DISCOVER HOW TO ANTICIPATE CHANGE AND BE PREPARED FOR ANYTHING
If there’s any one lesson I’ve learned from owning a few businesses, it’s this:
Leaders anticipate change while the losers are left reacting to it.
The ONLY constant is change. And the funny thing about you and I being alive right now is that technology is like a personal trainer pressing the UP arrow on our treadmill, speeding up the business process and causing change to happen faster than ever. We’ve got to keep up or we’ll fall off! That’s where business triggers come in.
THE IMPORTANCE OF BUSINESS TRIGGERS
Businesses today feel the pressure of the narrowing window BETWEEN seismic changes in any industry and across cultures. That’s because the lifecycle of ideas and products has shrunk. The time span between the moment you come up with a breakthrough concept to when somebody else comes up with a better one is no longer decades or years, it’s now just months.
Your competition is watching you through open windows (your blog posts, your Twitter feed, Instagram, Snapchat, Facebook…). Your cards are on the table. Everybody can see what you’ve got and they’re using it to come up with what’s next. Mass communication at the click of a mouse has given way to a culture that hinges on sky-high expectations and very low patience.
So how do business leaders stay on the bleeding edge and find a way to do more for clients and customers than anyone else in their industry?
As a leader, you must be able to adapt to the top business triggers that drive these changes. You must recognize that every move we make is setting us up for what’s next. To be successful you have to be in control. To be in control, you must anticipate what is to come. You must understand business triggers.
HOW BUSINESS TRIGGERS CAN HELP YOU SUCCEED
Leaders in every industry find a way to become the chess player, not the chess piece. Finding business success is not only about creating value, it’s about monitoring the trends and anticipating the challenges coming down the pike.
The hard fact is that 96% of all businesses are gone within any ten year period; a little less than 4% actually survive. And that doesn’t mean they’re profitable, it just means they’re still standing. The 10-year benchmark is just the beginning of a successful business in the making. So how do we anticipate change on the horizon?
By understanding that there are triggers of business crisis. Accept this truth and create a map of the terrain ahead of you so as to scan the periphery constantly for any outsiders approaching. (Remember when Apple entered the music industry? There’s no such thing as a closed course in business!). Anyone can be a player. So decide today to become the chess player, not a chess piece.
THE 7 BUSINESS TRIGGERS
Let’s look at the factors most people fail to anticipate: the Seven Business Triggers. Think of these like big red reset buttons with the uncanny ability to wipe out established businesses – and sometimes entire industries – almost overnight. They can be the start of a crisis, or they can be the start of limitless opportunities.
BUSINESS TRIGGER #1: A CHANGE IN YOUR COMPETITION
The first business trigger that guarantees painful loss is a change in competition that you’re not prepared for. The examples of this happening are endless.
You can be the Blockbuster Video of your industry, thinking you’ve literally got the market cornered, and in the blink of an eye you’re a non-factor all because you failed to acknowledge the appeal and added value of an emerging competitor and didn’t provide more value than them.
Consider this: In 2017, Netflix surpassed the $11 billion mark in global revenue. Then it reported $290.1 million in net income for the first quarter of 2018. That’s more profit in three months than the streaming giant had for the entire year of 2016.
But back in 2000 the young Netflix tried to sell itself to Blockbuster for a mere $50 million at a time when Blockbuster was doing $4 billion per year. Netflix practically begged to become the brick-and-mortar’s streaming service, but Blockbuster effectively scoffed and said, “What do we need this for?” They failed to recognize their competition as a business trigger – and they paid for it.
Four years later, Blockbuster launched its own streaming subscription service but it was too late. Netflix had 4.2 million subscribers by 2005. Sure, the stubborn storefront boasted 50 million members in their 2007 heyday but Netflix announced its billionth DVD delivery that same year. The sea change was swirling on the radar. In 2010 when Blockbuster finally filed for bankruptcy, Netflix’s worth was up around $13 billion.
