Your Industry Is Dying - But Your Business Can Survive
Your industry is dying. Yes, yours. Here's how your business can survive and thrive in the midst of disruption and change.
Your industry is dying.
I don’t care what your industry is. It is going to die. It’s inevitable.
And your business needs a plan to survive the disruption so you can have business continuity.
I KNOW WHAT YOU’RE THINKING
You might be thinking that your industry isn’t dying. It’s been around for decades or generations or even centuries. Nothing will change.
Let me challenge you on that idea by looking at the nation’s largest companies of 2016, according to Forbes.
J.P. Morgan Chase is No. 2, Wells Fargo is No. 3, Bank of America is No. 6, and Citigroup is No. 8. We’ve already seen major shifts in the banking industry in the last 10 years that proved the hard way that no company is too big to fail.
Apple is No. 4, thanks to being on the forefront of industry shifts like digital music, smartphones, and tablets. But if Apple misses the next wave, what happens? Could it become Yahoo!?
Yahoo! was a leader in search pre-Google. But Yahoo! missed on search changes brought on Google, then on the disprution that social media brought, and then on the disruption that mobile brought. Along the way, Yahoo! missed out on two chances to purchase Google, and turned down a $44.6 billion offer. Now Google’s parent company, Alphabet, is No. 12 on the list, and Yahoo! is becoming a division of Verizon.
By the way, TechCrunch recently asserted that Google isn’t immune from becoming Yahoo!, either.
What about Microsoft, which is No. 11? Benedict Evans talked about how Microsoft missed the mobile revolution and then spent $26.7 billion (with a B!) on LinkedIn to try to get back ahead of the disruption curve. Does that make you think Microsoft’s arrow is pointed up or down as the digital industry continues to change?
ExxonMobil is No. 5 and Chevron is No. 13. But would you be willing to make a 50-year or 100-year bet on the oil industry? Change is inevitably coming to this industry.
Comcast is No. 15—but faces a massive challenge of cord-cutting that is irrevocably changing the way the cable business works. (Just ask Disney, which saw losses at ESPN outweigh the massive success of Star Wars: The Force Awakens.)
Ford is No. 17 and General Motors is No. 20. These companies have survived the imports of cars from Japan and Germany. Now the industry must survive the disruption that newcomer Tesla is bringing that could fundamentally change how cars work.
Let’s look at healthcare, where UnitedHealth Group is No. 19, Pfizer is No. 21, Metlife is No. 22, and CVS Health is No. 24. Disruption here may come politically. The Affordable Care Act was the first salvo, and that will change as different political leaders gain or lose power or influence.
You get the point—the biggest corporations in the country are subject to industry disruption and even death.
Your industry isn’t any different.
I was listening to a podcast while I wrote this, and the ads in the podcast were directly aimed at disrupting the way things have always been done in several industries. Casper delivers mattresses to your home at a fraction of the cost. SeatGeek compares ticket sites and saves you from Ticketmaster’s notorious fees. Rocket Mortgage is Quicken Loans’ attempt to stay on the forefront of user experience by removing the mounds of paperwork in the traditional mortgage process.
(By the way, it shouldn’t be surprising that these disruptive companies are advertising in a disruptive medium—podcasts, which are in the process of pushing the radio business off the cliff.)
The reality that your industry is dying is a particularly personal insight for me. Let me tell you three stories to tell you why.
THE LUMBER STORY
I come from a family with a family business—a lumber yard. Back in the 1920s, my great-grandfather started a lumber yard. Like so many businesses, it went bust during the Great Depression. But my great-grandfather scrimped and saved and borrowed and reopened at a different location in the 1930s.
That lumber yard was our family business for the next three generations—so much so that we joked about the sawdust in our family’s blood. My grandfather took over that lumber yard; two of his brothers opened other lumberyards in nearby cities. Then my father began working there in the early 1970s.
