This week, telecommunications provider Telus reported a 10% profit dip due to their closure of the Black’s Photo Stores. That’s a big hit – could it happen to you? The Black’s closure likely comes as no surprise – the disruption in conventional photography with smartphones has been in the works for years. However, this poses some interesting questions that could impact YOUR business:
1. Smart phones and data are two growth areas for Telus – why did they hang onto a line of business for so long that was clearly not aligned with core areas of their business. They didn’t “stick to their knitting” what that ill-advised foray. What legacy, declining, or about-to-be-disrupted lines of business are YOU still hanging onto, that are no longer a fit for the future of your organization.
2. Disruption is happening in almost every industry, whether it’s 3D manufacturing, the rise of internet shopping vs bricks-and-mortar, unexpectedly new and clever market entrants (remember how Nucor’s mini-mills upended US Steel, Dofasco, and others?). So when was the last time your executive team got beyond a rehash of the conventional SWOT analysis and really looked at potential threats in your marketplace? Getting blindsided to something you should have seen is likely to cause a big profit hit when it finally happens.
3. Is your profit plan proactive, or just a P&L? A P&L is retroactive, measuring misses in revenue or higher-than-expected costs only AFTER they happen. In contrast, a proactive profit plan such as the one I outline in my book Profit in Plain Sight: The Proven Leadership Path to Unlock Profit, Passion and Growth lays out specific strategies for what I call the 5Rs of Customer Profitability Management (Retain, Ramp Up, Restore to Breakeven or Better, Regain, and Reactivate), along with proactive approaches to reducing costs by getting the sludge out of your systems, pricing for value, and innovating in low risk, low cost ways that are almost impossible for your competitors to copy.
Are you about to take a profit hit? Your best defense is to take back control of your profitability by being proactive, so that you can thrive despite economic disruption.
What’s the biggest surprise – good or bad – that you ever experienced to your bottom line? How did it affect you?