When Yahoo went public in 1996, it was valued at $848 million. Just four years later, at the height of the dot-com bubble, that valuation had risen to $125 billion. The company was valued at $40 billion as recently as 2014, but when Verizon acquired it earlier this year, it paid just $4.8 billion.
Yahoo’s history is littered with great ideas, but too often, those ideas were treated as just that: litter. There is evidence that its leaders had big ideas about the advent of search, saw social media coming, and realized that sharing photos would become a big deal. Even as far back as 2008, the company expected mobile technology to remake the internet and all of society. But Yahoo didn’t act on those hunches.
Entrepreneurs and startups know ideas are worthless without execution. And even the best multichannel brands and retailers can be caught off guard. None of them saw Pokémon GO! coming, for instance, yet that app set new download records in its first week — when it was only available in three countries.
Staying Relevant in a Mobile-Driven World
Staying relevant in this world of unprecedented disruption is incredibly challenging for businesses of all stripes and sizes, and enterprises need to plan for constant change. There are five simple steps to success in today’s mobile world:
- Adopt a customer-first approach.
Jumping on the bandwagon is a perilous option if you don’t understand your customers’ needs and expectations. Just look at Banana Republic: The company posted sales of $2.4 billion in 2014 by focusing on its traditional, classic apparel. But when it tried to go fashion-forward the next year, sales fell by 9 percent — its steepest single-year fall in a decade.Instead of focusing on what its customers wanted, Banana Republic tried to change its identity, and now the company has to earn back its following. Don’t make the mistake of telling people what they want; ask them what they want first.
- Find a platform partner moving at the speed of consumer innovation.
Innovative startups like Uber and Snapchat set the bar for customer expectations. They don’t launch new features annually; they update quarterly, monthly, and, in some cases, weekly.Even the most digitally savvy brands and retailers struggle to keep pace with these mobile-first innovators, and the problem lies in traditional enterprise software solutions — their release cycles are just too slow to keep up. Sometimes, you do need to abandon the traditional approach to stay relevant. So look for a partner able to keep up with the level of relevancy consumers demand.
- Make strategic acquisitions.
If you’re struggling to overcome internal silos and cultural barriers, then strategic acquisitions can be a good solution. You might want to merge with a competitor or try acquiring a smaller company that brings something new to the table.When Unilever bought Dollar Shave Club, it didn’t just eliminate a fledgling rival — it also acquired the company’s cutting-edge business practices, which would help Unilever engage with its audience. Moreover, Under Armour acquired fitness-tracking apps to up its innovative technology and brand identity, and Nordstrom bought online retailer Trunk Club to help meld its offline and online shopping features.
These examples illustrate the major benefits of acquiring innovative startups: It isn’t just about the technology; it’s about the executive capabilities, too. Make it clear to executives that you want them to help overcome new challenges and support initiatives, and roadblocks will fall faster.
- Plan for uncertainty.
Agility matters. The moment your company develops a marginal improvement on its existing product, you need to release it. Waiting for a future launch date prevents incremental gains and risks falling further behind.
Anyone with even a modicum of digital experience has heard about agile development, but embracing that strategy requires a new mindset. Forget project kickoffs and product launches. Instead, adopt a culture of continuous improvement.
- Keep budgets flexible.
Startups usually have finite runways, so they manage cash carefully, run tests, and learn. The most successful ones spend quickly and decisively when they find something that works or see a unique opportunity to differentiate themselves in the marketplace. Follow that lead, and manage your budget like a startup would.Too many Fortune 500 companies spend their budgets at the end of the quarter or fiscal year just to “preserve the budget,” and that strategy leads to waste and missed opportunities. Budget holders should be rewarded for their returns, not arbitrarily given more resources next year because they spent everything this year. Holding off on spending because an opportunity doesn’t align with the calendar year should never be penalized.
The pace of change in consumer technology is hitting global enterprises hard, and many are struggling to stay relevant. Whether the end is an acquisition at a lower valuation or bankruptcy, companies like Sports Authority and Yahoo can assure others that their luck will run out after just a few weak quarters.
And nowhere is that situation more pressing than in the mobile world, where your competitors aren’t traditional like-for-like companies anymore. They now include innovative startups like Uber, Airbnb, and Snapchat that are redefining customer expectations. If you want to stay relevant, you need to stay responsive.