“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.” — Winston Churchill, British Prime Minister.
You may find it hard to believe, given its powerhouse status now, but the music recording industry came very close to dying before it ever got started. The potential for recording music became obvious immediately after Thomas Edison perfected his phonograph in 1887; in fact, Edison founded one of the very first recording companies. But many performers and managers viewed the technology as a threat to their traditional business model. If fans could purchase recordings of their favorite performers’ music, they argued, no one would come to their concerts when the performers came to town. We all know how accurate that prediction turned out: recordings only made performers more popular—and richer. As a result, artists embraced the recording industry wholeheartedly, and after they combined it with the new technology of radio, the industry really took off.
Ironically, the recording industry itself failed to adjust easily when a newer technology, digital recording, came onto the scene more than a century later. At first, the Recording Industry Association of America fought vociferously against digital music, to the point of mortally wounding the song-sharing service Napster and prosecuting teenagers for downloading music to their computers. But once the industry calmed down and took at closer look at the technology, they adopted it as their own (with the addition of a few safeguards). Now recording companies depend on digital music for a significant portion of their profits.
Problem? What Problem?
Needless to say, most of us would prefer not to have to deal with threats in the first place. But you have no choice, as no worthwhile endeavor lacks its challengers, so you’ll have to face threats at some point.
Most business people are familiar with conducting a SWOT assessment: the analysis of a company’s Strengths, Weaknesses, Opportunities, and Threats. But in the face of a perceived threat, few remember to reframe Threats as Opportunities. Embracing a threat may actually be the best thing you and your business can do! Sometimes you need a threat to shake you up, jar you out of complacency, and change your perspective. It may even profit you handsomely, assuming you handle it right. I’ll give you some examples.
Consider the threat that electronic publishing has posed to the traditional bookselling industry for the past five years or so. All the major booksellers adopted stances on how to deal with Amazon and the Kindle, and some did better than others. Barnes and Noble probably saw the writing on the wall most clearly, and subsumed the threat by creating their own low-priced book reader, the Nook, and making hundreds of thousands of titles available for it. The late, lamented Borders, however, failed to meet the threat properly…and went belly-up in 2011.
On the financial front, then-regional stockbroker Charles Schwab partnered with numerous mutual fund families when they first appeared, while most of his competitors saw mutual funds as threats and refused to have anything to do with them. The ease with which Schwab’s customers could access mutual funds turned his company into a powerful national player within a few years.
What about the threat television posed to movie makers? Theaters were forced to improve their facilities and value in an attempt to draw in more customers. When they realized television gave them the perfect audience for their back-catalog of old films and cartoons, the two industries merged into a mega-entertainment giant and haven’t looked back since.
Turning the Tables
So: how can you turn your own threats into opportunities? Try my TOP Formula: Think, Open, and Push.
1. Think. Really pay attention to the Threats when conducting a SWOT analysis and try to determine how to turn them to your advantage by changing your perspective. Play “what if” games, such as “What if we were forced to compete in this business? What if we were forced to create this product? What if this market went away?” You may have to redefine your mission and vision to do so, but successful companies have done that regularly for centuries. The Hudson’s Bay Company, one of the world’s oldest businesses, has done so over and over. It began primarily as a fur-trading company in Canada in 1670, and has outlived all its rivals by changing with the times, often adopting threats as opportunities. Now HBC operates department stores (including Lords and Taylors), has several financial services branches, and operates joint ventures in a variety of other fields.
2. Open. When a threat faces you, don’t ignore it; be open to different approaches. Keep your focus on it until you’ve determined how to deal with it, then set a goal that converts that threat into an opportunity. Don’t focus too narrowly. Henry Ford focused on making automobiles affordable for the average Joe, and accomplished that in spades. But he missed a chance when people started asking for their Model Ts in different colors by quipping, “They can have their car in any color they want, as long as it’s black.” Ignoring the opportunity to diversify—and the threat of consumer boredom—allowed Chrysler and other automakers to steal some of his market share.
3. Push. Once you have enough information, push aggressively toward your goal. As the saying goes, action beats meditation. Flexibility remains key here, as always. Think Slinkies and Silly Putty. Both emerged from the mid-20th century war effort. Robert James originally invented Slinkies as spring shock absorbers for sensitive naval instruments; Silly Putty was an attempt to create a much-needed artificial rubber. Both failed in their original purposes, but the inventors didn’t give up. Eventually, both became classic toys that helped define the childhoods of generations of Americans.
Don’t Give Up!
You can’t reframe all threats as opportunities, but you may be surprised at how many can be reframed if you just try. Too many people give up when they encounter problems in their businesses, divisions, or on their teams. Whether the threat has to do with cultural change, team dynamics, or the bottom line, given a little time you may find a way to turn it into an opportunity and therefore a strength. Just point the TOP Formula at it, pull the trigger, and see what happens.