Adapt or die: eight businesses that transformed their business models to survive
From Toys R Us to Austin Reed to HMV, the list of bricks and mortar companies struggling to compete against more agile online competition continues to grow. But what about the businesses that adapted? Here are our top eight businesses that managed to stay relevant, anticipated trends and embraced innovation…
Remember the age of DVD rental? Founded in 1997 by CEO Reed Hastings, Netflix started its life mailing DVDs to customers. Now, with over 109 million subscribers worldwide, it’s hard to imagine not watching video on demand. Back in 2001, Hastings had the vision to stream movies over the internet direct to our screens at home. For 10 years he experimented and got customers used to the idea of streaming rather than playing physical DVDs.
Hastings always thought big but started small, failed quickly and scaled fast. Netflix has mastered the art of the disruptive innovator – it no longer solely offers shows produced by others, producing and writing its very own original blockbuster hits. Now seen as one of the tech innovators of the day, ranking alongside Facebook, Amazon and Google, Netflix has changed the way we consume entertainment. Has it cut the cord on regular TV networks? And what about the survival of the big screen?
2. Yellow Pages
Who didn’t have a copy of the Yellow Pages by the telephone? The iconic publication was once a vital lifeline for households across the UK. The telephone directory provided names, numbers and addresses of businesses to its customers for over 50 years. In 2017 CEO Richard Hanscott announced the company’s plan to stop printing in 2019 and make the move to digitise its entire business, given the rapid growth of digital and social media.
Hanscott has transformed the business model but retained Yellow Page’s integrity by providing customers with the same service since its first publication back in 1966. It may feel a little different not having a tangible copy, but Yell.com provides the same service, quicker and better.
3. The Walt Disney Company
Today Disney is one of the largest global media conglomerates – the ultimate success story that had humble beginnings. Since 1923 Disney has been exciting the imaginations of children and families alike. Maintaining a captive audience, however, is no easy feat. As the appeal of cult classics such as Donald Duck and Mickey Mouse started to wane, the real magic has been in Disney reinventing itself time and time again. Take the recent wave of live-action films that are breathing life back into old favourites such as Beauty and the Beast, The Jungle Book and the hotly anticipated Aladdin.
Disney’s ability to remain agile and move with the times, while honoring its roots as creator of classic, iconic characters, has played an integral part in its success. To remain relevant, Disney has also looked to the market to stay at the front of the pack, acquiring the likes of Pixar Studios (in 2006 for $7.4bn), Marvel (in 2009 for $6bn), Star Wars (Lucasfilm in 2012 for $4bn) and at the end of 2017 buying almost all of 21st Century Fox (external link) for $52bn in stock.
Founded by a Danish carpenter in 1932, Lego began small with wooden toys and then simple plastic building bricks. It quickly became a brand that holds a flame for generations of children, the same way Disney does. When the original idea was so good, how could it ever go out of style? Yet in 2003 Lego almost hit bankruptcy as a result of over innovating. The toy manufacturer exhausted too many options in a market saturated with new technology.
To recalibrate and to keep its business model turning over, Lego had to stay in tune with the rest of the market. It streamlined its business model by changing the way it managed innovation. Lego discovered it could revitalise and reignite its original products by collaborating with the likes of Harry Potter and Star Wars, as well as launching a successful series of movies. By taking the time to see where and why it went wrong, Lego created a measured strategy to fix its problems.
Who could have foreseen that back in 1994 when Jeff Bezos started an online bookstore in his garage in Seattle, his idea would go on to become the largest internet retailer in the world? Amazon has taken the world by storm and it all started with an offering billed as ‘Earth’s biggest book store’. Since then, the tech giant has definitively changed the way we consume. Fresh food online? Done. Same day delivery or even within the hour? Absolutely.
Our notion of convenience has been reinvented and will continue to be challenged by Amazon – Bezos sends out the same 1997 Annual Report Letter to Shareholders highlighting a relentless focus to ‘obsess over customers’ and the desire to make bold rather than timid decisions.
Emily Weiss, a former fashion editor at Vogue, created a beauty blog back in 2010 called Into the Gloss, which changed the way women talk about beauty. For years Weiss would interview leading celebrities on their bathroom floors and talk through their beauty routines, even if they claimed they didn’t have one. Weiss used her carefully curated editorial platform, and the countless conversations it sparked, to launch the first global beauty brand Glossier (external link) in 2014. She built a brand born by content and fueled by an online community.
With the customer firmly at the centre of the Glossier universe, Weiss harnessed the power of online storytelling by asking her readers what products they wanted Glossier to make. With the feedback garnered, the company would then make them. Everything Glossier does is designed to create a digital conversation, and last year waiting lists reached up to 10,000 for certain products. While it started small and doesn’t sell to stores, Glossier is changing the rules in the beauty sector by making every customer an influencer.
Launched in 2008, the Swedish company has transformed the way music is distributed and consumed in an incredibly short period of time. With 70 million users subscribed to Spotify’s streaming service, it has achieved the impossible – making consumers pay for music again. Global revenues soared last year at an estimated $10.8bn, but with Spotify paying out a huge portion of its revenue to the music industry, largely in royalties, how will it move forward without losing money? Could Spotify be poised to disrupt the industry all over again, following suit with the likes of Netflix? Rather than pay out royalties for rights to an album, might it endeavor to create its own music label to produce original content?
Remember when you used to call something a ‘Kodak moment’? Once synonymous with taking a picture, Kodak dominated the photography industry. However, its failure to respond fast enough to the advent of digital photography saw the company file for bankruptcy in 2013 as camera film was rendered obsolete to all but diehard traditionalists. But could it now be rising from the dead?
In January, Kodak’s share price on the New York Stock Exchange more than doubled. The rise came off the back of Kodak’s announcement that it is launching its own cryptocurrency called KodakCoin. Aimed at photographers, KodakCoin forms part of a wider blockchain platform committed to protecting photographers and helping them control their image rights. Could Kodak prove that by adopting a proactive approach to new technology, the ‘Kodak moment’ is on its way back once more?
So what can other businesses learn from these intrepid adapters… if it ain’t broke, break it… when you're finished changing, you're finished? Or maybe it’s simply about never being too sentimental about the past.