So note this lesson, whether you’re a small business or a part of a billion-dollar behemoth: no matter your industry, competition will create crisis.
It seems impossible that 50 million customers could slip away, but Blockbuster stores were boarded up while you and me and every kindergartener we know now has a Netflix account. On January 8, 2018 it streamed more than 250 million hours of movies and TV shows to its members. They created an industry crisis. They anticipated technological trends. They changed our culture. They played the game and they moved the existing pieces on the board out of their way.
Blockbuster had the chance to innovate, evolve and create – not destroy – but they decided they didn’t need to worry about this business trigger. Netflix execs admit that if Blockbuster had deployed their streaming subscription sooner Netflix would have had a hard time shaking Blockbuster’s grip on the movie rental market. Instead, we watched competition come in and knock off a 20-year old industry king. Checkmate.
BUSINESS TRIGGER #2: A CHANGE IN TECHNOLOGY
One key to recognizing business triggers is to ask yourself better questions, rather than assuming you have all the answers. Take a moment now and think: How is your business like Blockbuster? How are you stuck in your head and making yourself a potential target to emerging competition?
In business, the psychology of a leader who resists a coming trend in technology is capable of destroying a $4 billion company. Conversely, if you become the leader that can figure out how to use technology to fulfill needs and add value, you become the disrupter not the disrupted.
Consider a few of the most recent technology business triggers. Let’s start with Instagram, which Facebook purchased in April of 2012 for $1 billion. Imagine that. If you came up with the idea of a mobile app to share your photos through filters with friends, you’d have $1 billion dollars. Not too shabby.
Need more proof? Consider WhatsApp, the mobile messaging service Facebook purchased for upwards of $16 billion. WhatsApp was founded in 2009 and three years later it was processing 10 billion messages daily.
Unsure about how significantly WhatsApp triggered a crisis in the communication industry? Just ask the parent of a teenager. Consider the billions of messages sent via WhatsApp technology FOR FREE, evading the per-text charges of cellular carriers and making it worth its weight in SMS-text-defying gold. It’s even evolved to include free video chat and calling internationally, further shaking up established communications norms.
Participating in tech shifts – not just protecting yourself from them – can make way for your impact in the world and your fortune in business. Ask yourself: What technology could change my business? What technology could we be the first in our industry to employ? How can I be the creator of change? Even if you’re using cutting-edge technology today, those tools will age out. How will your business be ready to evolve?
BUSINESS TRIGGER #3: A CHANGE IN CULTURE
Remember the days of Napster? And Limewire, KaZaA, Morpheus and the like? Don’t be confused; it was NOT technology that changed the game this time. It was business trigger #3: a cultural change that led people to believe that stealing music does not actually qualify as unlawful stealing. In fact, we didn’t even call it stealing, we called it “downloading.” Downloading entire albums, sometimes before an artist had even released them.
Most of us would never walk into a music store (if you’re old enough to remember those), stick a CD up our shirt and walk out without paying. But there were a few years when the culture essentially made it OK to do that online. It was a cultural shift where millions of people were stealing music, but they decided it wasn’t stealing because they believed information is free.
We forgot that this information – original music – was created by artists who spent lifetimes coming up with one, two or five hits, so that they could make a living performing their heart out every night. The culture changed and an industry was decimated.
In 1999, the music business did $38.6 billion in sales. That same year Napster was founded. From the peak of about $40 billion in 1999, the music industry plummeted 58% down to $16 billion the following year. Think about that. That’s nearly a 60% drop in revenue practically overnight. All it took was a shift in consumer culture.
However, as with any business trigger, you can make this one work for you instead of against you: Consider how Apple harnessed the culture of shrinking attention spans and downloading hysteria to create something wildly popular (not to mention profitable).
Steve Jobs, in his infinite wisdom, reasoned that while our culture won’t pay $15 bucks for a new CD, people also don’t really want to poke around the internet for hours and steal entire libraries. He had a crazy idea. Surely short attention spans would appreciate the simplicity of 99 cents per song. By 2007, the sale of those cheap little digital singles overtook CDs in a landslide, generating $819 million in sales.
