Disrupt or Be Disrupted - Co:Collective
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A Guide to Company Survival
Disrupt or
Be Disrupted
©2020 – CO:COLLECTIVE LLC
What business are you really in?
Today, the answer is no longer ‘nice to know’, it’s do-or-die.
Kodak thought it was in the film business. likely to contribute to company failure. The
They didn’t realize they were actually in the companies that thrive when faced with
“treasured memory” business until it was too these challenges have one thing in common:
late. And Blockbuster was in the video store they define the business they’re in beyond
business. If they had realized they were in core product offering, category or enabling
the “entertainment provisioning” business, technology. To outlast disruption, they orient
we might be streaming Blockbuster original their business around a lasting benefit they
series this weekend. bring to the world.
We rarely talk about death. In the world of At co:collective, we believe that this is the
business strategy and innovation, we’re key to survival. Having a clear and generous
constantly discussing the next big thing, but purpose and taking actions to bring it to life in
we rarely dissect what makes a company fail. the world - is essential to remaining focused,
Our curiosity led us to investigate why some relevant and proactive in the rapidly changing
companies die, and why others survive. business landscape.
What are the biggest threats that companies
face today – and what can be done to The following field guide is designed to help
combat them? companies recognize and anticipate factors
of death, and take action to navigate them, all
We discovered there are six internal and starting with the question: what business are
external factors of death that are most you really in?
2We are living in a time
of unprecedented
corporate mortality.
Research firm Constellation found that
between 2000 and 2015, 52% of the Fortune
500 were merged or acquired, went bankrupt,
or fell off the list. Another indicator of
corporation health – the S&P 500 – shows a
similar pattern. According to Innosight, the
average tenure of a company in the S&P 500
is 24 years. It was 61 years In 1958. At this
current rate, Innosight predicts 50% of the S&P
500 will be replaced within the next 10 years.
3Company mortality is increasing
because the rate of change is increasing:
Technology, of course, is fueling this change. Take, for example, insurance startup
The number of patents granted annually by the Lemonade, which gained a 27.6% market share
US Patent and Trademark Office has doubled of first-time renters’ insurance buyers within
between 2005 and 2015. its first year of operating in New York. They
beat out longstanding titans like AllState,
Liberty Mutual, State Farm and GEICO. Not
only is Lemonade a digital-first brand with an
As a result, consumers are quicker to evolve impeccable user experience, but its mission
of transforming insurance from a necessary
their needs — and quicker to abandon a brand.
evil into a social good also resonates with
Expectations are rising and options have
customers. As part of Lemonade’s Giveback
increased. A global study from Accenture
program, leftover premiums are donated to
found that in 2017, 61% of consumers switched
causes dictated by each customer.
providers in at least one industry.
Finally, competitive landscapes are changing
faster. Every year new companies enter the
market providing appealing alternatives to the
business models, customer experiences, and
brand purposes of legacy companies. Between
2013 and 2018, there was a 29% increase in first-
time venture capital funding dollars for startups.
Lemonade Giveback 2018: The Lemonade Social Impact Report 4Why do
companies die?
The world is quickly changing; those who are If we observe which organizations do or don’t
slow to evolve have been falling into oblivion. succumb to these types of crises, a trend
According to the most comprehensive study of emerges: the way an organization defines the
corporate crisis ever conducted, the top 2 causes business it’s in is a powerful predictor of its
of corporate crisis are failure to adapt to external ability to survive. A future-proof definition of
changes* and failure of vision. the business you are in is a powerful antidote
to both of these causes of death.
* in 55% of cases, the management held on to strategies that were no longer working for the company,
and in 52% of cases, the management did not want to adapt to changes around them
Defining the business you are in
Traditionally, companies have defined Traditional definitions of the business you are
the business they are in by their flagship in limit an organization’s ability to predict or
product (e.g. a soft drink company), their adapt to external change. These definitions
enabling technology (e.g. a motor vehicle are often tied to static views of industries,
company), their competitive category (e.g. business models, culture, and technologies.
a telecommunications company), or their They can also contribute to a failure of vision,
business or distribution model (e.g. a luxury as they don’t provide a clear north star toward
goods retailer). However, these traditional the benefit that the organization wants to
definitions of the business you are in don’t contribute to the world.
help prevent the two major causes of death:
Read case study: Toys “R” Us
5Take one of the most popular examples of So how could have Toys “R” Us survived?
company failure for example. Toys “R” Us
defined their business by their business Toys “R” Us thought they were in the
model and core product offering: they were
business of toy retail. But the true
a toy retailer. By this definition of their
business, Toys “R” Us saw their mandate as lasting benefit they brought to the
simply competing with other toy retailers world was play and wonder.
