Conventional wisdom suggests that businesses have a natural life cycle wherein new solutions, evolving markets, and misguided management play a significant role in the probable failure of the company. According to this model, every firm—from family businesses to the largest multinationals—falls into decline. Even those businesses that come back after one downturn may not prevail in the next one. These organizations are replaced by new companies that are born to meet evolving market needs, new technology voids, or changing business environments, and the cycle repeats. But some notable companies—IBM and Apple, for example—have overcome periods of decline and have emerged with a new focus, strong core values, and a powerful new leadership position.
There are many possible paths to this success, but for a large technology company, regaining its leadership position after a major decline requires several critical ingredients, including:
- A clear target-market focus with in-depth understanding of the customer
- A strong, complete offering that cannot be easily duplicated
- A clear market position and message
- Strong organizational alignment with outstanding team commitment
- A financial foundation that will support the necessary actions
While these elements may seem obvious to any start-up entrepreneur, they may be harder for an established, enterprise-level company to achieve. Here's a look at how these five key initiatives can be applied.
1. Clear Target Market
A statement of mission, vision, and values can help an organization create a roadmap of where it wants to go and how it will get there. A basic underlying tenet of the statement is that the organization, regardless of its nature (i.e., school, auto dealership, technology company, etc.) will provide a high-quality product or solution that the market needs. Organizations must also identify the right way to communicate to the defined market that their product or service has value and is the best choice. They must support that communication with a solid foundation in marketing, sales, and infrastructure. It's a broad "pull" rather than "push" approach that benefits not only the organization but the market as well.
2. Strong, Complete Offering
Businesses that have grown and prospered offer a strong, quality product line designed specifically for the defined market. Maintaining that portfolio is an ongoing process that requires both a commitment and a product roadmap that will position the organization not only as a product leader but also as a technology leader.
Crystal balls aside, listening and responding to a changing industry is necessary to ensure that the portfolio offers solutions as well as products. Offerings today must feature greater intelligence and performance capabilities that will make a difference to the industry. In the physical security market, for instance, some of these solutions include products with increased connectivity, cybersecurity features, and an understanding of the Internet of Things (IoT). The offerings should be positioned to work in combination with the expertise of select technology partners to deliver an integrated system that solves customer problems through meaningful innovation.
3. Clear Market Message
Successful companies have an aggressive integrated marketing program that combines the best of traditional marketing with new social media and digital techniques to get their message to the market. These companies have implemented and will continue to refine consistent and aggressive public relations, new print and digital advertising campaigns, and advanced inbound marketing. This is all in addition to updated websites that include significant support tools and search engine optimization.
4. Organizational Alignment
The successful business operation must fit the needs of the market as it exists today. Many companies start the restructuring with the sales organization to create a closer, more-direct line to the reseller and customer. This approach serves customers by ensuring more direct contact, feedback, and intervention. By listening carefully, understanding what the market needs, and giving value, the company, in return, will receive value.
Along with a restructured sales organization, an updated marketing organization can better engage in highly strategic and integrated marketing efforts that are designed to reshape the company's image and drive new business opportunities. Populating the department with internal and external teams of experienced industry professionals who have proficiency in both traditional and digital marketing further helps in achieving company goals.
Finally, in any technology-based organization, the restructuring of the engineering organization is critical to meet the continual challenge of developing and delivering mainstream solutions with meaningful innovation. Ultimately, it is the close collaboration and alignment of these three primary functions—sales, marketing, and engineering—that will eventually drive the organization towards its new goals.
5. Firm Financial Foundation
Although a company may have been profitable throughout its history, change is costly. Strong financial backing allows an organization to move forward with its redevelopment in a manner that better ensures success. As an example, the capability of sustained restructure has been a key component in the success of Pelco's reinvention.
Even when these five critical elements are implemented, success is still not a sure thing. Economic uncertainty, fast-moving markets, and competition from nontraditional sources can take a toll. Companies with entrenched or outdated business models are particularly susceptible to business failure. As it becomes harder to hit performance targets, virtually all organizations need to consider some type of strategic restructuring if they want to avoid the end-of-life paradigm.
If this sounds radical, it's likely due to the negative connotations associated with restructuring. For many, restructuring conjures up images of court-supervised negotiations with different classes of creditors trying to reach consensus. But when viewed more broadly, restructuring represents an opportunity for companies to examine their operating models with the ultimate goal of optimizing their business for the long term. Companies that follow this process can remain a dominant force for many years to come.
Sharad Shekhar is CEO of Pelco by Schneider Electric.