Your mission is to be a life-changing executive, to take the company to the next level. To be one, you must continuously scan the environment and your business model, reflect on the sector´s as well as your own SWOT (Strengths, Weaknesses, Opportunities, and Threats).
The competition will try to copy your competitive advantages, so, to prevent them from catching up with you, you must reinvent yourself.
Andrew Grove, in his book: “Only the paranoid survive”, reminds us that you can never relax, even if you´re the leader of the Industry. Intel was the worldwide leader in semiconductors and was threatened by the Japanese competition. In view of this threat, despite being the leaders and to the amazement of many, they decided to give up their leadership and reinvent themselves. They entered into microprocessor manufacturing, which allowed them to become the huge company it is today.
If you don´t have any distinctive competitive advantages, or if they have been copied or depleted, or if you compete in a deteriorated industry, then you´ll need to reinvent yourself.
The world is under constant change with new technologies that lower costs or reduce the lifespan of products, with new players that revolutionise industries or with the appearance of new foreign competitors that break the rules on wage costs.
In this fast, competitive environment, the average lifespan of companies is shorter, as is the duration of their CEOs.
You have a rental car company and, suddenly, you come across RelayRides, a company that allows anyone to rent another person´s car whenever they´re not using it. Or, you have a hotel and run into Airbnb. Or a taxi and Uber appears. In all these cases you have a problem (or as we offer an opportunity) since new competition has changed the rules of the game for you.
Chris Zook, the author of ‘Unstoppable’, explains that to reinvent yourself, you must study which assets in the company have real value, those you can enhance to gain a clear distinction from the competition or a special/specific added value for your clients. These assets may not be apparent and are sometimes hidden.
When the industry margins in PC manufacturing deteriorated, Apple moved towards a new business: digital music. Apple reinvented themselves by leveraging on their design strengths, the brand creating interface development capabilities. With all this, they created the iPod. They only needed to acquire experience in the music industry and rights management. As soon as they did, they launched the iTunes Music Store, closing the market to their competition after signing contracts with the four major record labels, guaranteeing a constant and controllable source of income. With the iPhone, Apple has created a new class of product, since they have turned the mobile phone into a computer, an entertainment system, and a shopping centre.
Jeff Bezos, CEO of Amazon, said: “If you create frequently and you are open to failure, then you won´t have to get to the point where you must risk the whole company. We´ll continue to plant seeds. We´re stubborn about our vision. We´re flexible in the details”.
You sense a change in the environment and, since you know your clients and their needs, explore hidden assets that enable you to create a new success formula by offering customers a differential value proposition.
Airbnb was founded in 2007, back then their founders´ goal was to turn the living room of their apartment into a small Bed and Breakfast, the original name was Airbedandbreakfast.com.
The founders evolved into their idea of finding rooms for technology convention attendants when all the hotels in the city were full and, at the same time, giving the local technologists the chance to do networking, from there they went on to extend it to all those people who wanted to avoid hotels in their travels. They started getting feedback and learned from their users´ demands, detached themselves from the idea of breakfast and networking as their objectives and refined their mission until becoming the place to rent at any possible residence.
When seeking your valuable assets within the company, ask yourself: Can they help to distinguish ourselves clearly…Can they offer a greater value to the customer…Can we obtain other capabilities that, combined with the ones we already have, allow us to offer a unique value in a large enough value pond…
When hardware sales were falling and margins were getting narrower, IBM searched for a distinctive capability within the company and found it in a little unit called ‘Global Services Group’. The whole company reinvented itself by relying on this unit´s knowledge, which in 2001 came to represent two-thirds of IBM´s total value.
De Beers, thanks to their huge diamond reserves, could set the prices in the industry. But new, enormous reserves appeared, that forced it to reinvent itself and benefit from a distinctive competitive advantage: their brand.