Reinvention: The Key to Long Term Success

| By Editorial Staff

Business is like a river. It never stops. It constantly changes. Those not ready to roll with the flow risk getting swept up in the currents. But for those who build a boat and set adrift, the roaring river of Business can lead to new and exciting destinations.

What happens to a company that doesn’t build that proverbial boat? They get gobbled up by the competition. Of course, business cannibalism is nothing new.

As a refresher: business cannibalism is when the sales of a newer product or brand cut into the sales of other products with the same line. We don’t have to look too far to see evidence of this in our current lives:

  • Walmart was once the largest retailer. Now it’s Amazon.
  • Marriot was once considered a top hospitality chain. Now Airbnb comes to people’s minds.
  • Yellow Cab used to be a household name. Now, most folks know Uber.
  • Blockbuster and local video store chains were once found everywhere. Now they’ve gone extinct thanks to companies like Netflix.

This cannibalization is good for business and consumers. When new ideas and companies enter the fray, they force established businesses and industries to adapt or, simply put, die. The result is that all these businesses come up with new and innovative solutions in the hopes of winning customers’ attention, loyalty, and dollars.

But how do you know where to focus your ideas? How can you predict the trends that will capture an audience and disrupt an industry? By taking a closer look at some of the most profound examples of business cannibalization in recent years, here’s what you’ll begin to notice …

The river flows toward a sharing economy

One commonality found in many successful companies is that they leverage the shift toward a sharing economy, an ecosystem built around the sharing of human and physical resources. Uber drivers share their cars with people who need rides. People who list on Airbnb share their homes with folks looking for a place to stay.

In addition to leveraging the social economy shift, Uber and Airbnb also realized a demand for their services because of the recent recession and capitalized on this:

  1. They created affordable solutions for consumers reeling from the recession
  2. They offered viable sources of income for people who needed extra money or flexible work schedules

Take Airbnb, for example. While most consumers see Airbnb as a unique alternative to booking hotels, the company was created from its CEOs idea to help people pay rent. During the recession, folks struggled to make ends meet and needed a way to pay the bills. Listing their home or apartment on Airbnb was the perfect, stress-free solution.

According to Entrepreneur.com, the sharing economy’s size was about $15 billion in 2014, and is projected to reach $335 billion by 2025. As TX Zhuo puts it (in an article for Enterprenuer.com), “The success of Uber, Airbnb, and TaskRabbit isn’t a fad – it’s a new way of doing business.”

This type of forward thinking has not only helped to create a few successful businesses. It’s completely disrupted the way folks do business. But the sharing economy isn’t the only trend that’s disrupted the way business is done. So has the Internet, and the on-demand economy.

The content I want, when and where I want it.

Netflix’s business model isn’t built on a share economy, but its existence has completely disrupted the way we watch TV and movies. Netflix is built on the concept that people should have more say in what they watch, when they want to watch it. They took an existing innovative concept (the digital video recorder) and said, “Wait a minute, here’s something even better.”

The result has been that cable companies are scrambling to fight for customers who flock to services like Netflix, Hulu, Amazon Prime and Sling. These customers aren’t just jumping ship. They’ve created a “cut the cord” movement, encouraging everyone else to ditch the old way of consuming content (cable televisions).

Networks have adapted – they now offer content online via their own branded apps. But cable companies have a battle in front of them. Consumers’ mindset of what constitutes TV viewing is rapidly changing with each generation, and that change is veering people away from committing to pricey cable subscriptions that include hundreds of channels they’ll likely never watch.

Even the NFL is getting involved, and that could spell big trouble for cable companies. One of the most attractive features of cable subscriptions is access to sports. Sporting games are not as easy to watch online (due in large part to agreements with networks, cable companies, advertisers, etc.). But the NFL recently allowed Yahoo to stream a league game (Bills vs. Jaguars in London), which many view as a test for future NFL streaming efforts.

What can we take from this? The NFL, which is one of the most powerful, wealthy, and business-savvy organizations in the country, knows where the river’s current is headed and they have no intentions of drowning.

Other businesses can learn from the NFL. The league appears to be doing its best to adapt to the modern consumer, and isn’t waiting for the other shoe to drop before it starts making changes. The same can’t be said for Blockbuster, a direct victim of Netflix’s success. Blockbuster took too long to offer an alternative to Netflix’s business model. The result is that Blockbuster On Demand, while operational, is barely on anyone’s radar when it comes to on-demand content.

One day, Amazon will be Walmart, and Netflix will be Blockbuster

What can we take away from all this? In short, businesses should never settle (nor can they afford to). That doesn’t mean just established businesses with decades of success under their belts. Even those innovative, hip companies making waves today (like Amazon and Netflix) will one day go head-to-head (and possibly falter) against newer companies with bigger and better ideas.

A river’s water is never the same. Nothing in it, or in business, is permanent. Only businesses who make adaptation a constant part of their growth strategy will remain relevant over the long-term.