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Tips for HR professionals savvy in Business Acumen
After 146 years in entertainment, Ringling Bros. and Barnum & Bailey circus, "The Greatest Show on Earth," will perform for the last time in May. For those with fond memories of the circus, mixed emotions arise: sadness, surprise, confusion. Meanwhile, others, including animal rights activists, rejoice. From a business point of view, what lessons can HR professionals learn when a business model becomes obsolete?
Ringling Bros. and Barnum & Bailey executives have offered several explanations, including high operating costs, declining ticket sales and individuals' decreasing attention spans. One spokesman said the circus was "not a viable business model." For the Business Acumen-savvy, this means that the circus had reached the decline phase of the business life cycle.
That life cycle is defined by the intersection of revenue and time. A business proceeds from introduction to growth, then maturity, and finally to its decline. The maturity stage is where optimal market awareness and saturation are achieved and the peak point of revenue is reached. To avoid moving into the decline stage, a business must introduce new products or services and change its business model.
Various businesses have fallen victim to remaining stuck in an outdated model, and the reasons vary. We used to head to Blockbuster for the latest movie on video, snacking on Funyuns and Push-Ups, remembering to rewind the tape before driving back to return it within 48 hours. Redbox and Netflix disrupted that brick-and-mortar model, and Blockbuster failed to adapt to changes in technology. Now we stream movies over the Internet as we sit on the couch and eat kale chips.
Competition can also threaten a business model. Borders Books was outwitted by its direct competitor, Barnes & Noble, which, after identifying Amazon.com and other online retailers as a threat, recognized the need for e-books and e-commerce and adapted its model to those markets. It developed its own e-reader (the Nook), put Starbucks cafes in its stores, and eschewed store locations not in or near large cities.
What can HR professionals do to prevent their organization's business model from reaching the decline phase? Here are a few tips:
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