In an April 2011 article in Forbes magazine, contributor Nathan Furr outlined the challenge to big business survival in his post Big Business … The End is Near: Why 70% of the Fortune 1000 Will Be Replaced in a Few Years. Furr pointed to research that shows that the top businesses in the world are falling behind and at an increasing rate. The study found the following:
- From 1973 to 1983, 35% of the top companies in the Fortune 1000 were new
- From 1983 to 1993, 45% of the Fortune 1000 were replaced
- From 1993 to 2003, 60% of the Fortune 1000 were replaced
With this rate of replacement, by the year 2013 70% of the Fortune 1000 will be replaced. In other words, over 3/4ths of the existing leaders will fall and this is not just Furr’s point of view it is a trend recognized by other academic research.
If this trend does in fact continue at the rate that Furr suggests, and you are a b2b business, do you feel prepared for that type of churn? How will your business stay ahead and what strategies will help you to avoid losing significant ground?
We’ve surveyed a number of b2b executive leaders and here is what they are doing to make sure that their businesses stay relevant:
- Entrepreneurship and innovation: A lot of the replacement numbers above are a result of large companies lacking in entrepreneurship and innovation. Most of the executive leaders we speak with used the down turn to keep the innovation engine turned on and are now seeing some rewards from that investment.
- Industry expertise: If the replacement churn continues, all executives are clear that industry expertise is a requirement. Deep industry knowledge and expertise is transferable even if the churn moves your targets elsewhere.
- Customer engagement and advocacy: As Netflix, Verizon, and Bank of America have recently and publicly learned, companies that don’t listen to their customers very quickly find themselves struggling to keep up. Embedding your customers and their input into your innovation cycle is an important way to stay relevant in the face of churn. Even if some of those customers move on you’ll have a pulse on the marketplace so you can make your next move.
- Making markets: Businesses tend to have 2 options for growth – making new markets or acquiring new markets. Those executives that felt they had deeper longevity are doing both, but most have a strong ability to make new markets. IBM is a great example of a large B2B company that is exceptional at making markets.
How are you managing through the churn to ensure that your company is essential to your current and future clients?