When I first arrived in the U.S. from India in 1999, I got a crash course in adaptability. Everything was new to me. I was greeted with a melting pot of new accents, cultures, ethnicities, living standards, and, of course, completely new ways of doing business.
I believe that in the business context, the virtue of adaptability is often overlooked or underrated. So often, “success” means having the biggest piece of the market pie today or the best-performing stock in this week’s market. And effective leadership often translates into being tough, uncompromising, and laser-focused on profit in the here and now.
While those are traits and outcomes that might serve businesses well in the short- to medium-term, they could also be the very ones that become a company’s nemesis further down the road.
In today’s hyper-competitive business climate that’s defined by all things digital and Industry 4.0, the need to make change your friend, not your enemy, couldn’t be more pronounced, especially if you’re an established market incumbent.
And the facts bear it out. The lifespan of the average S&P Fortune 500 company has been on a steep downward trajectory for the last five decades, shrinking from 33 to around just 14 years.
The Adaptability Imperative
Back in 1980, Harvard Business School professor Michael E. Porter identified five undeniable forces that shape every market and industry in the world. His premise was that the number and power of a company’s competitive rivals, potential new market entrants, suppliers, customers, and substitute products influence its profitability and chances of long-term success.
Porter asserted that the intensity of rivalry among firms is one of the key forces that shape the competitive structure of an industry. He also explored how the emergence of new market entrants requires dominant incumbents to be vigilant about getting too complacent.
He argued that the only way for a company to truly maintain a competitive advantage is by providing a differentiated service to customers based on continual self-reinvention and a redefinition of the value it brings to the table.
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The story of Netflix is a textbook example of how this principle plays out. Today, Netflix is the movie and TV streaming choice for millions of people across 190 countries – pretty impressive for a company that started out by posting DVDs through the traditional U.S. mail service.
Soon after Netflix launched in 1998, it introduced subscriber personalization options and algorithm-based movie ratings, and it even began producing original content. In 2008, it launched its streaming service.
But they didn’t stop there. Netflix partnered with consumer electronics companies to accelerate the adoption and entrench the popularity of their entertainment model by making it available on smart TVs and other connected devices. And they continued to refine their algorithm to steer viewers toward content that they’d likely enjoy.
For me, perhaps the most significant learning can be found in Netflix’s name (“net” being an abbreviation for the internet and “flix” a colloquial term for movies). Back in 1998, the company’s visionary founders recognized that streaming was destined to become the future of entertainment.
Netflix’s unprecedented business model and runaway success spelled disaster for and ultimately caused the demise of traditional brick-and-mortar rental giant, Blockbuster, which simply couldn’t compete. But before it filed for bankruptcy in 2010, Blockbuster had the opportunity to partner with Netflix and even buy the company out, both of which it failed to do.
Blockbuster’s fate serves as a cautionary tale of the dangers of clinging desperately to a business model disrupted by new market entrants that start wooing customers away with a more appealing, convenient, and personalized alternative.
Netflix’s success testifies to the wisdom of always closely monitoring the pulse and preferences of your market, being open to flexibility and course correction, and never stopping in your quest to find new, more relevant ways to deliver value.
Adaptability is a trait that I’ve been intentional about cultivating throughout my career. As an immigrant in 1999, it was a necessity. The only way I survived in business was by developing an open mindset and the flexibility to handle the unfamiliar situations I found myself in. And along the way, in the companies that I’ve founded and run, I’ve also come to appreciate the value of workplace adaptability.
Workplace adaptability is about creating a culture where people are encouraged to embrace ambiguity and feel unafraid of taking calculated risks. As a leader, it means being curious, observant, empathetic, and open-minded. It’s about listening to new ideas and being willing and able to discover new ways to achieve business goals – or even considering entirely new or unexpected ones.
A Relentless Tide
Today, businesses that can spot shifts in market dynamics and move quickly to adapt and align their strategies to accommodate them will be the ones in the winners’ circle.
Those who go on the defensive when faced with change or are dismissive in their response will ultimately perish. It’s a bit like believing that by shoring up more sandbags, you’ll be able to keep back a relentless tide. Instead, businesses need to accept the inevitability of change and use this change to their advantage. In today’s business world, that’s the only way to avoid sinking.