In the early 1990s, Borders was a revolutionary company. It offered more books under one roof than any other retailer. But Borders filed for bankruptcy in 2011, while its rival Barnes & Noble continued to thrive. Both chains boasted gigantic retail space and provided many of the same products. They both battled the rise of e-commerce and digital books. So why did one fail and the other persevere?
In the first part of the 21st century, the market shifted. Customers began to shop online for media. Music and movies became digital, and e-readers appeared on the scene. Faced with declining sales numbers, the executives at Borders and Barnes & Noble had a choice: Double down on current strategies in the hopes of riding out the storm, or evolve to meet what appeared to be the new market.
Without a willingness to shift focus, companies risk complete failure, or — at best — lost potential. Someone is always willing to do what you haven’t done, and when they do, they also take your market share.
Know When to Evolve
Borders chose to double down: It expanded warehouse operations, refurbished its stores, and let direct competitor Amazon handle its online sales. Barnes & Noble, on the other hand, beefed up its digital presence and developed its own e-reader.
When you’ve held one vision since the formation of your company, it can be tough to leave your comfort zone and find the willingness to evolve. Solutions aren’t always at the forefront, ready for a CEO to grab out of midair, so change takes work. Plus, the struggle to adapt doesn’t occur just at the top: Your employees can feel lost if change is too constant or too uncontrolled.
You also need to be aware that you’re not just shifting strategy for the sake of it. Thoughtless transformation is not progress, and it can harm your business as much as not evolving.
Examine these four factors to know when to change and when to stay your hand:
- Your competitors. Your road map helps you understand your own business journey, but a good competitive intelligence strategy will help you avoid getting sideswiped by your opponents. Why are they operating a certain way? Does it make sense for you to adopt (and improve on) some of their strategies? Where are their shortcomings, and how can you fill the void? The best CEOs turn their competitors’ challenges into opportunities and take their competitors’ advantages and make them their own.
- Your data. Don’t leave the blinders on while you’re trying to be “forward-focused.” If you’re only looking ahead, you might miss something important in your data. Sometimes you need to look backward to move forward — take time to study the numbers. Find out what barriers you face, and think about how you can creatively meet those challenges.
- Your team. Yes, you and your executive team are ultimately responsible for company evolution, but everyone plays a role. Don’t rely on only a small percentage of your organization. Create a culture in which your people, at every level, can speak up about issues and opportunities. When you’re thinking of creating change, see what a cross-section of your company thinks. Your team keeps your company running day-to-day, so who better to know whether something is going to work or fail?
- Your gut. Trust your own instincts. As a founder, you’re tapped into the vision of your company more than anyone else. Placing the fear of change aside, does shifting directions feel like the right thing to do? Don’t ignore your gut; it’s what got you here in the first place.
Create a Culture of Evolution
Change in business isn’t a one-time deal. A smart CEO will always be up-to-date on the market and his competitors, looking for ways to stay ahead of the game. It’s not enough to take one big, desperate leap; you need to build a culture of evolution that encourages you and your entire team to constantly think ahead.
Remember that your company exists to fill a need. Be more attached to fulfilling that empty space in the market than to one particular strategy. This will allow you to change course when necessary, all with your ultimate objective in mind.
Develop relationships and knowledge outside your immediate industry and expertise. For example, when Jeff Bezos was just an online bookseller, he absorbed information about warehousing and logistics from Wal-Mart. His research helped him build Amazon, which currently beats its former mentor in market capital.
Look outward to avoid getting caught in a bubble of revolving, and aging, wisdom. Pay attention to everything going on around you, and think about what you can adapt for your own purposes. Don’t let yourself get stuck in one mindset.
Be on constant watch for industry gaps, and resolve to be the first to fill them. Once Amazon conquered logistics, it saw many opportunities for home delivery of goods beyond books and is now the biggest general merchandise retailer in the world.
Borders and Barnes & Noble faced identical challenges, but only one was ready and willing to evolve. For a business to survive — and thrive — it must lose what doesn’t work, adapt to what does, and shift to what will work next.
If you’re prepared to be brave and bold, to listen to data, and to adapt to your consumers, then your company will never go extinct.
By Zach Robbins, co-founder of Leadnomics.