Last month, I attended the University of Tampa Board of Fellows Business Network Symposium. The quarterly symposium recognizes well-known businesses in the Bay area and places business leaders in the spotlight to share their accomplishments and strategies.
One of the symposium’s keynote speakers was Mark Gordon, CEO of Odyssey Marine Exploration. The Odyssey team uses state-of-the-art technology to discover deep sea shipwrecks with significant amounts of valuable metal commodities on board. They are perhaps most famous for the 2011 recovery of the SS Gairsoppa, a British steam merchant ship which sank in 1941 after an attack by a German U-boat. Odyssey recovered 110 tons of Spanish silver bullion from the SS Gairsoppa, setting a world record for the heaviest and deepest recovery of valuable cargo ever performed on a shipwreck site.
What should have been a multi-million dollar gain for his company ended up being a $1.2 million loss. Why? The company was fined by the U.S district court after a lengthy legal battle, which also resulted in Odyssey having to return the bullion to Spain in 2012–despite having legally obtained it during the expedition.
In the aftermath of a ruling that should have sank the company, Gordon decided to challenge himself and his colleagues to adapt. Recognizing the risk of focusing solely on recovering shipwrecks, Gordon pivoted his business to include a new focus: the profitable recovery of deep sea minerals used in science and technology.
In addition to spending time in the depths below, Gordon is helping other business owners stay afloat of challenges by offering advice on how to adapt in the face of setbacks. Does your organization need a business adaptation strategy? According to Mark Gordon, here are the 4 things you need to do:
Understand your competencies
At the very core, your competencies are what differentiate your organization from your competition. It’s only natural to want to list your organization’s entire range of strengths, but according to business experts and authors of “The Core Competence of the Corporation,” Gary Hamel and C.K Prahalad, there are three tests to determine whether your strengths are your true core competencies:
Relevance – Your competence must give your customer something that strongly influences him or her to choose your product or service. If it does not, then it is not a core competence and it has no effect on your competitive position.
Difficulty of imitation – Your core competence should be difficult to imitate. This allows you to provide products that are better than those of your competition. And because you’re continually working to improve these skills, this means you can sustain a competitive position.
Breadth of application – It should open up plenty of potential markets. If it only opens up a few small, niche markets, then success in these markets will not be enough to sustain significant growth.
Inventory your skills
Whereas core competencies are defined by your market strategy, your skills inventory is determined by your human capital. An effective skills inventory summarizes the skills, education, and experiences of an organization’s employees. A skills inventory may also include an assessment of leadership skills, certifications, and examples of specific client and industry experience. If done correctly, this inventory will provide a collective summary of the ingenuity, knowledge and real-world experience that an organization possesses.
Adjacencies allow a company to expand into related business segments that utilize and reinforce the profitable core competencies. Identifying adjacent business opportunities is critical to sustainable growth.
According to Forbes magazine, there are two factors that make adjacencies work: the adjacency materially improves the value proposition of your business; and the adjacency uses enough of your company’s distinctive capabilities to be favored in the marketplace. When considering adjacencies, you’ll need to determine what skills transfer outside of your market niche.
Select a new path that gives you the highest return
Using all the information you’ve gained from evaluating your organization’s competencies, your employees’ skills, and your potential areas of growth, you can now determine the path which will result in the highest return.
It’s doubtful that this process will be linear. It’s likely that your organization will need to reevaluate at every step along the way. However, by creating a business adaptation strategy, you can be sure that when the time comes to adapt, you’ll be ready and prepared to take on the challenges ahead.