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Personal Finance

You want to keep a successful business? Avoid complacency

 In business, it is important to stay current and relevant. Trade innovation is a great way to do this. FILE
In business, it is important to stay current and relevant. Trade innovation is a great way to do this. FILE 

I first came across Nokia as a university student in Egerton in the year 2000. Those were the days when phones were limited to voice calls, texts and a few “extras”. During those days, we had phones-and we had Nokias. At the top of the pecking order sat the Nokia 3310.

The brand was so popular in its heyday that people still remember it fondly. In fact, Wikipedia tells us that if all the Nokia 3310 phones sold were laid end-to-end, the line would stretch from Helsinki, Finland to Santiago, Chile – over 13,500 kilometres!

Just last week, Nokia has sold its handset division to Microsoft for €3.8 billion ($5.6 billion), marking the end of an era in the consumer mobile phone market. What lessons, if any can we learn from this?

Don’t become lazy in success

In order to stay on top, you need to continually go hard and think of new ways to do your thing. When you are at your height, coasting will only bring you down. If Beethoven had just kept playing his Third Symphony, we would not have mastered the Ninth Symphony.

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The hard reality is the fact that past accomplishment guarantees nothing about future success. A core business that meets a fundamental human need rarely becomes obsolete. This means never-ending creative renewal.

In business it is important to stay current and relevant. Business Innovation is a great way to do this. It is about new ideas being brought to the table. Nokia dominated the market with its range of reliable and easy-to-use handsets. But it missed a series of fashion and technical changes and was gradually overtaken by other companies.

In the same way, owning a successful business is one of the truest ideals of the dream world. It is a joy and a privilege not to be taken for granted. Yet many complacent business owners have hit some of their initial goals and become satiated. There just isn’t that “fire in the belly” that drove the first few phases.

If, as a business owner, you become complacent and not watchful, it will be your trade that loses sales.

Nokia missed the smart phone fad and was late to 3G, but it did release one of the first smart phones, the N95.

While the N95 was technologically superior to Apple’s iPhone, it used Nokia’s unpopular operating system Symbian. Apple’s iPhone took over the market. Nokia dumped Symbian in favour of Microsoft Windows in 2011, a year too late.

This is a hard lesson for all of us. The more you succeed, the more competitors notice - and react to - what you are doing. A market-leading offer one day may be no better than average a few months later.

Apparently loyal customers can be quick to find alternative suppliers who provide a better deal.

As products and services age, sales growth and profit margins get squeezed. Understanding where your products are in their lifecycles can help you work out how to maximise overall profitability. At the same time, you need to invest in innovation to build a stream of new, profitable products to market.

There is a need for change. Individually and organisationally, we need to adapt to changing circumstances if we want to avoid becoming redundant.

Direction

However, there is a balance that needs to be found between change and continuity. If everything was changing all the time, we would sink into chaos, not knowing in which direction to go, or what to do first.

Once we understand what needs to change, by definition, we also know what to keep. Newton’s first law of physics states that it is generally the change that requires energy and effort, not the continuation of something we are used to.

It is important to keep an eye on the overall pace of change – not necessarily to match it but to understand the implications of our own choices. The fact that Nokia has expressed its willingness to make drastic changes to fix its business is something commendable. Watch this space.

Mr Waswa is the managing director of Outdoors Africa. Email:[email protected]

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