Only companies that have perfected the art of adaptability will truly succeed.
At the height of the 2008 financial crisis, the United States government offered to bail out car manufacturing giant, Ford. Despite being up to its eyeballs in debt and looking like it might go under any day, the company ultimately turned down the proposal.
There was a good reason for this refusal. Chairman Bill Ford was convinced that companies that don’t adapt simply fail, period. Sure, an injection of government cash might have solved Ford’s short-term liquidity issues, but it wouldn’t have gotten to the root of the problem – its longstanding failure to adapt to the new realities of the automobile market.
The company’s board of directors and its managers decided on an alternative strategy and hatched a plan they called “The Way Forward.” At the heart of this roadmap was a reappraisal of Ford’s relationship with the environment, an issue it had long sidestepped. If the car manufacturer wanted to remain relevant to American consumers, it would have to move toward their views on environmental matters.
What followed was a pretty radical overhaul. Ford downsized by around 25 percent and implemented a system to produce cars more quickly. Most importantly, it shifted to manufacturing smaller and more fuel-efficient cars.
The carmaker dodged a bullet, but the company almost left it too late. A better idea than waiting it out and hoping for the best would’ve been to take a leaf out of Toyota’s book; the Japanese corporation is a master at adapting to changing market conditions. This characteristic allowed it to increase its share of the global car market from 7.3 percent in 1995 to 15 percent in 2005.
So what’s the secret to its success? Well, the company has a solid reputation for quality products, but what really sets it apart is its constant search for improvements that satisfy changing consumer preferences. This allowed the company to stay ahead of the curve and anticipate changes in the market long before competitors like Ford saw them coming.
To take just a couple of examples, Toyota was already developing low-emission cars in 1992 and hybrid petrol and electricity-powered vehicles in 1995!