(including new digital entrants like Amazon
and mass retailers like Walmart). As such, Had they focused on this future-proof definition of
they focused on assortment and price. Toys their business, they would have given customers
“R” Us struggled to compete with Amazon’s a compelling reason to stay loyal. From in-store
multiple convenience factors powered by a play experiences, to proprietary toy and game
digital-first experience. What’s more, Toys “R” development, to play and wonder-related services
Us even entered a distribution partnership with like playgrounds and amusement parks, Toys “R”
Amazon, allowing Amazon to quickly dominate Us could have provided a unique value that Amazon
the online toy-shopping market. and Walmart simply couldn’t have. But choosing
to focus on stocking shelves and keeping prices
Toys “R” Us also fell prey to Walmart, who low — spaces where they couldn’t compete with the
made shopping for toys effortless by providing retail giants — kept them in a losing game.
a one-stop-shop for parents. Toys “R” Us had
a traditional definition of their business, and
as a result they failed to provide a compelling
reason for parents and kids to come to their
stores. When it came to selling toys, Amazon
and Walmart were simply better.
“ ...they failed to provide a
compelling alternative for
parents and kids to come to
their stores. ”
Bloomberg/Getty Images. 6Future-proof companies, on the other hand, have a different way of defining the business they are in. They define themselves based on a lasting benefit they bring to the world. A benefit that often transcends technology, business models, and even core product offerings. We call this a Quest. Let’s examine Red Bull. At first, you may Earlier this year, Tru Kids — the parent think of Red Bull as an energy drink company. company of Toys “R” Us — announced they But look closer, and you’ll notice Red Bull is would revive the beloved toy brand and a Quest-driven company. They define their make shopping at Toys “R” Us an interactive business not by a thing they make, but rather experience. “We never really had a canvas by something they want to accomplish in the there to bring play alive,” said Tru Kids CEO world. Redbull’s Quest is to help all of us live Richard Barry. Not only is the company our lives to the absolute extreme. Redbull is designing “immersive toy wonderlands”, but a CPG company that makes energy drinks. they’re also partnering with Target to build Redbull is a media company that makes out their e-commerce presence. By grounding magazines and films. Redbull is a motorsports their endeavors (e.g. experiences, e-commerce, company that owns and operates two productization) in the benefit of play and Formula 1 racing teams. And Redbull is an wonder, Toys “R” Us has begun future-proofing events company operates multiple extreme their business for years to come. sporting events around the world. But the business that Redbull is in is “helping all of us live our lives to the absolute extreme” - they are in the business of making their Quest real in the lives of people who want to participate in the Redbull lifestyle. Tommaso Boddi/Getty Images Sports/Getty Images. 7
How does redefining
your business
help you survive?
A traditional definition of your business can
cause failure to adapt to external change and
failure to have an internal vision. Having a
Quest that’s rooted in a lasting benefit you
provide to the world does the opposite.
A Quest stays evergreen through
external change and creates
vision and decision making
structures that drive action.
8Let’s break down the key ways the definition of
your business can make or break your company:
Companies with a traditional Companies on a Quest
definition of their business
Fail to adapt to shifts in technology Use a definition that is broader than their
As we saw, Toys “R” Us failed to adapt to the enabling technology or business model
increasingly digital-first, convenience-based REI thrives even in an age of online,
market of toy shopping. Not only did Toys “R” convenience-based shopping because it thinks
Us not provide a compelling digital experience, of itself as an enabler of outdoor lifestyles.
but they also didn’t give customers a reason to It’s more than a brick-and-mortar retailer. REI’s
come to the store instead of shopping online. stores serve as community hubs and outdoor
skills learning centers. Its digital offering
includes apps such as Snow Project and
Hiking Project, which help customers plan out
their outdoor adventures.
Fail to adapt to shifts in customer needs Leverage changes as culture evolves
Hummer failed to adapt to shifts in green Danone (Dannon) is successfully navigating
transportation culture because it saw itself the shifts away from dairy consumption due
as being in the business of large and military- to sustainability and health reasons. This is
inspired SUVS and trucks (a product that went because it sees itself in the business of health
out of style). through food. Danone made investments
early on into plant-based foods and was one
of the first major multinational companies
to become a B-corp, which is a key marker of
sustainability.
Fail to anticipate competitive threats Have a broader view of their competitive set
A legendary example of this is Blockbuster, Tesla looks for competition beyond General
which failed to anticipate and compete with Motors or Ford because they don’t think of
Netflix because it thought itself as being in the themselves as a car company. They broaden
video store business. their competitive set to anyone in the energy
industry. They are in the business of the
electric economy.
9Beyond external changes, lack of internal vision can also kill an
organization. These are the key ways in which clarity of vision – and
the actions resulting from it – determine which companies survive.
