It wasn’t that long ago that we were discussing the end of jobs for life. How we would need to retrain a few times during our working years. It seemed exciting but a bit daunting at the same time. Unlike flying cars, those predictions were spot on, but of course, it hasn’t stopped there. Most of us are doing completely different things than we were just a couple of years ago. Perhaps called the same thing, but delivering very different services in very different ways. And we know it’s not going to stop there, it’s going to get faster still.
When we think about disruption we think about traditional industries being destroyed – but often they just hang around, albeit with substantial loss of market share. Products like newspaper classifieds from sites like Gumtree, the taxi industry from Uber, and recruitment agents because of LinkedIn. When television was introduced, people predicted the end of radio; that obviously didn’t happen. Of course, some things like encyclopaedias die off completely and let’s hope that also happens for phone books and fossil fuels soon.
I know there are lots of smart people out there thinking about these very things, and how they might take a position. Thinking about how they might develop the new Uber of something. Love your work. But what if you are in an established business using an established model of delivery. Worse, what if you are providing one of the many services facing big disruption in the next few years.
Looking at this, from a CFO’s perspective, I remember my undergraduate marketing about cash cows. That you should increase efficiencies and reduce costs, plus support it with effective marketing spend. If it’s not producing cash, or when it stops, ditch it and switch to new one. Do that with a different brand if you need to protect your margins on the old product. If you do a SWOT and the product is your biggest strength, and your biggest weakness, you are probably in this state.
Traditional marketing wisdom stakes you should use the cash to develop new products, but beware trying to make a silk purse from a sow’s ear. You see it sometimes when a bold initiative is taken to save a business only for it to fail as well. It’s usually at times like this you need less risk, not more, and in the wise words of Tim Ferriss, you should avoid trying to make money back from where you loose it.
Better I think, with all of this, is to continuously improve and develop new innovative services. To start them in small controlled trials and, once you have a better idea of margins and the cost of customer acquisition, roll them out appropriately. Always keeping a close eye on the numbers.
Cheers