Are you noticing the shifting ground underneath your feet? [Growth Needle™]

How a seemingly small event marks the demise of cable TV, the problem with misleading food labels and why Italian fashion brands are struggling to keep up.

Greetings from Vancouver! 👋

In this week’s edition, we will look at how a seemingly small action by Netflix marked the beginning of the end for cable TV. We will look at how expiration labels on foods are misleading and why Italian fashion brands are lagging behind in the world they created.

Let's jump into it!

The Shifting Changes Around You

On February 1, 2013, Netflix released House of Cards, a show that would go on to be nominated for 33 Emmy awards, 8 Golden Globes and define the new era of streaming content, with Netflix leading the way. The release also marked the beginning of the end for another industry, cable TV. 

The term “cord cutter” increased in popularity a few months later, as seen in the Google Trends data.

I doubt that the cable industry looked at the release of House of Cards with dread. It was a good show from the beginning but no one else was doing streaming. Companies like Disney, Sony and Fox were still releasing their films in theaters and licensing their content for Pay-TV viewers. 

The crazy thing is that these changes are happening all around us but not every organization grasps the potential long term effects. The ground is shifting underneath many organizations but they dismiss it as an inconsequential earthquake.

Here’s a question for you. 

Why didn’t cable TV release their own streaming service? They had the content deals, advertising experience and cash. Netflix had to stand out by developing original content, one of the hardest things to do. Cable offering their service through mobile apps and the internet seems obvious, with hindsight. 

There’s a certain irony to this story after Netflix recently introduced a lower cost subscription option that includes ads. In essence, they have brought cable back but in a new form. Not only did Netflix start the demise of pay-TV —licensing content and selling ads—but they are now emulating the very same business model.

In your industry, think about what changes happened 10 years ago that are now affecting your strategy and decisions. These are the pivotal moments that can realign the winners and losers of entire industries. 

Now think about what changes are happening today that will have an impact in 10 years. If you don’t properly recognize and adapt to these changes, you may find yourself on the wrong side of future charts.

Question: What changes are happening in your industry today that will affect your business in 10 years?

Are You Communicating Clearly? 

I’m looking at a container of almond milk in the fridge and noticing something that I thought I understood. The container says this product is “best before” February 6, 2024. My understanding is that this milk container will be rotten after that date but turns out that is not true.

My confusion arises from the label itself. You see, these expiration labels don’t always mean what we think they do. They originated as a way to help retailers know when to rotate stock. Food producers will tell you that the labels help you consume their products at their “peak quality” but that is not the same as the food being rotten.

In many cases, you could consume a product well past the date on the container. There’s obvious exceptions here—rotten eggs, milk that has gone bad and so forth—but they aren’t necessarily tied to the label itself.

The labels lead many people, including myself, to throw out food that is perfectly fine. For example, the U.S. Department of Agriculture estimates that 31% of all available food goes uneaten, retailers discard 43 billion pounds of food and consumers another 90 billion. The labels cannot be blamed for 100% of the waste but they are playing a significant role.

The same thing happens inside organizations all the time. Leaders believe they are saying one thing but the rest of the company understands something else. Think of how many situations you have seen confusing strategies prevent people from making the right decisions. 

Next time you talk to your team, make sure that you’re using clear labels and don’t assume that everyone understands what you’re saying.

Question: Are you communicating clearly with your team?

Why Italian Brands Are Lagging in a World They Created

Look at Richard Gere in a photoshoot from his 1980 film, American Gigolo. Even if you don’t like fashion, you have to admit he looks cool. He’s wearing a Giorgio Armani suit, one of the many Italian fashion designers that would go on to define what was cool in fashion for the next 25 years.

Italian fashion designers are household names, even to those that have never worn any of their items. For example, Prada, Dolce & Gabbana, Cucinelli and Zegna. Many are basically small businesses run by their visionary designers and founders.

The problem is that they are being left behind. Their names and clothes aren’t going out of style but the business model might be. LVMH, the French conglomerate that also owns Louis Vitton, is 20 times the size of its Italian rivals. In a recent event, LVMH took over the Pont Neuf bridge in Paris to put on a show by its newly hired creative director, Pharrell Williams. Jay-Z also happened to sing a few songs.

The Italian brands face the classic problem of succession. Their designers are treated as infallible demi gods who cannot be replaced. There’s only Giorgio Armani, after all. There’s no denying the quality of Italian brands but their ability to run an internationally competitive business is in doubt.

The lesson for all organizations is simple. You cannot allow your future to be driven by a single, visionary person. You need a stable of highly competent individuals who can take the mantle. Apple successfully moved beyond Steve Jobs without missing a beat. 

Question: Are your succession plans sufficient for your growth ambitions?

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Cheers,

Ruben