Companies with a traditional Companies on a Quest
definition of their business
Fail to act on a vision Have a clear purpose in the world - and act on it
because their business definition doesn’t give Google has successfully grown into and
them a clear north star. After being acquired dominated numerous categories because
by L Brands, Henri Bendel focused more on its they don’t define themselves as being in
own luxury product lines than on third party the business of search or advertising. They
products. But they lacked a clear vision of define themselves as being in the business of
what their brand was about. This is why Henri organizing and enabling access to information.
Bendel failed. They failed to see their strength This has allowed them to develop a product line
lied in tasteful curation of innovative and that ranges from search, to mail, to maps, to
emerging design. cloud computing and enterprise software.
Fail to focus Have a clear sense of what to start, stop, and
dispersing their efforts and therefore gaining continue doing
no traction. Yahoo, for example, failed because Their business definition provides them with
it couldn’t determine which business it was in. focus on where they can contribute. Red Bull
They played in a broad set of categories from experiments in a broad variety of categories,
search, to media, to advertising. They tried to but it keeps a clear focus on what is in and
be a jack of all trades, but mastered none. out of its scope: anything that inspires people
to live life to the absolute extreme is up for
consideration.
Fail to let go of legacy assets Know which assets can propel them forward
Blackberry failed to see that consumers, With the rise of online retail, Best Buy doubled
not business customers, would drive the down on their Geek Squad, because they
smartphone revolution, because they thought of themselves as being in the business
thought of themselves in the business of providing technology solutions, not just
telecommunications category. By remaining selling technology. This allowed them to survive
attached to the business consumer, Blackberry the rise of online retailers and mass retailers,
also remained attached to their plastic who focused more on price and convenience.
keyboard, and proprietary servers, failing to
adapt to the app economy.
It’s not enough to just theoretically redefine the business you’re in.
Companies on a Quest bring it to life through concrete actions.
10What’s next?
The mandate is clear: redefine your business 3 Involve your employees
through a lasting benefit you bring to the world As you explore how you might redefine your business,
— and take actions to make it real — or risk being consider including folks from different departments,
disrupted. While the task may seem daunting, seniority levels, and markets within your organization.
redefining your business can be an exciting way Including a variety of perspectives will help you see
to energize your leadership team and inspire your opportunities and hidden strengths you didn’t know
organization. Get started with these five steps: existed. It’ll also give you a barometer for whether
this new vision is something your employees will
believe in. Once you land on a Quest, share it broadly
so all employees understand it.
1 Think differently 4 Start doing
Brainstorm how you could redefine your business Once you’ve reached a decision about your Quest,
in a way that feels authentic to your organization start living it through your actions. To begin, identify
and builds on your strengths. As you explore what some low hanging fruit opportunities to change.
business you might be in and what your Quest Define a few major, iconic actions you could take.
might be, consider the following questions: what Perhaps it’s launching a new product, experimenting
does your current offering enable people to do? How with a new business model, or entering a new
does your current offering make people feel? What partnership or joint venture.
unique and differentiated value do you bring to the
world? Why does your company do what they do?
2 Explore the implications 5 Measure your progress
Test if your Quest feels right for your brand by What gets measured gets managed. To ensure
thinking about what you would do differently if long term sustainability of your new vision, see to
you redefined your business in this way. What new it that your internal metrics are tracking towards
products and services would you launch? Which the contribution you seek to make in the world.
ones would you discontinue? What organizations Consider introducing new performance metrics at
would you partner with or acquire? What kinds of the team and individual level that will both hold all
business models would you explore? Remember, a members of the organization accountable to your
good Quest should feel a little uncomfortable. organizational goals and help all your employees
live out your Story.
11Workshop Who it’s for
The c-suite and leadership teams of companies
with us
ready to disrupt themselves
What you’ll do
• Gain an understanding of the future vectors of
change and provocations to get you thinking about
The Do or Die Workshop how they’ll impact your business
• Define a new way of thinking about how you
The best leaders understand that they
define your business
must anticipate threats and have a clear
defensive plan of action to survive. • Align on the most pressing threats facing your
business and chart a path forward to combat them
Guided by our experts in business
disruption, the Do or Die workshop explores What you’ll get
the story of your business’ demise through
a series of interactive exercises and • A deep dive into your organization that will unearth
provides actionable tactics and techniques a new definition of your business and reveal
you can use to think differently about your opportunities for growth
business and take immediate action.
• A strategic analysis of the key factors threatening
your business
Get in touch • Alignment on at least two specific challenges to
tackle and a framework for how to solve them
labs@cocollective.com
How you will use this
• Inspire and galvanize your team as part of your
strategic planning process
• Evolve your view of your company and where it
might be vulnerable in the face of change
• Create a roadmap for what you have to do to be a
great company of the future
12co:collective is a creative and strategic
transformation partner for bold businesses.
We specialize in brand building and business
transformation through Storydoing. Our approach
creates, accelerates, and transforms purpose-led
brands to thrive in today’s moment.
cocollective.com
(212)505-2300
419 Park Avenue South, Floor 5
New York, NY 10016
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