefine your mission and start a new story. Look at your existing products or services to determine what needs to be changed and why. As an entrepreneur, you may have more ideas than you have time, which is why it's important to focus on what matters. A clearly defined vision will make it easier to decide which ideas are worth your time and effort.
Know the Signs
Successful entrepreneurs have the ability to anticipate problems even when things are going well. For example, micro-niche websites were extremely profitable back in 2010-2011, but Google has changed its algorithms over the years, prioritizing quality content over short blog posts stuffed with keywords. Today, micro-niche sites are pretty much dead. However, some webmasters changed their approach and shifted from small niche sites to authority websites featuring quality content, e-books, courses and in-depth guides.
As a business owner, it's important to identify your strengths and weaknesses. At the same time, you need to recognize potential threats and opportunities. If, say, you have an online jewelry store selling exclusive brands and one day you notice that two other stores have started to offer the same products as you, that's a red flag. Reinventing your business might be the only way to beat the competition and survive.
If you're a local event planner, you may need to cease your operations following a global pandemic, such as the COVID-19 outbreak. However, this doesn't mean you should file for bankruptcy and give up years of hard work. You can still reinvent your business by shifting to the online environment.
Consider hosting webinars and workshops online for entrepreneurs who wish to start an event-planning business, or you could set up online event-planning courses and charge a subscription fee. This will allow you to use your experience to help others plan events on their own and even launch a profitable business when everything returns to normal.
Conduct a SWOT Analysis
A good way to anticipate potential issues is to conduct a SWOT analysis. This acronym stands for strengths, weaknesses, opportunities and threats. Having a good understanding of these factors can help with strategic planning and point you in the right direction.
Your company's strengths and weaknesses are considered internal factors, while any opportunities and threats are external factors. As a business owner, you have no control over the external environment. However, you may look for clues and use data-driven insights to anticipate potential threats and identify opportunities. The global economy, government regulations, market trends and societal changes all affect the external environment.
Conduct a SWOT analysis at least once a year. This process can provide valuable insights, allowing you to make smarter decisions and work on necessary changes. You will be better prepared to tackle potential challenges and leverage your strengths to pursue opportunities. Ask yourself the following questions as you work through each category on your list.
What are you good at?
What could you do better?
Are there any opportunities you have not yet pursued?
Who are your potential or existing competitors?
What do you do better than your competitors?
What are the biggest challenges you're facing?
Is there any way to leverage your skills or resources more efficiently?
Has there been a major change in technology, customer behavior, regulations or economic conditions that may threaten your business?
What resources do you have that others don't?
What resources are you lacking?
Are there any changes in technology, markets or customer behavior of which you can take advantage?
What is the competition doing better?
What do your customers love about your products or services?
What do your customers dislike about your products?
Which marketing channels work best for your business and why?
What challenges does your business face?
What does your unique selling proposition look like?
What factors affect your brand image?
Develop a Reinvention Strategy
It's time to put the pieces together and create a reinvention strategy for your business. During this process, you'll gradually phase out the old business model and implement new strategies. To mitigate the risks, take one step at a time instead of jumping in. Simplify your message and product offerings, communicate with your team and establish regular feedback loops.
Reinvention and innovation are strongly connected. Depending on your goals, you may need to change your company's culture, try new technologies and build relevant digital capabilities. For example, automating time-consuming processes can rapidly cut costs and improve your business processes. Keep an open mind and do as much research as you can before making major changes.
Act as if you're starting from scratch but use the insights you already have to make informed decisions. Experiment with strategies that are quick and cheap to implement, track the results and focus on what works. Traditional strategy development approaches are costly and time consuming, and the cost of failure is higher. By rapidly experimenting with new ideas, you'll take fewer risks and find it easier to start all over.
Think Smarter, Not Harder
The key to a successful reinvention is to think smarter, not harder. Be prepared to challenge your convictions and make quick decisions. Test the new direction before you commit on a large scale. Failure is inevitable, but this doesn’t mean you should quit; learn from your mistakes instead of beating yourself up.
Try to identify ways to differentiate yourself from the competition and keep your target market in mind at all times. Compete on value or quality rather than on price.
Allow time to measure the results of your efforts and adjust accordingly. Think about what skills and resources you need to turn your vision into reality. Seek out employees who possess those skills and encourage an innovative work culture. In the long run, these changes can pave the way to success.
- Bain & Company: Reinventing Your Business Model for Digital
- The Philadelphia Inquirer: How Your Favorite Brands Reinvented Themselves and Made Big Money
- For-Managers: Business Innovation: All About How to Reinvent Your Business
- Corporate Finance Institute: SWOT Analysis
- Forbes: Reinventing Business Models in a Disruptive World
- Fortune: Why Legacy Companies Must Reinvent — or Die
- London Business School: Amazon: A Master of Reinvention
- Louisiana State Civil Service: SWOT Analysis - Questions for Conducting an Analysis With Your Team