How organisations reinvent themselves

IBM, which currently operates in over 170 countries, almost went under in 1993 when it posted an $8billion loss. The company, which was the leading personal computer manufacturer, ran a business model which allowed it to buy hardware components from smaller manufacturers and shipped its PCs preloaded with Microsoft Windows. With that model, it was making a lot of money until small companies flooded the market with cheaper PCs, popularly called “PC clones”. The PC clones each had cheap components and ran the same versions of Windows as IBM PCs. Since these were cheaper and could do almost the same thing that IBM products had been known for, there was a shift in market preference for them which resulted in hemorrhage for IBM. Following the unprecedented loss, Lou Gerstner was appointed as the company’s chief executive. The new CEO knew that IBM would have to reinvent itself or become history. He led the company to make the difficult choice of abandoning what it had always done. It moved from building personal computers to providing IT support services to companies. This is where the company actually hit gold. IBM, which later sold its PC unit to Lenovo, currently offers services in cloud computing, cognitive computing, commerce, finance, data and analytics, Internet of Things, IT infrastructure, mobile, and security.

Need for reinvention

Reinvention is rethinking the business to have a new model. The essence of this is to activate a change in the market or keep pace with market realities. The market is never in a static mode; it always evolves. The companies that constantly reinvent are the ones that are retained in the consciousness of the market and they are the ones that are profitable and last the distance.

In the book, Re-inventors: How Extraordinary Companies Pursue Radical Continuous Change, Jason Jennings opines, “Your job as you know it and your business as it is currently run will eventually change. The only chance any of us has for prosperity is to constantly

re-imagine, rethink and reinvent everything we do and how we do it in order to remain relevant. We must all become re-inventors, and we’d better do it quickly.”

The need for reinvention cannot be better put.

How organizations are reinvented

A number of steps are taken in the process of reinventing an organization. Here are some of them.

Recognizing need for reinvention

The process of reinventing an organization starts with the recognition of the need for it. This is the point at which the leadership of the organization comes to understand that continuing on the route the organization has always trodden cannot deliver the desired result. It is this realization that leads the organization to embark on the process of reinventing itself.

Recognizing the need for reinvention is a consequence of a number of factors. The first is deciphering what the market wants. A company does not exist for itself; its existence is tied to market satisfaction. Therefore, it must be in tune with what the market wants. Many companies underplay this and, as a result, underrate the market. Man’s craving for out of this world products is incomprehensible but the yearning is always there. A company that makes it a point of duty to always satisfy the yearnings of the market will have the market eating out of its palms.

The second factor is watching the trend.

Apart from paying attention to the bottom line to ensure the company remains profitable, and managing the top line to see the inflow of revenue, the next most important task of a chief executive is watching and understanding the trend in his industry as well as the economy as a whole. It is his success in this regard that will determine whether there will be a business for him to manage in future or not.

Every CEO should see the company he manages as a legacy that has to be preserved so that it could be handed over to succeeding generations. To accomplish this, he has to be conversant with the development in his industry so that his company will not be left behind in the scheme of events.

A leader may be forgiven for not being a trend-setter but no leader will be forgiven for failing to watch, understand, interpret and align with the trend because such failure can lead to the collapse of the organization.

Between National Geographic Magazine and NIPOST

National Geographic Magazine, the official magazine of the National Geographic Society, started in 1888 and thrived until the advent of new technologies threatened its existence. With the upsurge of electronic media as well as the internet, National Geographic saw its subscription nosedive. But rather than surrender, it leveraged on the new technology to reinvent itself. In 2001, though it kept its magazine in print, it went into television shows by establishing the National Geographic Channel which has hosted some of the most amazing reality television shows. It also seized the moment and became active on various social media platform. Currently, National Geographic, in addition to revenue through subscriptions from its television channel and proceeds from its magazine publication, has close to 70million followers on Instagram, Twitter and Facebook.

But for the Nigeria Postal Service (NIPOST), it is a different story.

In its heyday, NIPOST was a dream postal organization, delivering mail items to homes, schools and business outfits. But beyond its primary function of mail delivery, it was also heavily involved in fund transfer with its sale of postal and money orders. Its presence in the remotest parts of the country made it a veritable channel for city dwellers to remit funds to their kinsmen in the hinterland. NIPOST was also involved in international fund transfer. But when technology improved and electronic fund transfer became feasible, NIPOST fizzled out as it was caught napping. Thus, it was beaten at its game by joiners.

Given its vast network and infrastructure, NIPOST was positioned to be a major player in electronic fund transfer market but that is a potential that was never realized. Why did NIPOST fail to seize the opportunity offered by technology to make itself more relevant to the people by being in the forefront of electronic fund transfer? It was either because the organization was not conscious of technological developments that affected its industry or it did not take this seriously. Neither is pardonable.

Now, while National Geographic is financially buoyant, NIPOST depends largely on the government for its capital projects. But that would not have been had the leadership reinvented the organization in line with the reality of new technologies at the appropriate time.

Tinkering with the vision

Once the need to reinvent is recognized, the next step is to tinker with the vision.

By the time Jack Welch became the chairman of General Electric in 1981, the company was doing very well. However, in spite of the apparent success being recorded by the company, Welch realized that the level of success would not be adequate to see the company through the challenges of the future. This realization led him into coming up with a redirection that resulted in the reinvention of the company. He changed the vision of the company. Welch said the company and its subsidiaries would only operate in industries where they were either number one or number two. The import of this was that merely being a player was not enough for the company; it had to be a market leader wherever it chose to operate. This changed the orientation of the company completely and many subsidiaries that were just marginal players in their sub-sectors had to be sold. This buoyed the company as it became one of the most profitable companies in the world. The reinvention rejuvenated the company and made it the bomb.

Though a vision is an organization’s compass, it is not necessarily permanent. As time evolves and situations warrant, visions are subject to change. That is what happened to General Electric. It reviewed its vision at the nick of time. That is what National Geographic did that boosted its relevance but NIPOST failed to do that took it from the zenith to the nadir.

• 10 steps to becoming a successful entrepreneur

Fashioning out appropriate strategy

Strategy is the leg on which vision walks. The success of a vision is dependent on the quality and the appropriateness of the strategy that is used to drive it. So, when the vision changes the strategy has to follow suit. Most corporate failures are traceable to the deployment of wrong strategies. If the vision is right but the strategy is wrong, the result will be wrong. So, getting the appropriate strategy is very critical.

Work the strategy

It is said that the way to hell is paved with good intentions. Many organizations have good intentions of reinventing themselves but they just stop short of doing that because of the inability to walk the high ground of working out the strategy to the letter.

Taking a cue from the deposit money banks after failing to take the lead in electronic fund transfer in the country, NIPOST also came up with a fund transfer product to get a slice of the action in the fund transfer market. The product, Postcash, was launched with fanfare but it soon petered out. The organization had a strategy to push the product into the market with a view to making it the preference of Nigerians but after working on it for about a year without any appreciable result, it abandoned it. NIPOST’s staying power was too weak to make its reinvention through the introduction of the Postcash work.

Last line

The dinosaur became extinct because of its failure to reinvent itself. Change is the only constant factor and organizations that want to remain relevant must reinvent constantly.