A report from NESTA found that risk taking is essential to innovation and to avoid being left behind businesses need to consider the idea that they need to change path.
Take the example of Twitter it began its life as a network where people could discover and subscribe to podcasts called Odeo. The founders were worried about the companys future when iTunes started taking over the podcast niche so they asked employees to come up with some new ideas for the company. And so the now very famous social network was born!
Taking a step back to reassess where the companys future lies is one of the hardest things to do.
As the digital age is going into overdrive, all leaders, whatever market they are in, need to accept that times are changing and so must they in order to keep up, as substantiated in the NESTA report. Out of all the Fortune 500 companies that existed in 1955, only 12 per cent are still going today so this proves that failing to adapt is simply not an option. With that in mind, you need to put significant time and energy into understanding where your industry is headed so that you dont get left behind.
So what happens when you realise your business is on the wrong track First things first, you should trust your gut. As the figurehead of the business, you are best placed to evaluate market insights and discover the key trends that your customers are following.
If you’re sat at home thinking about the future of the company and you can see an alternative route, then it’s worth exploring although it might seem like it’s purely “gut feel”, youll find on further evaluation that you have the knowledge and experience to back it up. Once youve tested the water, you might decide that you were right and you need to redefine the business focus. You can’t juggle two business models as thats an expensive strategy and not sustainable, so at some point you need to bite the bullet.
Once youve sussed out your new path and ran the numbers, you will discover that people are your next challenge. Your team members are often your business greatest assets, but the team has to adapt to fit in with the vision you have of the future. Tough decisions need to be made and you will undoubtedly have to face the fact that skilled and talented individuals might not buy-in to this shift or worse, might not fit with this new vision.
So how do you minimise the damage to team morale You need to be transparent and make sure employees grasp the reasons why you are shifting the focus of the business, and also believe in your vision as much as you do. You also need to make sure you have a clearly defined plan of how you will achieve your growth plans so that everyone is on the same page.
Once you have your ducks in a row, convincing investors is the next hurdle and maybe the most important one. If you’re shying away from short-term profitability in favour of long-term growth then you need them on your side, backing you all the way. As you go through the notions, there may be a period of time when the company is shrinking before it can grow, which can be worrying for investors looking at the numbers. Again, open and transparent communications can hep make sure they are not left in the dark, worrying a fretting.
You need to make sure they have the same vision as you and you back up your claims with numbers that make sense. If theyre not on the same page, dont be afraid of parting ways and looking for new investors who may have more relevant knowledge and expertise to help you propel into the future.
So if you’re being kept awake at night by thoughts about your business uncertain future, a much better alternative is to explore the possibility of a pivot. Trust your instincts, evaluate the market you’re in, check what your competitors are up to and work with your organisations champions the investors and the staff to make sure you are set on course for long-term success.
Erik van der Meijden is the CEO of Exact.