by Bill Weber
If your revenue is falling, it’s bad. If you don’t know why, it’s worse, especially since there are only two possible causes:
We’ve recently had several Fortune 500 clients experience this issue with isolated product lines. These are accomplished, efficient companies. Execution wasn’t the problem. So they took a look at their traditional competitors and found no recent innovations in products or business models that changed the competitive landscape. Further, there were no external forces they could discern that would explain decreasing demand for their products. Yet their product-line revenue was declining. To their credit, this set off warning bells for their executives, and they turned to us for assistance.
I say “to their credit” because a lot of big companies get tunnel-vision: their dominant market positions lead to complacency, and they don’t recognize dangerous blind-spots until it’s too late. These blind spots develop because companies with a high market share have—by definition—a complete understanding of the technologies, industries and markets (TIM) (see this earlier post for a more complete discussion of TIM) that form the ecosystem for their products. In fact, their deep understanding of TIM is one of the things that made them dominant in the first place. So if something is causing their revenue to decline and it’s not immediately obvious what it is, they ought to be scared: like a creature in a horror movie, there is something out there in the woods biting off pieces of their business.
When confronted with this problem some companies simply carry on and pretend everything is okay. The good ones call iP2Biz or other independent experts to help them get to the bottom of things. So what can we do that these companies can’t do for themselves? Two critical things:
The first of these distinguishing factors is self-explanatory, but let’s talk for a second about the “truth.” Every company that enjoys years of success in a given market begins to think it has a complete understanding of TIM. That it knows the truth. And that perception is accurate. For a while. But markets are dynamic, and what is accurate today may be fantasy tomorrow.
When the truth of the market begins to shift you have two choices:
Think this doesn’t happen in successful companies? Ask Kodak, Blockbuster, et al. about it. Outside experts aren’t burdened by your history, and they can tell you the truth about the market today, whether executives want to hear it or not.
Put in the context of innovation, you should be concerned about your current understanding of the truth for a given market if:
If either of these metrics head south and the reason for the change is not immediately apparent, you know your understanding of TIM is no longer accurate, you are back in the realm of Front End Innovation, and you need to take immediate action. You may be able to figure it out on your own. If you can’t, get independent help. Your long-term success depends on it.