You have a firmly established business that runs well.
You have secured a strong market position.
Your processes are smooth and efficient.
In other words, what you’re doing is working.
That’s great: Until someone comes along and does it better. Faster. Cheaper.
You may have a secure spot within the market as it exists today, but any market can change on a dime if a scrappy, inventive start-up appears.
Think you’re immune because you’re not in a tech-heavy industry? Think again. Start-ups are disrupting every conceivable industry vertical, from goods to services.
In their book Simplify: How the best businesses in the world succeed, consultants Richard Koch and Greg Lockwood discuss the patterns of new businesses building a better mousetrap (proverbially speaking) and taking down industry behemoths. These new businesses are called simplifiers, for the obvious reason that they simplify the good or service.
“There’s a general tendency for simplifiers to emerge victorious” in the battle against less efficient, established businesses, say Koch and Lockwood, but “it’s not inevitable.” There are also tales of legacy businesses fighting off threats from simplifiers.
So, the good news: legacy businesses can win out. Some win by differentiation (e.g. luxury hotels providing a different experience than AirBnB can ever offer). Others win by also simplifying, while continuing to trade on the strength of their existing brand identity and client relationships (if you can’t beat ‘em, join ‘em).
Are you vulnerable? The short answer: Almost certainly. But how to know when the threat is on the horizon? According to Koch and Lockwood, warning signs include the emergence of a new company offering a new version of your product and service that:
Has lower gross margins, a cheaper price, a more efficient production/delivery model, and/or a more positive user experience.
A strong contingency plan can help you navigate threats. Talk to your CFO to make a plan. (Need a CFO? We know a few.)