Business Strategy

Video streaming is just one example of a digital economy where competition is intensifying. Many so-called legacy companies are caught up in a battle with digital competitors, and so far, the born-digital companies have been eating their lunch. Walmart (and every other physical retail store, from Macy’s to Best Buy) is in a constant duel with Amazon, and banks and credit card companies are squaring off against PayPal and Apple Pay.

Growing into adjacent markets is a powerful approach for tapping new revenues, rejuvenating businesses, and creating defenses against competitive upstarts. From Netflix’s entry into streaming and then content production, to Fujifilm’s transformation from Kodak rival into a $20 billion medical imaging powerhouse, to Ingersoll-Rand’s growth from air compressor maker to power tool manufacturer, the playbook for attacking adjacent markets has powered business successes in both high-growth and mature industries. However, it is also fraught with pitfalls. How to avoid them and follow the path of the winners?

Digital business transformation is akin to permanent disruption, a self-imposed regimen that recognizes transformation not as a one-and-done endeavor but as an ongoing commitment to adapt in line with changing customer needs and shifting industry landscapes.

We are trained to be solution-finders. In school, we are given questions and graded on the quality of our solutions. As we develop in our careers, management examines the solutions that we propose, not the questions that we have asked. For annual reviews, “performance” is usually defined as creating and implementing solutions rather than finding the best problems to tackle. We become wonderfully efficient at solving problems, even if they are the wrong ones to solve. Few kudos come from asking the right question.

We’ve seen how tech-oriented companies have thrived in the pandemic, from Amwell in telemedicine to Zoom in tele-everything. But what about the rest of the economy? One fast-growing pizza chain shows that Covid can create a Great Reboot for all kinds of industries. The story of this company – rooted in five key steps taken by leadership – holds lessons for all types of organizations seeking to use this moment as an opportunity for reinvention.