I’ve written about this topic before and as we approach the end of the year there are some new entrants into the “companies who failed to innovate” category.
Anheuser-Busch is one of the largest beer companies in the world, but did you know that it was unable to produce beer for about 14 years during Prohibition? They survived by diversifying and producing other products including ice cream, ginger ale and refrigerated cabinets.
How would other companies deal if they were suddenly unable to produce their flagship product?
What if Starbucks couldn’t sell coffee?
What if Toyota couldn’t sell cars?
How would these and other similar companies survive?
On one hand we can argue that it’s better to have focus on a small product offering — In ‘N Out Burger is a perfect example. While competitors have expanded their menus with an array of new items, In ‘N Out just sticks to the basics and their success is enviable.
Take a look at any episode of “Kitchen Nightmares” and Gordon Ramsay will always cut down the size of the menu because he knows it’s a lot harder to stand for something when you spread yourself too thin. Why would you have a Chinese/Vietnamese/Sushi restaurant when you could be known as the BEST Pad Thai restaurant in town? And if you know about the Pareto principle — the 80/20 rule, I’d be willing to bet that the majority of a restaurant’s sales come from a small portion of its menu.
On the other hand some people will argue for diversification, but the risk is trying to do too much. Starbucks has expanded with food, iTunes cards, instant coffee, etc. so much so that they’ve gotten away from the very thing that made them special: a great cup of coffee.
Blockbuster (see “Blockbuster Bankrupt“) and RIM (see “Where Should Mobile Developers Focus? and “The Death of RIM“) are two brands that have been in the news recently for struggling. You can argue that they should have diversified, but that’s not the case.
The problem isn’t that they didn’t expand — it’s that they didn’t evolve.
“Innovation distinguishes between a leader and a follower.” — Steve Jobs
Blockbuster should have evolved to delivery, streaming video or better distribution, but Netflix, Hulu and Redbox all beat them to the punch. RIM’s error was putting all their chips on email, but no one cares anymore because we’ve moved on to better browsers, apps and more. Innovation today is about constant adaptation and anticipating your customers’ future needs.
So what is the best strategy for brands? Who do you think will inevitably become the next typewriter in 2011?
What do you think? Please share your thoughts and fire away in the comments!!
photo credit: pachd.com
