Business Rescue: Part III

 

It’s common to define brands by their traits. They appeal to the consumer with certain set of characteristics that roughly correspond to a personality. This was best illustrated in the series of ads known by their first line, “I’m a Mac. And I’m a PC.” Just as brands have personalities, companies have Company DNA.

What does that mean? The DNA of a company is a summation of what they are really good at, but it’s also more than that. The DNA sequence covers how your company responds to new information, how you handle knowledge transfer, how you cluster ideas, how you align workers around a mission goal, how you create a runway to support innovation, what your appetite for risk tells you, the hopes and aspirations of the executive team, and the balance in your innovation portfolio between incremental and radical innovations.

The value proposition is an expression of your DNA, but value propositions can change. Your optimal value proposition at the moment lies at the intersection of the best offer externally and the most effective marketing capabilities internally.

We’ve analyzed data from more than 5,000 organizations in 105 countries and isolate a group of companies that posted double-digit year-over-year growth over at least three consecutive years. One factor shared by these market leaders is a DNA Focus.

Managers in these companies regularly discuss and analyze their own DNA in terms of the competencies where employees truly excel. They compare themselves against the competition to see what differentiates their value proposition, going far beyond traditional customer satisfaction surveys and evaluations. Some of the world’s most recognized and successful brands fall in this category, including IBM, Google, Volvo, and 3M.

At the other end of the spectrum, we’ve also looked at companies that ignore their DNA and pursue market strategies unrelated to their strengths.

Companies that don’t pay attention to their DNA tend to make the most common mistakes, such as:

• Prioritizing large markets over smaller or undeveloped ones
• Allowing competence to decay into incompetence
• Failing to manage internal conflicts and legitimacy problems
• Trailing behind temporary market preferences
• Holding onto old tech after new tech changes the industry structure
• Preserving product architectures that creates deadlocks in the company
• Developing technology but lacking pathways for successfully introducing it

A good example of a company that lost sight of its DNA, and is now struggling to reclaim it is Kodak.

Kodak’s Missed Moment

People often refer to Kodak as a company that went bankrupt because it didn’t adapt fast enough to digital, but that’s not the true lesson. In fact, Kodak did develop digital cameras as early as 1975 and actually held the No. 1 spot in digital camera sales as late as 2001.

The real lesson is that Kodak lost their way because they didn’t understand what people were buying. They thought their customers were buying chemicals, inkjet cartridges, and workflow software. Their customers were actually buying memories.

They might have understood that if Don Draper from Mad Men had been there to advise Kodak as he did with the “carousel” idea.

In reality, Kodak’s competition for memory capture was not other camera or printer companies, but entirely new concepts like social media. When it was still profitable, Kodak did not ask itself what it was really good at and discover its DNA, but instead, went for the last cent of the photo development aftermarket.

They were indeed experts in development, but the world had moved on. Kodak was managed by the known facts and their incentive systems were linked to gross margins and profits instead of innovation. Kodak illustrates the paradox that they were too big to fail, but not because of their market cap and profitability but due to their earlier DNA of innovating, taking risks, and building for the future.

It is ironic that the companies with solid resources and smart cash management are better positioned to take risks at being innovative, but tend not to because they don’t have to. Kodak demonstrates where that road leads. Now let’s look at the snapshot of an innovator who found their DNA before it was too late.

Harley-Davidson Uses Their DNA to Kickstart Revenue

In 1903, when cowboys still ruled the American West, William Harley and his friend Arthur Davidson joined forces to strap a massive automobile engine onto a bicycle and the Harley-Davidson company was born. Since then, they have manufactured big, loud, terrifying motorcycles, and the company has survived many ups and downs along with countless variations in society’s values.

One period during the 1980s came the closest to wiping them out completely. A tidal wave of cheaper, faster, more colorful motorcycles from Japan crashed onto American shores. Harley-Davidson kept themselves afloat and roared back to life when they discovering that they don’t sell motorcycles after all. What they actually sell is a special subset of dreams. On top of those dreams they built a community of riders who felt emotionally connected with to the company’s DNA.

John Russell, managing director of Harley-Davidson Europe, said: “Harley-Davidson sells to 43-year-old accountants the ability to dress in leather, ride through small towns and have people be afraid of them.”

This is the DNA of Harley-Davidson and it has served them very well over the decades as tastes and technologies changed. In 2019, they are facing difficulties in adapting to a world of electric motorcycles but the dreams that energize their customer base are still valid. Only the future will tell what’s coming next from their dream factory. It is entirely possible that what they build in the future won’t even be motorcycles.

How Do You Discover Your Own DNA (And What Can You Do With It?)

Assess and measure the competencies of your employees and the capabilities of your teams. Look at the connectivity between teams that creates additional capabilities. Conduct a litmus test of who your ideal customers are and what the actually want from you. That’s how you discover what it is that you actually are selling to your best customers. Your DNA informs you how to stay relevant as conditions change. Don’t be surprised if your DNA is not in line with what you thought it was, or what you offer the market currently.

You will never be able to innovate in a way that conflicts with your unique company DNA. The organizational culture within your company won’t allow innovations like that to live. I’ve seen it happen many, many times over the years. Organizations react in an almost biological way to innovation where there is no tissue match. The body rejects it. The corporate antibodies attack the innovation and just destroy it.

Successful innovators investigate their DNA, then use that knowledge to deploy innovations with the best chance of market adoption. This strategy helps you pinpoint and jump to the next S-Curve where your business can thrive again.

You cannot follow your way to the front and you cannot build a business based on anyone else’s model. It will not work because the skill profile of your company is as unique as your fingerprint. Whatever it is that you do best is encoded in your business DNA.

You cannot innovate using anyone else’s DNA. You must know who you are before it’s possible to know what you can do for the market and the world beyond it.  Even if you don’t know who you are, your company antibodies do and they will protect their own identity, even if it kills the business. My team and I have seen it many times. As hard as it is for people to change, it’s even harder for organizations to change. It is possible and I’ve seen it happen, but not without a structured transformation project and a great deal of support from company leaders.

What’s your company DNA?  Contact Innovation360 for a free online assessment and you can start the discovery process today.

Wish you all a fantastic summer!

Magnus Penker

DS. Read Part I here. Read Part II here