How to build a business that lasts
The probability that a company will not be around in 5 years is 32%.
So, what should a company do to try and defy these odds and be able to pass their company down from one generation to the next?
Firstly, even though short term results are important to keep shareholders and investors happy, a business needs to prioritise tomorrow and work out how they will need to adapt. If not then they will be standing still, which is equivalent to falling behind their rivals.
In order to decide the path to follow the company needs to work out their core competencies, i.e what they are good at. Once they know what these are, then they can create a viable plan for the future.
“Diversification is the key to the future” — Fujio Mitarai, CEO of Canon
Diversification reduces the risk of failure as if demand for one product falls they have others to fall back on.
Taking into account their core competencies a company must decide upon how to use these to attack the market in a different way. To diversify, the company can choose between using:
- the same product in a different market
- a different product in the same market
- or completely diversify and introduce a new product in a different market, which represents the most risky strategy.
Fuijfilm used their core competencies to diversfy and thrive whilst their competitors failed
Whilst the camera industry was rapidly digitalising and becoming less profitable, Fujifilm realised that diversification was the only way to stay competitive.
They used their extensive knowledge of using nanotechnology to place chemicals onto film to create new products which could apply cosmetics to facial skin. Their expertise with photosensitive materials additionally helped the company produce fine chemicals and industrial materials.
Companies need to adapt to the constantly changing environments and diversify their products accordingly. Stay one step of the game, just like Fujifilm
If companies do not look to the future and plan how to adapt their strategy, then sadly, failure is waiting around the corner!
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