When the culture demanded a cheap, easy, fast way to get music, Apple had the ingenuity to answer to this business trigger and became the number one music retailer in the world. All because they monitored critical shifts in cultural behavior and added more value faster than anyone else.
Less than 10 years after Apple deployed its iTunes Music Store, it surpassed 25 billion songs sold. They didn’t just trigger crisis in an industry, they changed the way the world consumes music, books and in-pocket entertainment. And the changes kept happening — just look at how streaming services like Apple Music, Spotify, Pandora, Amazon Music, Google Play Music, Tidal and even YouTube Music have shifted the culture of listening to music.
To stay ahead of this business trigger, leaders must ask themselves: What behaviors are trending? What cultural shifts are afoot? What are the belief systems that can be ascribed to those trends and how can they affect the business of you and me? What cultural shifts can you use to your advantage today.
BUSINESS TRIGGER #4: A CHANGE IN THE ECONOMY
Next time you bump into a real estate agent, ask them if the economy is capable of changing an industry. Most of them can captivate you with real-life campfire thrillers that illustrate first-hand how business triggers like economic recessions and interest rate swings have affected them personally and painfully. Can’t relate to real estate? How about government policy? Can that affect your business? You bet.
Consider the modern-day cup of coffee. Think about those four dollars people donate every single day to Starbucks. Ask former Starbucks executive chairman Howard Schultz about how an economy that justifies paying $4 for a consistent cup of coffee has changed his life and the way he does business. And while we usually think of Starbucks as flush with sales and profits, they stand as the sterling example of surviving this business trigger.
At the end of the second quarter of 2008, Starbucks quarterly earnings tanked. Global operating income had sunk 26% and the company’s in-store sales figures were negative for the first time in the brand’s history. Meanwhile, consumers were tightening up and cutting their spending as the global recession took hold. In July of 2008, Starbucks lost money for the first time reporting a net loss of $6.7 million for the third quarter. In the fourth quarter, profits dove 97% and earnings for the year were down 53%. As the financial crisis sprawled across Europe and Asia, Starbucks sales figures were at negative 8%, effectively rendering Starbucks’ existing economic model completely inept.
If you’ve never read Howard Shultz’s book Onward: How Starbucks Fought for Its Life without Losing Its Soul, here’s the crux: After eight years away from the biz, Schultz returned as CEO while the financial walls were burning down at his beloved brainchild. What would you do in that situation?
When Schultz came back in the middle of the crisis, he ceased the company’s go-go expansion. He cut out nearly $600 million in costs, and for three hours on February 26, 2008, he orchestrated the closing of more than 7,000 American Starbucks stores for a retraining session for employees. “This is not about training,” Schultz told his employees, “This is about the love and compassion and commitment that we all need to have for the customer.”
Schultz used the recession as the impetus to refocus on his core business. He asked himself what business Starbucks was in, and then had a good long look at what business they needed to become. He rekindled love for his customers and effectively checked the ego that will control ANY company that loves its product more than its customers. And that is why Starbucks stands as a textbook example of how to come out on top – stronger even – not in spite but because of tough economic times. As Schultz said in 2011:
“I returned to Starbucks as CEO in January 2008 because we had to navigate through our own issues and deal with the cataclysmic financial crisis. The past two years we’ve done our best work. We’re a much stronger brand because of the recession.”
One thing I know from my experiences helping with the turn-around of thousands of businesses of every size: the business trigger of economic crisis creates breakthroughs. And winter? Winter is coming.
Crisis takes us from thinking about the things we could do and requires us to take massive action. Crisis brews innovation and revolution for those who use it to create, instead of letting it destroy them. Those that fail to adapt to a new economic environment end up in the graveyard of business – the place 96% of all businesses end up even after 10 years of growth.
