Avoiding the Race to Zero


Share on LinkedIn

We have all read the stories about the company that was experiencing incredible sales and profits only to become irrelevant at some point in time. Whatever happened to Zenith, Quasar, RCA? What is Polaroid doing these days now that it has filed for bankruptcy – twice? These are all big name brands that won the race to zero – their products and services got replaced by innovation and change.

Innovation and adaptation is a fundamental component of viability and longevity. One day’s dominant market leader is tomorrow’s dinosaur. I have been historically critical of the US auto industry for not catching the wave of innovation and change. And, their behaviors put them in a prime spot to win the race to zero. By continually ignoring the threat of foreign competition, protecting a system and culture that had existed untouched for decades, and paying lip service to a market that was sending clear messages to them, the US auto industry was near collapse. Were it not for a government funded bailout, one of the nation’s most historically prestigious corporate names would have become the next RCA.

Contrast the behaviors and the lessons provided by GM to the strategy of Cintas. Cintas was founded as a uniform rental service. Traditionally uniform rental plants were based in old neighborhoods and were dingy and hot and inefficient. Also, the uniform rental industry was very mature with flat revenues and declining profits. Instead of going small, Cintas went big. They built large, highly efficient operations in high profile business parks. The founder’s mantra was when the economy is good we raise prices, when it is bad we acquire our competitors. For nearly 30 consecutive years Cintas has experienced over 18% annual growth. However, Cintas did not achieve this growth simply in uniform rental. Recognizing the limitations for growth in a flat, mature industry, Cintas branched into plant safety, janitorial services, white collar garment sales, and document storage. They not only became a very efficient and dominant player in their core and mature market, Cintas discovered other areas to expand, grow, and become highly efficient, competitive, and profitable in. They had no interest in participating in the race to zero.

The race to zero is a long enough race that no one should ever get to zero unless they were not paying attention. When customer buying habits, competitive trends, and technology adversely impact your revenues and your profits the need for change is right in front of you. Rather than focusing on being really good at what you do, or have historically done, this would be the time to ask yourself what am I good at that I can do differently or change and improve to be in front of?

I have a client that read the race to zero tea leaves and has completely abandoned what their historical business model has been. They are focusing on a new strategy and plan that leverages what they learned and discovered while building the current one. It is a risky move, an aggressive one; however, they saw they were in a race to zero and decided that their skills, experiences, and capabilities can drive their business in new and different and sustainable direction. Like Cintas, they leveraged innovation to keep the business growing instead of protectionism tactics to simply keep it alive.

The race to zero has no winners. Be aware of the shifts in your business, the changes in your competitive and financial landscape and make an honest assessment – am I trying to hang on? If you are, look at your business in a different light and put some innovation and change in the mix. You will likely find a new race to win—the one of profitable sustainability.

Republished with author's permission from original post.

Dave Cooke
I leverage my 25 years experience in sales and marketing to create and implement strategic initiatives and develop educational programs that increase both revenues and profits. I take great pride in my experience in turbulent, chaotic, and transitional work environments. It is from these experiences that I have developed my commitment to collaborative teams, strong internal and external relationships, effective communication, decisive leadership, and a cohesive, collaborative strategy as keys to sustainable revenue growth.


Please use comments to add value to the discussion. Maximum one link to an educational blog post or article. We will NOT PUBLISH brief comments like "good post," comments that mainly promote links, or comments with links to companies, products, or services.

Please enter your comment!
Please enter your name here