The lumber yard survived a major shift in the industry in the 1980s—at least for a while. The big-box stores like Home Depot and Lowe’s came in and drove down margins to an unsustainable level. Many small, independent lumberyards began to go out of business. But my family’s lumberyard stuck around, thanks to early adaptation of some innovative products and a willingness to embrace customization and special orders when the big-box stores would not.
My brother began working there in the early 2000s, and he realized that the idea of carrying a huge inventory of lumber was no longer sustainable. He opened a separate location that only sold windows and doors via preorder.
That was a wise move, because when the housing crisis hit the United States around 2008, construction stopped. The family lumber yard had to close. Thankfully, my brother’s new location is thriving, because he adjusted to the disruption all around.
THE NEWSPAPER STORY
I didn’t go into the family business. I wanted to be a sportswriter. So I focused my education and career on journalism. My first newspaper article was published the week before my high-school graduation, and I freelanced consistently through college and grad school.
My first full-time job was with a magazine called Pro Football Weekly. I worked there for three years covering the NFL. For a burgeoning sportswriter, it was an unbelievable career start. While the weekly circulation was modest, the annual Fantasy Football Preview magazines sold nearly half a million copies.
During the three years I was there, the magazine was sold once, and there was one round of layoffs when a sister magazine was shuttered.
That magazine stopped publishing for good three years ago. After a year hiatus, it has relaunched as a website that also produces newsstand specials.
After that job, I moved on to a newspaper with a solid daily circulation. I was there for two years, and saw two rounds of layoffs as profits declined.
What happened to this industry? The internet.
First, the arrival of Craigslist demolished the lucrative classified-ad market that newspapers had thrived on for years. Within just a few years, one of the most significant revenue streams for newspapers disappeared.
Then, as newspaper and magazine articles went online for free, the subscriber base started eroding. As that declined, ad rates did too. The newspaper and magazine industry was in a death spiral so pronounced that John Oliver built an entire show around it.
Now the newspaper I worked for is a shadow of its former self, as so many are. So many of my former co-workers who tried to stick it out have been laid off. I’m thankful I got out when I did, before the bottom really fell out.
THE PUBLISHING STORY
After I left the newspaper industry, I went to work for a non-profit ministry that created books and resources. It was a startup, and so we struggled to make it by taking on contract writing projects (while some of my coworkers also spoke at camps and conferences).
We also wrote a book of our own and self-published it. We took it to a publishing conference because we thought landing a deal with a publisher was the way to success.
We eventually signed deals with two different publishers—and it was far from a silver bullet. The problem was that in this moment, the book publishing market was fundamentally changing. Amazon had come to prominence, and the independent bookstores that publishers had relied on for book orders and sales were disappearing. It was shocking how completely unprepared these publishers were for this change—they had no idea how to help a book succeed in this new market.
Before long, we realized that we could make more money by selling 5,000 self-published books than by selling 40,000 books through our publisher. The industry was dying, and we had to change strategies in an attempt to survive.
THE CURRENT STORY
This is why I was so excited to join Worthwhile in 2012. I sensed that I was joining a company with a strong history and a strong future in an industry that was strong. That has proven to be the case.
Of course, things have changed. Mobile responsive design has gone from being a premium add-on to an expectation. Website projects have been commoditized, driving down the entry price point if a company’s needs are basic. Now connected devices and Internet of Things functionality are becoming essential.
But given my history, you can understand why I gulped when I saw this article:
Not even our cutting-edge industry is immune from dying. We have to be prepared to change and adjust to the inevitable disruptions, or else our business will go down the drain with it.
YOU’RE FREAKING ME OUT—WHAT DO I DO?
The solution to change isn’t pretending it isn’t happening or harkening back to the good ol’ days. Your business needs a clear-eyed approach to preparing for the future. Here are 5 keys to embrace ASAP:
1. Be Proactive But Not Reactionary
Your business cannot afford to change tactics every time the wind blows. That will drain your resources and leave your employees with whiplash. But you must be willing to make proactive change.
