Re-invention is perhaps the mother of survival.Â Â Â Â Â Â Most obvious examples are from the world of pop, where the likes of Madonna and David Bowie changed their persona at regular intervals and probably extended their shelf-life in the process.Â Â In the world of business itâ€™s harder, but the successes can be spectacular.Â Â Â Â Â There is no better example thanÂ the Finnish maker of gun boots, that diversified into electronics,Â to then become the worldâ€™s leading manufacturer of mobile phonesÂ â€“ Nokia.Â
For other companies, the re-invention was more subtle, BT and IBMâ€™s shift towards consultancy, for example.
Apple got it right too with the iPhone.Â We remember the successes, but the failures tend to be forgotten.Â Â Â A rock star who re-invents him or herself and then hasÂ a string of hits is a genius, but one who gets it wrong, and whose career ebbs away, is dismissed as having lost the plot.Â
The truth is, however, that luck playsÂ a role.Â Â Â Â Â To hit upon the right business model is incredibly difficult, but the laws of statistics say some will be successful.Â For a successful business to then diversify and move into new areas is also tough.Â Of course some will manageÂ the changeover, but others wonâ€™t.
At the beginning of the last century, the economist Alfred Marshall drew up a list of the top 100 companies.Â Â Â Â Mr Marshall was no mean economist,Â he wrote perhaps the first-ever textbook on the subject that was commonly quoted, and he counted among his pupils John Maynard Keynes.Â
So large and powerful were the companies on Marshall’s list,Â he argued, that they would probably surviveÂ indefinitely.Â Â Â He referred to them as the Californian Red Woods â€“ trees that can live for so long that to us humans, with our short life-span, they practically appear immortal.Â Red Woods have in fact been known to live for over 2,000 years.
But in 1999, the economist L Hannah revisited the Marshall list, and discovered that of the 100 largest firms in 1912, 29 had, by the time of the study, gone bankrupt, 48 had disappeared, and just 19 of them were still in the US top 100.
The truth is that nothing lasts forever â€“ and for business, which depends on ideas, the life-span can be especially short.
And that takes us to Tesco.
In the UK, Tesco has seemed liked a miracle store.Â Â It has grown while all around there has been disarray, it has posted record profits while the High Street has been infested with gloom.Â It seemed irrepressible.Â And when Tesco announced its move on the US, even Wal Mart trembled.Â
Tesco had been busy.Â As HG Wells might have put it, the US market had been â€œscrutinized, as someone with a microscope studies creatures that swarm and multiply in a drop of water.â€
But the conquest ofÂ earth proved too difficult for the super-advanced aliens from Mr Wells’ classic novel, they were defeated in the end by the bacteria that life on earth had immunity to.Â Â
Will the conquest of AmericaÂ prove equally tough for the mighty Tesco?
In recent months, we have become aware of growing negative sentiments associated with the Tesco US stores, Fresh and Easy.
In the US the grocery scene really is in two halves.Â Â Â Â At the Wal Mart out-of-town type giant stores â€“ itâ€™s your classic supermarket type experience â€“Â pile them high and sell them cheap â€“ and let the customersÂ do their ownÂ packing. But with the local stores,Â itâ€™s the opposite.Â Â Â Â Indeed, it is not uncommon for customers to have their groceries taken out to their car for them.
So the Tesco Fresh and Easy approach must have come as something of a cultural shock.Â
For Tesco, itâ€™s a high risk strategy.Â That does not mean it is wrong â€“ merely that the odds of failure must be quite high.
Later this month we will get the latest Tesco results â€“ and that will give us an indication of how successful the venture has been so far.Â Â But, right now, the tea-leaves (that’s Tescoâ€™s own brand of tea-leaves) are not looking promising.
Earlier this month, an analyst at Piper Jaffray said that sales to date from the Fresh and Easy stores are around a third of the level the company expected.Â Â Â Then, during the last few days, a blog on the companyâ€™s web site from Fresh Easy’s marketing director Simon Uwins confirmed that the company is taking a three-month break from openings.
At the moment there are 60 Fresh and Easy stores in Los Angeles, Phoenix, Las Vegas and San Diego.
So does that mean it’s curtains for the Fresh and Easy plan?
Of course not; making these stores a success was never going to be easy, and overnight success never likely.Â Â Â For Tesco, this is a long haul, a few weeks of sluggish sales do not make a disaster.
But equally, there is no guarantee the venture will be a success.Â Business ventures fail more often than they succeed,Â and just because Tesco, by adopting one approach in the UK has proven to be a formidable force , it does not mean Tesco in the US, with aÂ quite different model, will also be a success.
© Investment & Business News 2013