The Price Of Success: Why Businesses Fail
Question: Why do once-successful businesses fail?
Answer: They don’t re-value their core revenue drivers often enough.
If you’ve ever built a business from scratch, you know the early days require intense prioritization. You have to identify the big rocks, the high-level bits and get them right.
As time goes on, you fill in the aggregate around those big rocks to strengthen and support them—keeping your advantage by getting in front of as many future risks as possible. Later, many of those medium-sized pieces of aggregate will become entire departments, each with its own subset of objectives and strategies to further enhance and calcify these supporting structures.
However, no business operates in a completely static, predictable environment. No matter how perfectly your offering matched the environment and buyers back when you started, over time, the white space between those three elements (buyers, environment and offerings) emerges and widens.
This is where value leakage lives.
Of course, you can and should address these changes by continually improving your offerings. But if you were to respond to every emerging trend with the required investment to capitalize on it fully, you would surely go bankrupt. Many of these “trends,” in effect, end up fizzling away into the annals of history. And unfortunately, the trends that truly disrupt an established business are usually identified only in hindsight.
In my experience, being unable to predict the future isn’t a failure. But it is a failure to not re-value your offerings at the moment a new future becomes predictable.
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