Reinventing Your Business (1/4)

Reinventing Your Business

Learn how to jump-start your company with these long-term strategies for growth.

When it comes to business, growth demands change. And as we approach a new millennium, the world is metamorphosing into a global economy with new customers and new challenges. Experts agree, therefore, that in order to survive and thrive in the 21st century, businesses must reinvent themselves.

There are several catalysts - such as innovation, branding, technology and corporate culture - that can be influential in rejuvenating the growth of a mature business or jump-starting a fledgling enterprise. And, although every organization is unique, a combination of one or more of these strategies can stimulate the continual growth of your company.

Innovation

Innovation has been touted the growth and reinvention strategy of the '90s. While this term can mean different things to different people, in simple terms, innovation refers to something entirely new. Experts agree that when companies stop innovating - or trying new things - they stop growing. Yet, ironically, when businesses are booming, their leaders often become preoccupied with success and stop planning and prospecting for the future.

"Businesses may have so many requests, so much activity, that they can no longer plan their time, and they're simply reacting to everything. We allow our success to camouflage that we are not doing the things that made us successful in the first place," says Dirk Beveridge, CEO of Illinois-based The Beveridge Consulting Group. Beveridge also stresses that profits and statistics are not true indicators of growth. And while research and development (R&D) into new product and service offerings is essential to the progress of a business, those goods and services can be quickly duplicated by competitors. Beveridge insists reinvention that is strictly product-based will not yield a long-term sales advantage for most companies.

"For a decade, product-based innovation has barely allowed most large corporations to keep up with the pack, much less break away from their competitors," echoes Robert Pethick, vice president of the global management consulting firm A.T. Kearney, and John Ciacchella, a principal at the company.

One of the duo's theories suggests that current business operating systems are outdated and must be reinvented for changing times. "That's because today's predominant business system often confines companies to a comfort zone that is centered on today's business, where transactional excellence, incremental product and service improvements and risk avoidance are the preferred operating methods," say Pethick and Ciacchella.

While today's business posturing revolves around being a "problem solver," the bar is being raised, and companies must establish themselves as "problem preventers" for the new millennium. "The competitive advantage must be their willingness and desire to better understand the needs, desires, wants, opportunities and problems of their customers better than anyone else," insists Beveridge. "And then they must have the skills to provide value-added services. That's the competitive advantage - not the product, not the price." Beveridge suggests companies can meet this challenge by moving from a product orientation to a customer focus.

A Brand for All Seasons

Consumer behavior is the focal point of branding, and experts say brand marketing can dramatically increase the value users perceive in an existing product or service and effectively rejuvenate growth in companies of all sizes. The key for business owners who want to reinvent their companies through branding is to understand what their businesses do exceptionally well and communicate that message distinctively and consistently over all media, from advertising and Web development to special events and trade shows.

When using this strategy, product or service quality is still vital, but according to Charles Conn, managing director for Boston-based Encompass Communications, a design communications and brand-marketing firm, branding ultimately becomes a matter of consistent repetition of the presentation of the company name or product. "Without consistency, the target audience may view the company or brand as confused, resulting in a lack of confidence and loyalty for the product or service," he explains. "One of the true marks of a successful brand is how it can compete with other brands," adds Dan Droz, adjunct associate professor of design management at Carnegie Mellon University and president of Pennsylvania-based Droz and Associates, a branding and design-management firm.

For example, when Bari & Gail, a small family-owned chocolatier based in Massachusetts, wanted to revitalize its image to appeal to a broader base of consumers, they enlisted Encompass to help reinvent their brand. The problem that was uncovered was that Bari's existing trademark was almost invisible, and their packaging lacked a distinctive design. Encompass assisted Bari with developing a contemporary branding campaign by first conducting research in the fine chocolates market to better understand what prompts consumers to purchase confections.

Their discovery led to a whole new Bari & Gail. "The fine chocolate industry is a little bit like fashion in the sense that there is a seasonality to it that is very important," says Conn. Armed with this knowledge, Encompass created a commemorative positioning for the candy maker with the tagline "Celebrate the Gift of Chocolate," and redesigned both the logo and packaging. "Ultimately, we had to come up with different seasonal-packaging solutions for the product and the brand, along with a consistent year-round presentation for people who are not celebrating a certain event," explains Conn.

This brand-modernization strategy led the company into a new stage of growth, but branding can also help a business reinvent itself in a more dramatic style. Such is the case with Skip's Propeller, a Philadelphia-based outboard motor propeller-repair shop. Skip's was the smallest of companies located in a region where the seasons are distinctive, and, therefore, year-round water activities are not commonly pursued. Skip's business, not surprisingly, peaked in the summer and dwindled throughout the winter months.

Droz examined the customer base and determined a critical commonality: athletics. "It is a year-round customer, although the sports themselves are seasonal. At other times of the year, Skip's customers use the same skills to do different sports," explains Droz. The reinvention strategy implemented to boost sales was to sell additional products related to sporting activities.

