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Innovate, Reinvent or Do Nothing?

Here are five businesses that are about to fail (Blockbuster, Rite Aid, Border Group, Palm and YRC Worldwide). I think there is a common theme among these five businesses. In fact there are two things, related to each other, but quite different.

First, these companies did not innovate very well, although they did some. Second, they forgot to reinvent their business model when their industry took a sharp turn.

Perhaps the best example of this is Blockbuster versus Netflix. Blockbuster did innvovate their service offerings but not until NetFlix became a threat, allowing no late-fee option for late returns, for example.

But more importantly, they completely missed the shifting fundamentals of the entire movie rental industry. Their competition was offering huge selection not available at Blockbuster; their customer had become Internet literate and preferred to shop from home, and their movie selection process was much more efficient online than walking through the aisles at Blockbuster.

On the other hand, here are two businesses that did very well in 2009 despite their industry (publishing) going through fundamental changes. One is Martha Stewart Omnimedia and the other is Axel Springer, a German publishing company. Both are also poised to do well in the future.

Watch either of these interviews by Charlie Rose (Click for video here: Martha Stewart, Axel Springer) for only 10 or 15 minutes. You will realize that these two businesses did what the failing businesses did not do, which is to innovate and reinvent their products, their services and their business models.

One way to reinvent your business is by changing its business habits, the systems and processes that the people in the business carry out on “autopilot” or subconsciously. When you reinvent your Business Habits, you reinvent your business. (Click here for more on Business Habits.)

What are you doing to innovate and reinvent your businesses, your products and your services? Or do you think that a small business does not need to worry about “such things” as innovation and reinvention?

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