I happened to walk into a Cold Stone Creamery outlet on the 72nd Street last week. It was around 8 pm, there was one person managing the store, not a single customer in a relatively big store. We hanged around there for about 15 minute and no one entered the store. Interestingly, on our way back we passed through about 5 yogurt places all pretty packed.
This brings up an interesting point. Why did a major ice cream parlor chain with more than 1000 stores nationwide missed the boat to serve customers what they wanted to eat? How did the yogurt parlors manage to steal their customers? For that matter, the same question is valid on lot of other industries. Apple killed the Walkman maker Sony with iPod. Amazon did it to Barnes & Noble. The list can go pretty long where an incumbent leader is brought down by new upstarts.
There are a few reasons for this. One of the key reasons is complacency. Companies are on the path of downward spiral when they start thinking they are invincible. Another reason is legacy. It is so hard for companies with all the extra fat and years of legacy to be nimble. Then there is always that fear of cannibalization. Companies don’t want to shift their attention or take any kind of risk that might cannibalize their money generating business. And to top it all up, there is denial. Something that is far too evident is not visible because companies are stuck in the state of denial.
The core way to tackle this is by understanding what is important for your customers. Understand what they want in your industry, why they need it and how can you provide it. Be nimble and quick in transforming yourself to meet the needs of customers. Don’t be scared to nudge your existing business. You got to understand that you cannibalizing your own business is so much better than someone else doing it. Way too often you won’t be at the forefront of innovation and transformation, some other company with a fresh mindset will be ahead of you. In that case, just shed the extra weight and follow your customers as fast as you can.
The last two books I happened to read focused a great deal on business leaders who got a second chance to do it all over again. The first one is Onward: How Starbucks Fought for Its Life Without Losing Its Soul by Howard Schultz. The book takes you through the journey of Howard Schultz about how he rebuilt the company which lost its mojo in the eight years he was away from being the Starbucks CEO.
The second book is Steve Jobs by Walter Isaacson. The book dedicates a large section on how Steve Jobs came back to Apple and built a company from the verge of bankruptcy to being one of the highest valuation companies ever.
There are a few key things that come to mind when you read books and stories of this nature. First is the emphasis on how easy it is to end up losing the brand equity that is built with continuous labor over a long period of time and how hard it is to earn it back. It shows the impact of your mavens, your most loyal customers and partners, who believe in you till the very end. They are the ones who love you no matter what and they are the ones who critic you because they just can’t stand letting the brand be destroyed. They are in fact the backbone of a brand’s marketing. They are the early adopters, the loud backers and the selfless promoters.
The second is the difference an individual can make for a company. It is said that teams run a company and you cannot do it all alone. That is so true, but the most overlooked factor is that individuals build teams. An individual recruits other individuals to become part of a team. One of the hardest things in building a business is to find people who trust you, who share your vision, who can deliver and can put their all in for the sake of building the company. Even harder is to be cold enough to let people go when they are not at the right place. One individual can make a whole lot of difference in steering the company in the right direction.
This also speaks a great deal about the founder’s touch. The founder knows the core of the company. When you start the company, you have a vision and a mission you set for it. To build it sustainable and successful, you make hard decisions more often than not keeping the long-term view in mind. Whether you take a hiatus (Howard Schultz) or are fired (Steve Jobs), things are shaken. A continuity is lost. This might be good in cases where the company needs a fresh look, but I believe Round 2 cases strongly prove that there is nothing like the founder’s touch in building a company, whether its first time or all over again.