When I was young and received a new baseball hat, I would work the bill of that hat until it formed a symmetrical arch - in the general shape of a rainbow. This was accepted as the best and most stylish thing to do at the time. Today no young people engage in this ritual. They take their new hat, flat bill and all, and put it right on their head – and they never work the bill into an arc. It is straight-as-an-arrow and, in my opinion, not very attractive.
This is a small example of a world that is constantly changing. Business is no exception to this rule. In fact, unlike popular fashions and trends that may come and then go as quickly as they came, business change is about finding more value, efficiency, cash flow, and profit.
Some of the traditional business models, or old ways of doing business, are under serious overhauls in our new economy with the help of technological advances, social media growth, and a general philosophy that leaner is not only meaner but powerfully more effective.
Here is an example: the professional services industry, as a whole, has been shifting towards a flat fee business model in opposition to its entrenched hourly-rate model. Those leading this charge are seeing phenomenal success. Those unwilling to change will continue to see their revenues, and more importantly, their profits fall.
I recently met a manufacturing firm that has had the same ownership and leadership since 1976. This is impressive, with the exception that the leadership has failed to adapt their business to more effective business models through the years. Their inefficiency, lack of technology, and resistance to change in general has them teetering on bankruptcy. In other words, they are still focused on putting the arch in their baseball hat when the rest of the market, especially their competitors, has a new and better way.
I’m not going to change the way I wear a baseball hat – I guess that makes me old and I am willing to deal with the very minor repercussions of my decision. Some changes in business are fads and will not have any impact on the most effective model for an industry. But some of these changes are monumental and must be adopted if a business hopes to survive. The executive team is to continue to drive the business model towards acceptance of those changes that will bring great value and true competitive advantages. This should be at the premise of any strategy a company develops for its future.