Many businesses get into a rut after a time and if they are not in difficulties the temptation is to carry on as they are.
This may be natural on the principle that if something is not broken why fix it, but this is actually the point when they would be well advised to reflect on their future survival.
Sooner or later, unless there is a culture of continuous improvement, businesses sink into decline and the longer change initiatives are put off, the more difficult it is to ensure a business has a future.
Turnaround usually involves making an existing business more efficient and generally this will involve cutting costs which can involve brutal downsizing if a company is losing money. The focus is on existing activities that are profitable and perhaps returning to the core business.
Transformation involves revisiting the business model or product/market mix. For example a manufacturer might sell the same products to a different market or sell via different channels. Or they might close factories and outsource the manufacturing perhaps to focus on assembly or distribution and marketing. This is more to do with reorganisation and can be risky if carried out when a company is in financial difficulties.
A third option is the pivot
This involves retaining some essential elements of the original business but fundamentally changing everything else.
Examples of a pivot are adapting a product to a different market. If, perhaps, Yahoo were to become an investment vehicle this would be a pivot. Similarly one of the original social media sites, Friends Reunited, originally set up as a social network for friends to reconnect and keep in touch, was taken over by the Dundee-based publisher DC Thomson in 2009 and in 2013 re-branded and repositioned as a family history site. The original Friends Reunited platform was closed down in January this year.
Another example of a pivot was a product, an airbag invented to stabilise washing machines fitted under kitchen counters. The invention caught the eye of another person who saw it as the ideal solution for protecting musical equipment when it was packed and being transported. It is now sold to the freight handling market.
It is not enough for a 21st Century business, however currently successful, to stick with the status quo. With the pace of technological change accelerating business leaders need to be visionaries and to be always on the lookout for the next opportunity.
An early transformation or pivot can avoid the need for a major restructure further down the line.
(Image courtesy of iosphere at FreeDigitalPhotos.net)