One way of describing it is this: you don’t have to be an innovator, but seek to be an early adopter or at least part of the early majority. Once a change is established, or once a new technology is tested, find a way to jump in. Above all else, avoid becoming a laggard—those are the companies that end up as the first victims of industry disruption.
2. Be Flexible
Your business needs established processes in order to thrive, and this is even more true the bigger your company or corporation is.
But these processes can stymie innovation and creative thought. In the hands of the wrong manager or leadership team, they can become a cudgel that tries to destroy the kind of flexibility that your business actually needs to survive.
Here’s one practical example: companies have established IT processes to protect their networks. But when mobile devices came on the scene, these processes were slow to adjust to technology that every one was using. The lack of flexibility led to either security gaps via email, or user complaints about what they couldn’t do on smartphones—or in the worst case scenario, both issues.
This means your processes need to have an obvious change management procedure. This option needs to be open for discussion at all levels of the organization, and it needs to be something that the organization uses willingly, not as a last resort.
3. Invest in the Cutting Edge
It’s one thing for your business to be open to change. It’s another thing to commit resources—both money and manpower—to staying at the forefront. Google legendarily had a 20% time rule during its meteoric growth—inviting employees to spend 20% of their work time on projects that they thought would benefit Google (whatever they might be). The results included products such as Gmail and Adsense.
Google has since pivoted to take a more focused approach to innovation, but the company still puts its money where it mouth is when it comes to pushing the cutting edge forward. Your company should too.
4. Expect Digital Change
We are in the digital era, and things are changing quickly. First we all went online with the internet. Then we all went mobile, and then social, and now we’re going wearable along with the wave of countless more Internet of Things (IoT) devices.
This has been a copious amount of change in the last decade—the first iPhone isn’t even 10 years old!
Change is going to keep coming. You need to expect it. You can do this by:
* Looking for change. Find a list of trendsetters you trust and follow them closely.
* Talking about change. Make sure a key group of employees regularly discusses upcoming changes and what they do for your business.
* Lean into change. When you see a trend coming, and know how you can engage it, actually do something about it—a product, an initiative, a project, something.
If you don’t have in-house resources to help you identify digital change trends, find a trusted digital partner and start the conversation now. That way, when it’s time for your business to move, you will have the right people already on your side.
5. Look at Opportunities, Not Just Challenges
Your mindset is important when it comes to change. Yes, change will create challenges for your business. You will need to spend money, retrain employees, and sunset certain parts of your business.
But change also opens the door to tremendous opportunities. If you get through the door first, you can beat your competition and gain revenue. If you get there with the best product, you can establish your business’s security for the next era.
Disruption isn’t the enemy—failure is. So approach disruption as an opportunity for success.
THE SURVIVAL STORY
One company’s story helps us see the right kind of approach to change.
The Bell Telephone Company was founded in 1885 by Alexander Graham Bell, inventor of the telephone. Officially acquired by the American Telephone & Telegraph company in 1899, became a behemoth of American communication. In the 1980s, the government filed an antitrust lawsuit against AT&T, and it had to break up into seven regional companies.
The current AT&T was one of those seven “Baby Bells”—Southwestern Bell. Southwestern Bell kept a forward-thinking bent, entering the mobile-phone business in 1987 and buying some of the former Baby Bells as they became available. By 1995, the company was No. 15 on the Fortune list, and in 2005 it bought its former parent company AT&T.
AT&T’s mobile business exploded as the exclusive provider of the iPhone when it launched in 2007. It has also launched the Uverse cable system and purchased DirecTV.
Now AT&T is No. 7 on the Forbes list of biggest American companies we discussed at the beginning of this article. (Another former Baby Bell, Bell Atlantic, is now known as Verizon and ranks at No. 9 on the list.)
It’s possible for your business to thrive even as your industry throws all manner of change at you. AT&T proves it.
Change is coming to your industry, and it eventually will die. But that doesn’t mean winter is coming for your business. Your business can thrive even as your industry dies.
So as you compose the next chapters of the story of your business, make way for change.