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.