How To Move Past Existing Business Models To Find New Success

Business Model Success

Knowing when to move on from existing business models is a sign of leadership.

Google has retired over 70 products in the last 3 years. That’s a lot of failure for one of the world’s most successful companies. There is an important reason why Google embraces failure.

This is what we can learn from it.

In the post about company culture we examined difficult decisions. Retiring a product is a difficult decision. Google seems to have no issue making difficult decisions when it comes to doing what’s best for the company in the long-term.

In another post we looked at failure and how leaders need to know when to change course when a business model is not working. Again, Google understands how to learn from products that don’t work.

In the article about failures there was a statistic that was quite interesting. The stat was the fact that Google has closed 70 products in just the last few years. 

We often think failure is something that should be avoided. In fact, accepting failure, learning from it and moving on to the next opportunity is how businesses become successful. Google is a recent example of a company that understands how to accept failure, learn from it and move on from it.

Adapting To The Changing World

The Google example above is important to note for one main reason.

Companies need to innovate and create new products in order to grow.

There is an old saying in life that says what got you where you are today will not get you where you want to go in the future tomorrow.

In business, this means that the product or service that got you where you are today won’t get you to where you want to be in the future.

Google has embraced failure as part of its business model. The leaders in the company have no issue rolling out product after product. The process provides an opportunity to innovate, which is great for company culture and the bottom line.

Employees at Google are encouraged to brainstorm new ideas. Each employee gets 20% of their work time to work on projects they are personally passionate about.

This culture fosters innovation, which is necessary to take Google from its current business model to the business model that will drive them in the future.

Google’s main business model is advertising. Every product they role out seems to be aimed at earning people’s attention so they can serve ads. It started with ads in the search results and now includes everything from web browsing (Chrome) to email (Gmail).

In the future it could even include self-driven automobiles.

My feeling is that Google is simply trying to innovate in any way they can. Advertising is their business model today. They may not even know what will be their model in the future. It’s up to their culture to innovate and create the next model.

An important part of this process is launching new products and closing products if it becomes obvious that it will not work. It allows for resources to be put into more promising endeavors.

New Business Models and New Customers

Growing businesses need one thing – more customers.

In order to get more customers it’s necessary for businesses to offer new products and services.

Products (or services) have a lifespan. They typically have a period early on when they take off and become successful. Then they live on for a while fading off in popularity as time passes.

It’s the natural evolution of the world. The products that are amazing today may not be the best in the world tomorrow. That’s why companies that want ongoing success need to innovate with new offerings.

But you can’t simply offer new products for the sake of offering new products. They have to be products that people want and will use..

in the last decade Apple has been one of the best examples of this principle.

The first product launch was the iPod. It was a revolutionary product that made it easy for people to listen to music anywhere they went. It was a digital version of the Sony Walkman (more on the Walkman in a bit).

As Apple continued to innovate they ran into an issue. They had their hands on a new product – the iPhone – that was also revolutionary, but would ultimately take customers away from the iPod.

For Apple, the decision was difficult, but necessary. They knew that in order to grow they would have to change the business model and that came with the launch of the iPhone.

The iPhone was a revolutionary product that brought scores of new customers to Apple. They continued to innovate with the iPad.

Today, however, Apple is at the crossroads again. There are reports that the Apple’s board is worried about the pace of innovation.

Will Apple be able to release another new product innovation that keeps them on the ascension they currently enjoy?

A new iPhone appears to be on the way. Maybe the rumoured Apple TV monitor will be revolutionary.

Struggling With Change

Sony has been around for nearly a century. The company was revolutionary in the electronics world for decades with various devices including the popular Walkman.

Just like the IPod, the Walkman allowed people to listen to the radio and to cassette tapes anywhere they went.

Sony was able to change with the times when compact discs were released as they easily launched the Discman. There were a few issues with this new device, but it sold well.

Eventually, however, Sony wasn’t able to continue to innovate into the digital revolution. Apple took over with the iPod as Sony continued to expend resources into its current products.

The lesson here is that there is danger in investing in the past. You can make money in the short-term, but every product has a lifespan.

To find success in the future there needs to be innovation. Sony was able to do it for generations of portable music players, but they were unable to move past the Walkman series and eventually lost the entire market to Apple.

Moving On From The Old To Focus On The New

The biggest takeaway from this article is how people and businesses continually move on from the old in favor of the new.

A simple example is a child and his or her toy.

One of the toys children often get when they are toddlers is a tricycle. They learn how to ride it eventually becoming expert tricycle riders.

But tricycles have limitations both in maneuverability and speed. As the child grows they reach a point where investing time into their tricycle is holding them back.

At this point, children naturally know that it’s time to move on to a bicycle. They aren’t experts at the new toy, but they leave their tricycle behind in favor of the new toy eventually becoming experts and reaching places they would not be able to on the old toy.

Leaders need to find a balance of old and new at their company.

There are only so many resources available. You can invest in current business models, but if history has taught us anything it’s that innovation is necessary to move forward into tomorrow.

What got you to where you are today will not take you where you want to go tomorrow.

Google understands this. They innovate, accept failure and look for new business models. They learn from their innovative process. Not every innovation is a winner. In fact, most do not work out. They know this, accept it. They fail products fast – even when they have invested lots of time, effort and money in them. They know that failing fast is ultimately good for business. It leads them to the next big thing that will be successful.

You don’t need to win every time. You only need to find the one new business model that will take your company into the future.

That is how leaders can drive their business to success. Holding onto the past will keep you in the past.

Moving toward the future will lead you to success.

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  • Paul

    Interesting article and well aligned with what I am working on nowadays as a Business Analyst. In the old days, Businesses would document and re-engineer Business processes in order to find out how they actually did deliver outcomes to customers. The new thinking is to turn that around and not think from a how/business process perspective but define outcomes (goals). If multiple processes provide the same goal then we investigate if we can make it “lean” by just using 1 process. It a process provides an outcome that is not aligned with the business objectives then that process will become obsolete.
    Discussing goals with Business stakeholder is way easier than discussing business processes because of the obvious reason: everyone can understand a common goal but how to achieve that goal there are 1001 ways and opinions….

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