The current financial crisis makes businesses both large and small rethink their future direction. In nature, the plants that survive are the ones that can adapt quickly to changes in nature. Those that can't adapt quickly enough will vanish. Even 100-year-old companies are learning to adapt and create ways to stay ahead of the game.
For small businesses, adaptation often translates into innovation. Innovation can be a product, a process or a service. It can be a business model, a new way of marketing, a new supply chain, etc. I recently had the opportunity to interview author Mark W. Johnson of Seizing The White Space: Business Model Innovation for Growth and Renewal. Johnson is co-founder and chairman of Innosight, a boutique consulting firm that helps clients improve their ability to create innovation-driven growth. Johnson says innovation can be part of your corporate culture--not a one-time deal, but as a repeatable process. This repeatable process not only provides long-range strategic action for the business but also creates growth opportunities beyond the current business model.
For many small businesses, to be bought by bigger players could be a dream come true. But how do you position your business model so it is attractive enough to be bought? Yes, your product or service innovation has to be noticed. But you also need to have a solid foundation for the big guys to pick you up. Here are things to consider when you innovate or reinvent your business:
Focus on the job-to-be-done. "A powerful customer value proposition is a key for all successful business models," Johnson says. "The CVP is to solve an important problem or to satisfy a job-to-be-done." Today a B2C business can easily tap into the consumer's community and receive inputs from the community to enhance its products. "It is your job to fully understand what is your customers'/clients' job-to-be-done so you can add value to all stakeholders."
The speed of new learning. Any new business model needs timely implementation. "There are three stages in implementation: incubation, acceleration and transition," Johnson says. Often, it takes years to go through these stages. However, the implementation stages are measured by the speed of new learning inside your business along with the structure, discipline and ability to trim the waste in the system in pursuing the potential growth.
Scalability of the new business model. Whenever a business enters a new space, the owner is taking a certain amount of calculated risk. You have to know how to scale it so you can handle the growth.
Financially fit to succeed. The five-year block (each five-year-block in a business is a milestone) often will determine whether a business can break through the $5 million, $10 million or even $50 million mark. To successfully apply the elements cited above, your business must be financially fit to take on the new challenge.
Parallel implementation. Don't rock the mother ship too much. Let the mother ship continue to sustain the business, and implement the new business model in parallel.
Madonna is an example of someone who has reinvented herself many times. Her success obviously is testament to her ability to innovate, reinvent and adapt. Remember this: Your business either leads the industry or follows the industry. Just don't get crushed.
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Chia-Li Chien, CFP, CRPC, PMP; CFO for Women Entrepreneurs. She is chief strategist of Value Growth Institute dedicated to helping private business owners increase the value of their firms. She is the award-winning author of Show Me The Money and faculty member of American Management Association. Her blog is named a top small business resource by the New York Times. http://valuegrowthinstitute.com
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