Sears, JC Penney, Nine West, Kodak… the list of great companies that have gone bankrupt just grows and grows. Many of those companies looked like they’d be there forever. They had name recognition, loyal customers, and a good reputation until suddenly they found that they had none of those things. The reasons for those failures are as different as the businesses themselves. All retailers have struggled with competition from online shopping, and in particular with competition from Amazon. Businesses related to photography had seen the environment change as cameras moved onto phones, and the pictures stayed there.
The reasons for failure in each are usually easy to identify. But what about the reasons for success? How does a company stay in business at a time of rapid change? Here are three things that innovative firms to do to stay ahead of the curve:
1. They Dabble
Smart firms understand the Pareto Principle. They recognize that 80 percent of their business will come from 20 percent of their effort so they focus those efforts where they believe it will do the most good. But innovative firms do more than that. They also recognize that nothing stays the same and that the 20 percent of their efforts that are bringing in 80 percent of their revenues today might generate almost nothing in a year’s time.
So they’re always on the lookout for new opportunities and the next big thing. They don’t wait until the collapse comes before they look for a new business model. Google might still make most of its revenues from search but its parent company, Alphabet, has interests that range from electric vehicles to artificial intelligence. Tesla is dependent on its car sales but the battery technology the company has developed may also be used to power homes.
Innovative firms understand that not all of those experiments will work. Most, in fact, won’t work but if one of them becomes a hit, they’ll be ready to become a very different company.
2. They Know the Difference Between a Fad and a Trend
The challenge that innovative companies face though is where to put that investment. Almost all carmakers have now recognized that it’s wise to invest in electric vehicles but how much should they put into autonomous driving? And should they go even further and invest in autonomous air taxis? Should banks develop their own cryptocurrencies or should they focus instead on the blockchain technology that underpins it. They might regard a digital coin as a fad but the use of the blockchain itself as a trend.
Those kinds of decisions aren’t easy to make. They tend to be made gradually with decision-makers tracking developments, keeping an eye on competitors… then often experimenting out of fear of being left behind.
The most innovative companies though, make smart decisions about where to put their investments and where they watch their competitors waste their resources.
3. They Follow Futurists
One way they make smart innovation decisions is by listening to futurist speakers. These are people who follow different aspects of technology and talk about their development and significance in talks and in books. They might explain the value—and the risks—of artificial intelligence, for example, or the challenges that are still keeping autonomous vehicles off the road. They tell businesses what to expect and what’s likely to happen. They don’t always get it right, of course, but they do bring an expertise and experience that a company, focused on its current revenue activity, lacks.
Acquiring that knowledge might take a bit of effort for a company, but booking a speaker or attending a futurist conference means that someone else can do their predicting for them, while they remain an innovative firm that stays ahead of the curve—and stays in business.