Running a successful business is no easy task as it involves managing several responsibilities. Executives and higher-level managers are under immense pressure to increase company profitability. The ever-evolving market also makes it imperative that companies continually evolve and adapt to suit their surroundings. Hence, no business-level strategy can remain static for extended periods. However, making the required changes to create a meaningful impact is challenging and mind-blowing. So, how can companies come up with business plans that change their industry game? Read on to find out about the importance of a business level strategy and how to implement them.
What Does It Mean to Become a Game Changer?
Executives and directors need to continually evaluate their policies to ensure a rise in revenues and company profitability. But doing so isn’t always easy as the scales involved are massive. For instance, imagine your company brings in over $20 billion in revenue every year. If you wish to raise your organic growth by a mere 5%, you will have to bring in an additional $1 billion each year. Implementing changes that make such revenue generation possible require game-changing ideas and innovations.
In most instances, businesses have to do more than find ways to cut costs to improve their performance. As customers grow more demanding and competitors expand, sometimes the only option is to change the game. Not all industry game changers have the most advanced technology or the most access to resources. On the contrary, research shows that most innovators employ various tried-and-true methods to grow their business. Let us now look at these methods and how they can help take your business to the next level!
5 Business Strategies to Change Your Industry Game
- Jobs to be Done: The first step in becoming a game-changer requires focusing on customer needs. Doing so is crucial as spear-heading innovation on products your customer-base has no use for will not help your business in any way. While this might seem obvious, only 9% of new products end up addressing and alleviating a customer problem. Hence, trying to one-up competitor products or emulate them will not help you gain a footing in the market. Companies need to explore unarticulated customer needs and figure out- what exactly their market requires. The JTBD model explores eight factors that help companies discern how B2C and B2B consumers make purchasing decisions. This model enables businesses to understand customer needs, pain points, and how competitive the market truly is.
- Costovation: One of the biggest perils of innovation is how valuable it can be for the company. Depending on your market and industry, you might have to sieve through thousands of ideas to find the next big thing. While most companies have safeguards to prevent the ballooning of costs, a particular rise in expense is inevitable. Even concepts that have a commercial basis might become more high-priced than expected, leading to smaller margins. Even some of the world’s best tech companies have over-engineered their products, leading to higher costs and less customer satisfaction. Costovation is an extension of the JTBD model as it helps companies focus on the jobs that ascertain customer satisfaction. By focusing on the integral components, businesses can prevent investing in features that do not generate revenue.
- Business Model Innovation:Creating a big splash in any industry requires companies to understand that innovation goes beyond creating a new product. Creating a successful innovation is challenging. Studies show that the aggregate success rate for any innovation is as low as 4.5%. Hence, game-changers become vital, as 2% of the innovations were responsible for 90% of the total value. The most successful innovations employ different methods and models to fuel themselves. These include creating a new product, configuration, and crafting the perfect customer experience. Hence, the most successful ideas leverage a profit model and a customer engagement model.
- Capabilities-driven strategy: The best way to build an innovation model is by looking outward and focusing on the customers. It involves creating a portfolio of skills, ideas, and competencies that enable the business to attract customers. Such a portfolio can include proficiencies, processes, intellectual capital, and even tools used in day-to-day business. Over time, these improve organically, preventing competition from gaining an upper-hand. A few examples of such skills include Toyota’s automotive production system, Wrigley’s approach to innovation, and Procter & Gamble’s vast product categories. All these portfolios benefit from continuous improvement, have been honed and strengthened over decades.
- Divest: An integral part of creating a profitable business is to divest from ones that don’t fit your portfolio. Doing so helps companies save money by streamlining their capabilities. It also ensures the most efficient allocation of their resources. The best way to create a game-changing product is to invest in capability areas that help the company. Doing so will help prevent companies from spreading themselves too thinly over different sectors and markets. For instance, Bank of America chose to retrench its institutional businesses to fund its more profitable services. Similarly, P&G sold off Sunny Delight and Folgers to focus more on health and beauty, which promised better returns.
Examples of Game Changers
- The Wm Wrigley Jr Company has been making chewing gums for over a century. Founded in 1891, the company only branched into candies and mints as late as 1999. During that time, it focused on innovation by crafting new flavors and creating a sustainable marketing strategy. As a result, by the 1980s, the company’s operating margins were almost twice those of competitors that were ten times larger. Hence, the company remains one of the few in the packaged consumer goods industry to prosper, on its terms, rather than mimicking competition.
- The Honda Motor Company centers its profitable growth around designing and manufacturing high-performance engines. It does not go out of its comfort zone and has become a master in building smaller engines for motorcycles and lawnmowers. While the company expanded to automobiles and light sport vehicles, it refuses to go forward beyond that. Hence, this is the perfect example of a company that knows where to draw the line during innovation.
- Kimberly-Clark takes customer immersion to the next level by making use of 3D Virtual Reality Technology. Customers can visit their virtual store and interact with products without leaving the comfort of the main center. Hence, the use of such technology allows the company to compete with everything from Target to Walmart.
It is safe to say that innovation is challenging, no matter the metric or the industry, as most end up unsuccessful. However, the biggest reason for this result is that businesses conduct their innovation efforts poorly. Rather than focusing on their customers, companies try to outdo each other. As a result, they end up with increased costs and complexity, while the value addition remains constant. However, companies can become industry game-changers by relying on a sustainable business-level strategy. Businesses should opt for the plans and business models mentioned above to create profitable products and services. How do you plan on implementing these strategies to grow your business? Let us know your thoughts in the comments below on how you plan on building an industry game-changer!