Don’t ever allow your business to become ‘mature’. Why? Because that could signal the beginning of the end for your business.
When a person becomes mature it is considered that they are fully grown and developed. In contrast, when a business becomes mature it is often thought that it has reached its potential – and this is not a good thing.
However, I believe there is no such thing as a mature business or a mature market. There are businesses that have ceased to evolve, step-out and reinvent themselves, and there are markets that are dominated by businesses like that.
The most important determinate of a business’s success is its own capability and not the industry in which it competes. A business can become very successful in an industry that is deemed ‘mature’ and a business can fail in an industry that is considered a ‘goldmine’. Why? An entrepreneurial business can bring life to a dying industry through its creativity, innovation and leadership. And a hopelessly-led business can fail in an industry in which everyone else is doing well.
Leadership Carries This Failure
This failure to renew rests squarely in the hands of the leadership team.
Often, successful businesses fall into this trap as their historical success has railroaded them onto a fixed path where they are incapable of seeing anything other than what has worked in the past. The self-interest of some in the leadership team can also be the superglue that does not allow the business to break away from this path.
Customer needs, technology, market channels, and value have all moved on from the ‘yesterday-offering’ of the business. Yet none of these changes were acknowledged nor accepted by leadership because of their entrenched view of the world.
Kodak with its dominance in chemical film could not transition to digital photography. Nokia was not able to transition from mobile phones to smartphones. But Nestlé were able to create Nespresso as a separate business unit and Cirque du Soleil is now a global business that has redefined the circus and theatrical industries. But in the case of both success stories, a study of the history will reveal that success was not always a certainty.
Dematurity – Subtle Changes
John Sviokla, author, principal and US advisory innovation leader at PwC, in his article ‘How Old Industries Become Young Again’ describes ‘dematurity’ as ‘what happens to an established industry when multiple companies adopt a host of small innovations in a relatively short time. Those seemingly trivial moves combine to rejuvenate the old mature industry and make it young again.’
And leadership in established companies do not pick up these trivial moves until their combined effect shift competition to a new level where they are no longer competitive and they find themselves trying to catch up.
Sviokla recommends that leadership watch for changes across the following five broad categories, seek to better recognise their impact today, and then what they may mean for tomorrow:
- New customer habits.
- New production technologies.
- New lateral competition.
- New regulations.
- New means of distribution.
But I’m not sure that the term ‘dematurity’ carries with it the right message for leadership. It seems backward looking, as if you are unravelling all that has been done and starting again.
A stronger growth approach, I believe, is founded in ‘compounding’.
You must always be continually building on your existing offering and competitiveness. Growth is continuous, the entire business is active in growing and the power of compounding ensures you always out-compete all others.
The following representation of a business life cycle, taken from my book Strategy Play – Crafting Undefeatable Business Strategies, reflects the continual growth strategy that businesses must adopt:
A business must be continually investing in its capability and customer value and, if it ever senses that it is reaching a point of maturity, it must launch itself forward through new opportunities.
Weak Signals
Whether the changes and opportunities that are emerging in the market are interdependent, as Sviokla highlights in his article, or if they are independent and significant in their own right, they may well be so soft that leadership cannot easily hear them.
As the complexity of business grows through globalisation and the interconnection of products, services and needs, the clarity which leadership can bring to their decisions diminishes.
This increased complexity can silence all weak signals of market changes and render leadership blind and deaf.
The answer is to amplify your business’s capability to hear weak signals and this lies in its organisational design and culture. The way your business communicates within itself and the outside world should be seen an integrated network (a sphere) with all points connected. In real terms, this means breaking down hierarchical structures where leadership sits at the top and makes decisions. At the ‘top’ they are too removed from the customer, the market and their business. Visually, leadership are better seen as being at the core and spread throughout the business using the principle of ‘centripetal leadership’. As for culture, this must be one that requires a free-flow of knowledge and information throughout the business.
If you have not heard of the term ‘centripetal leadership’ before, this explanation may assist: ‘As a leader you must recognise the working of centripetal authority in your business. I believe everyone looks, and is drawn, towards the centre for leadership. It’s not an upward movement; it is an inward movement. As a leader your influence only extends so far and when it reaches its outer limits you must ensure that you have appointed another worthy leader to extend your leadership influence. Think of it this way, extend your arm as far as you can, once it reaches its limit you need someone else to extend your reach. Leadership is the same.’ – An extract from my book ‘Leadership Talk – Great Leaders Building Great Businesses’.
You Can’t Push An Elephant
So what has an elephant got to do with all of this? Well, I was sitting in a strategy conference in Paris in 2003 listening to a panel discussion about why large corporations had failed to respond to the challenges and opportunities the emergence of the Internet and digitalisation had presented. In that era, with almost unlimited resources, many established businesses were stunned by the rate of change and simply unable to act no matter how much money they threw at the issue.
And one of the panel members said the phrase, ‘You cannot push an elephant, but sometimes an elephant needs to run’. That phrase has always stuck with me as a metaphor for maturity in markets and businesses, and its solution.
You may well be large and/or well-established in your market and be lumbering down the roadway of success, but to survive you need to be constantly aware, adapting and growing. And at times you will need to be able to move fast.
So, how do you ensure you never become mature?
- Always remember there is no such thing as a mature market, only lazy businesses.
- Always compound on what has gone before.
- Build a business that has big ears and listens to everything.
- Build a business in which everyone openly shares knowledge.
- Place the customer need, and your business’s purpose, at the centre and continuously ask: How might this help us improve customer value?
- Adopt the mantra, ‘better every day’ and live by it.
Your goal is to build a business that is competitively fit and tactically alive.
Active Knowledge Question:
1. How are you keeping your business fit and alive?
Act Now:
How undefeatable is your business strategy? Consider Strategy Play – Crafting Undefeatable Business Strategies.
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All the best in the success of your business,
Richard Shrapnel
