There is no one recipe to renewing a business, there are however many ingredients that make renewal a success. Surprisingly, firm perceptions of what led to successful renewal are similar to entrepreneurial skills at the individual level. In the Renewal of Manufacturing -research project co-funded by Tekes, we identified differences in renewal between successful and less successful companies. By interviewing leaders and entrepreneurs about how they see their strategies and successes we found the elements of successful renewal.
Views on the success of successful companies not only highlight the skills and abilities needed to renew, but how these allow the company to be flexible and to manage day to day uncertainty. Uncertainty is the key driver of change affecting how companies renew.
Companies’ ability to tolerate uncertainty and change is no longer only a survival skill, it can be a driver of development and success. In all there are five ingredients for success:
- Perseverance and tolerance of uncertainty. Successful companies emphasized that renewal is often based on tolerance of uncertainty and perseverance (Rogers: Overcoming tough times). In addition, companies underlined the need for continuous adaptation in line with customer needs and the business environment;
- Flexibility and agility. Successful companies aim to be ready for change, including for change that affects their customers. Flexibility and agility requires modification of strategies and even the abandonment of established activities that are no longer necessary.
- Pro-activity and vigilance. For successful companies it was important to be tuned into what was happening beyond their own sector and to understand changes and trends. Their objective is to identify how different possible changes affect the industry and the activities of their customers.
- Entrepreneurial culture. Successful companies appreciate and emphasise their corporate culture, which was often inspiring and supports renewal (Grant: “encourage a culture of inquiry”). Innovation was understood holistically as an approach to doing and as an attitude that is visible to customers and enables experimental activities.
- Listening to customers and creating value. Successful companies time and again emphasised the need to address customers’ needs and to create value together with customers. Doing this requires continuous interaction between the company and the customer, as neither collaboration nor the content of value-creation stay the same.
Our findings show that successful renewal of business is interlaced with listening to and understanding customers. However, these alone are not enough. Renewal requires different elements to come together at the same time (Man et al. 2002). Some of these elements, such as listening to customers, quickly become activity, but some, such as an entrepreneurial culture, evolve over the time. Our findings underline that successful renewal requires companies to be capable of continuous development of activities and to practice proactive vigilance.
Man, T. W. Y., Lau, T. & Chan, K. F. (2002). The competitiveness of small and medium enterprises: A conceptualization with focus on entrepreneurial competencies. Journal of Business Venturing, 17, 123-142.
Pekka Stenholm is a senior researcher with the SWiPE project
Read more here about Pekka Stenholm, his work and expertise.