In order to build credibility in these uncharted waters, Skip's changed its name to Ultimate Edge and adopted a brand new corporate identity that targeted users of radical sports equipment such as skateboards, snowboards and wakeboards. An effective branding campaign attracted professional "extreme" athletes and amateurs alike, and propelled Ultimate Edge to become a leader in this new sports arena. "This little company is now a national brand in radical sports," says Droz. "And they still fix propellers."

Experts say reinvention through branding can work for any company that understands both its customers' needs and the distinctive positioning that allows the company to fulfill those needs.

The Web: A Second Industrial Revolution?

There are two theories about doing business on the Web. Some observers insist that the Internet levels the playing field and allows business to reinvent themselves to compete on a global scale. Others argue the Web forces companies to remodel their operations or fall by the wayside as technology continues to improve. According to Droz, companies doing business on the Internet have a dramatically increased need to create distinction to attract customers and encourage brand loyalty, since the barriers to entry for competitors online are so low.

California-based Mustang Software, Inc., found itself in the latter category in 1995, when the World Wide Web started gaining popularity. Mustang was a pioneer of the Bulletin Board Services (BBS) environment for nearly a decade. However, when Internet capabilities expanded, the software company experienced an abrupt shift in fortunes, as BBS users became Web surfers and began depending on Internet Service Providers.

"With Internet technology replacing modem-to-modem within one year, Mustang went from 250,000 customers to zero," says Jim Harrer, Mustang's CEO. "It was a matter of reinventing ourselves - and quickly - or going under." Mustang did not succumb to the obstacles; rather, the company transformed itself to meet the new demands of its consumers and reemerged as a leader in e-mail management and Internet customer-service solutions.

But while the Web has demanded that some technology-based businesses reinvent themselves, it presents others with opportunities to stimulate new growth for an existing product or service. Enter barnesandnoble.com. Ben Boyd, director of communications for the Web-based subsidiary of the brick-and-mortar book behemoth, says after watching the evolution of the Internet, Barnes & Noble, Inc., decided to launch an online division in 1997, rejuvenating the growth of America's oldest bookseller and competing with early adopter Amazon.com.

"We already had a catalog offering for customers, an 800 number and our retail operations," says Boyd. "So we were already permeated in the existing channels and really saw this as a complementary channel, allowing more consumers to find the books and related content information that they would want at their convenience."

Boyd says the Web-based operation has also spurred growth in their traditional retail establishments, with a 100 percent increase in special orders. "Folks go online, do their purchase research, and then walk into our stores with printouts from the Web and ask for help in securing the titles," he explains.

Barnesandnoble.com has increased overall company revenues significantly, posting $14.9 million in its first, partial year, and an estimated $65 million in 1998. "Clearly, the Net has rejuvenated the overall category," says Boyd.

The "X Factor": Human Resources

While companies are focusing on other issues of innovation, branding and technology, experts stress management must not ignore their people. "Businesses need to reinvent themselves, and the only way that is going to happen is if companies have leadership that is successful in driving a corporate culture with a grow-or-go mentality," says Beveridge.

James Belasco, co-author of "Soaring with the Phoenix: Renewing the Vision, Reviving the Spirit, And Re-Creating the Success of Your Company", takes that theory one step further. "Businesses don't exist; individuals exist," he insists. He says if you want to grow your company, you must grow your people. "You can bring in people who have new perspectives, or you can encourage your people to go out and gain those perspectives themselves," suggests Belasco. "The key to self-development is learning."

Savvy companies like energy-food manufacturer PowerBar and nostalgic restaurant chain Steak n Shake strive to make every employee an entrepreneur. E.W. Kelley, founder of the modern-day Steak n Shake, employed multiple tactics to stimulate the growth of the legendary burger company. However, the menu hasn't changed since 1934 - and neither have the products or recipes.

"Mr. Kelly reinvented the concept, as he understood people today want the same things people wanted in the 1934," says Vic Yeandel, the company's vice president of marketing. "Previous owners had modified Steak n Shake; Mr. Kelly turned it into what it used to be because he really understood that there was room in people's 'brandscape' for a nostalgic restaurant that, in effect, was modern." But Yeandel says Kelley really rejuvenated the growth of the chain by focusing on people.

"Mr. Kelly is an innovator and a leader as it relates to the development of people. He's focused on making sure that each of his employees, whether they are in the corporate headquarters or an hourly person, has the necessary training and development to maximize their own potential," explains Yeandel. "And he takes that real seriously. Everybody has a development plan."

Yeandel says Kelley works on those things employees need to do to improve themselves, and, therefore, improve how they can help the company. "That's really important because the brand is about the people. You can't have a good experience at a Steak n Shake without quality prepared food, a friendly and efficient wait staff, and a good general manager that is making sure all of those things are firing on all cylinders. So his focus on people was really important in terms of reinventing the brand."

Steak n Shake is now on a growth spree, planning about 600 new restaurants during the next five years and transforming one of the oldest restaurant chains in America into one of the newest.

So what is the bottom line? Whether you choose a reinvention strategy similar to Steak n Shake, or one of the others mentioned above, you will need to obtain a company-wide commitment to change and a willingness to redefine your business. Like the phoenix from the flame, your company can then reemerge as a new and improved organization - one better prepared to compete and grow in the next century.