How many of today’s Fortune 500 did not exist back in 1995? Seventeen. The other 483 have been around in some shape or form since that year.
Many people believe that technological disruption will destroy most companies. The reality is when we look at how the makeup of the Fortune 500 and the global 500 has changed since the rise of Internet, that story does not hold. Only 17 of the companies in the 2020 Fortune 500 did not exist in 1995, several Big Tech and Unicorn start-ups started taking over the world. Industry transformation happens very slowly and companies can successfully respond to disruptive challenges in one of the four ways: retrench, fight back, double down on existing assets, or diversify into new businesses.
Adaptation to the changing markets and demands can help improve their odds of coming out as winners.
- Fight back: It is said:“survival of the fittest” and “survival of the creative”. Major car manufacturers started thinking of electric vehicles production when the entire world was deliberating on reducing carbon footprints and the petrol/diesel prices were steeply increasing. Fighting back is appropriate in the form of setting up new strategies, reengineering systems, processes, practices, setting up new units, changing acquisition strategies, entering joint venture and so on.
- Double down:Here, an established firm plays to its existing strengths. For example,Disney’s strong content library gave it a huge bargaining power with Netflix.
- Retrench: This is our defensive move based on weakness not strength in which established firms yield ground to new arrivals and use a variety of tactics to ensure their own continued survival. Adaptation and survival are based on the strength, weaknesses,opportunities, and threats that exists in the surroundings and within. It is about becoming aware and playing on the inner strengths which are in the control of the organisations and being aware of the competition and market demands externally. Retrenching increases the bargaining power, reduces industry rivalry and raises barriers to entry. Example: camera maker Konica agreed to merge in 2003 with Minolta when faced with rapid growth in the digital market.
- Move away: Here, an established firm simply migrates to new opportunities.Example: Fujifilm, once Kodak’s biggest competitor, is now a successful healthcare, image in, materials firm.
When a new technology or a competitor comes along, one needs to understand the context, do careful assessment and analysis, and consider a full range of options. Take the time to make right choice. The newspaper industry is still in dilemma with the print media and digital versions alongside each other.
So, choose your path instead of plunging forwards, play a long game, stay alert, be proactive, andfind adaptation and resilience strategies that best fits your companies needs and capabilities.
