I recently met the CEO of a large, privately held company whose industry had recently seen more than its share of macro-economic difficulties, technological changes, and shifting customer needs and expectations. When asked how he planned to address those challenges, the CEO emphasized the significant success achieved by him and his father who started the company 65 years ago. He also pointed to the sleek, new website under development which would showcase all of the operating divisions that had performed so well for the company for all of those years.
His response reminded me of the Smith Corona Company.
It seemed like everyone who went to college in the late 1970s or early 1980s had a Smith Corona typewriter. They were as ubiquitous as blue books and beer. In the mid 1980s, things began to change. Personal computers, which were capable of performing more sophisticated word processing functions, were beginning to threaten the typewriter.
When confronted with this technological change, Smith Corona, which once famously declared “”The pen is mightier than the sword, but the Smith-Premier Typewriter bends them both!”, reaffirmed its 100 year commitment to being a typewriter company.
In 1985, the company introduced a new type of typewriter that they called a “personal word processor.” In 1986, Smith Corona was acquired by a UK take-over specialist, which proceeded to dismantle the company. Smith Corona ultimately filed for bankruptcy.
Contrast Smith Corona with the Xerox Company. In the 1970s, it seemed as if every office had a Xerox copy machine. Xerox had to confront a similar technological threat, as PCs and printers began to threaten the their core copier industry. Xerox rethought their core value proposition, and became a document and information company. They recognized that what their customers really needed were the documents and information that copiers produced, and not the copier itself. Five years ago, Xerox again transitioned “from a company focused primarily on document and information management to one that supports critical business processes for enterprises of all sizes.”
What was the result of Xerox’s acute understanding of the importance of evolving their core value proposition? Company revenue in 2014 was nearly $20 billion with equipment sales (including copiers) representing only 15% of that total.
Take a long look at your company’s core value proposition in the context of all of the changes in your industry. Are you more like Smith Corona or more like Xerox?