Were you in business in 2008? If you still are today, congratulations. How did the global financial crisis change the way you do business today? What did you learn, and how did those lessons shape you into who you are now? Most importantly, how are you applying it to future economic winters – how do you plan to do business in 2022, 2025, 2028? Now is the time to anticipate and implement what you must do to be more efficient and effective in order to get yourself out in front of the ever-ebbing and flowing economic tide.
BUSINESS TRIGGER #5: A CHANGE IN YOUR CUSTOMERS’ LIVES
Some of you reading this have a specific customer base. A very particular niche demographic for a product or service that’s perhaps not quite as ubiquitous as a cup of coffee. (Even though I don’t drink coffee, I do take business tips from Howard Schultz!). If you’re part of a company that acutely targets the ideal customer, can a change in your customers’ lives be a business trigger? To answer that question, consider the example of Harley Davidson. Not just motorcycles, Harleys.
For years baby boomers bought Harleys because they grew up watching Hollywood bad boys riding these beautiful bikes. For that customer base, most sales happened between the ages of 35 and 55. (You don’t see too many 65– or 70-year-olds buying Harleys). The biggest sales sweet spot is about 40 to 45 years old. Somebody has a midlife crisis and they run out and buy a Harley, right?
So there’s only one problem if you’re Harley Davidson. The generation behind me and my fellow baby boomers is much smaller. So much smaller that even if every Gen Xer turned 40 and bought a Harley, sales would hardly put wind in your hair.
Soon, the last baby boomers will age out of the market. They’re not buying Harleys anymore. Now they’re taking pictures of them in their garage, and posting them on Craigslist, and selling them. It was cool and fun for a few thousand miles, but now they’re 65 and want to get some cash in their khakis for this thing that’s in near mint condition.
And that’s how a change in your customers’ lives can become a crippling business trigger if you don’t anticipate it.
Ask yourself right now: Who is the next generation and how will we market to them?
Just as businesses have stages of growth, people go through stages of the human experience. As people change – as they have children, as they age – they’ll make decisions differently. The same goes not just for your customers but for you and your employees, too.
BUSINESS TRIGGER #6: A CHANGE IN EMPLOYEES’ LIVES
Many business owners have had a top employee or salesperson go through a life stage like the birth of a child, a divorce or a birthday, and they come into your office and say, “I want some time away,” or, “I want to go to spiritual sojourn,” or, “I just want to play more golf.” Suddenly they’re not as productive (OR they’re not even around) and it takes a real hit on your business.
If you find yourself facing this business trigger, use it as a catalyst to look at your own employee retention strategies. Today’s employees want flexible schedules, remote work and plenty of vacation time. They want work-life balance and professional development opportunities.
Encourage your employees to take a break. Stepping away from work can actually improve creativity and innovation. Ask them what they want – and really listen. Discover what inspires them to do their best work and provide it. Work on your leadership skills and become the leader you need to be to overcome this business trigger.
BUSINESS TRIGGER #7: A CHANGE IN YOUR LIFE STAGE
Maybe it’s not your employees that are the business trigger. Maybe you find yourself saying, “It’s not you, it’s me.” Maybe you want to be more present for your family. Perhaps you’ve realized that you’re really a business operator, not a true owner. Or you hit a threshold and you just had to do something that made you happy. Maybe there was a period where you burnt out, or you fell in love, or you beat cancer, or got married, or had a baby, or you went through some other event that upended your business.
It’s inevitable: Your life looks completely different today than it did 10 or 15 years ago. And your own life changes are one of the most massive business triggers. But what I’ve learned is that in so many ways, these are more predictable than you may think.
Remember to give yourself a break along with your employees. Clear your head. When you return, work on becoming a true business owner – or develop your exit strategy. You won’t do anyone any good if you’re no longer invested in your business.
Review this list of the Seven Business Triggers once a month. Look at your company and think ahead to what’s coming. What needs to be anticipated? What’s approaching that you must protect yourself from? Even better, what is available for you to disrupt the competition and do more for your clients than anyone else in the game?
Expect change. Analyze the landscape. Take the opportunities. Stop being the chess piece; become the player. It’s your move, my friends.
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