Everyone knows about the proverbial buggy whip manufacturer. You know, the company that didn’t see the rise of the automobile coming and failed to adapt to the changing market. That’s only part of the story. There are carriage companies that did change and thrive (and some are still in business today).
To be sure, corporate history is littered with companies that failed to change with the times. Much has been written about companies that were slow to adapt – or never did – like Eastman Kodak Company, Blockbuster, Polaroid and Borders Group. Not nearly enough attention has been paid to companies that actually have refashioned themselves into something new, evolved and succeeded. Retail investors have plenty of options when it comes to companies that have reinvented themselves or their products to stay relevant.
When you think of technology, John Deere (Tii:DE) might not come to mind. But the company founded in 1837 in Moline, Ill. is embracing technology that helps make farming safer and easier. The company unveiled a self-driving tractor at CES earlier this year and is investing billions on high-tech, automated farming equipment. The automation comes from analysis of cloud-based datasets managed by the John Deere Operations Center. CEO John May expects that in the next decade, 10% of the company’s annual revenue will come from software subscription fees, part of the The Deere Smart Industrial strategy, announced in 2020 that focuses on delivering intelligent, connected machines and applications that will revolutionize production systems in agriculture and construction.
John Deere acquired agricultural artificial intelligence company Blue River Technology in 2017 to boost its AI program. The first product from this partnership is a system that uses machine learning algorithms to determine where a tractor should spray pesticides.
Another company that has been around for over a century, but understands the need to change with the market is Levi Strauss & Co. (Tii:LEVI). The clothier quickly adapted to the pandemic when stores closed and millions of consumers started shopping online. The San Francisco-based apparel company had invested in digital technologies including AI and predictive analytics prior to the pandemic, so when the shutdowns hit, Levi’s was ready. The company announced in June that it was pursuing a direct-to-consumer strategy and boost its investment in stores, online platforms and other digital capabilities, while “creating an integrated omnichannel shopping experience,” which is expected to profitably drive this channel to 55% of the company’s annual net revenues by 2027 while tripling its ecommerce business.
Even some traditional newspaper companies are flip-turning and adapting to changing markets. The New York Times (Tii:NYT) is a good example. The company has bled print-newspaper subscribers for decades, but its digital transformation has been impressive. In the second quarter this year, the company had its highest-ever number of new subscribers to the All Digital Access tier, which includes The Times’s news report, Games, Cooking, Wirecutter and The Athletic. The net gain of 180,000 digital-only subscribers was a 70 percent increase from the net gain in the second quarter of 2021.
Corning (Tii:GLW) started growing as a business in the mid-1800s by mass-producing glass for Thomas Edison’s light bulbs and it could have rested on its laurels, content with its existing market channel. Instead, the company continued to innovate and reinvent how glass might be used. That innovation led to the creation of Pyrex, the hard-wearing cookware. More recently, the company’s culture of innovation led to the creation of optical fiber used for internet telecommunication and Gorilla Glass, the difficult-to-break glass used on high-tech products like the Apple (Tii:AAPL) iPhone, iPad and Watch.
Netflix (Tii:NFLX) is another great example. The company started out as a DVD home rental delivery service. It rented DVDs by mail and had 20 million subscribers at the height of its DVD business in 2010. The company watched as online streaming gained in popularity, so Netflix started offering its own online streaming alongside the by-mail DVD business. Netflix has become one of the world’s largest entertainment services with 221 million paid memberships in more than 190 countries. The company streams TV series, documentaries, feature films and mobile games. Netflix is now looking to expand into streaming live sporting events as well.
Not all the companies that have adapted to changing markets are high tech. Some companies have simply found a better market for a product than the one it was originally designed for. Play-Doh, the popular children’s modeling clay was first sold as a cleaner to remove coal residue from wallpaper in the 1930s. Demand for the product dipped as modern oil and gas furnaces became popular in the 1950s. The owners of the company discovered a schoolteacher using the clay in arts and crafts classes and the rest is history. Play-Doh is now owned by Hasbro (Tii:HAS) and more than 2 billion cans of the modeling clay has been sold.
Even when we stick with the original buggy whip analogy, there are companies from that era that did adapt and change. The Studebaker Brothers Manufacturing Company began as a blacksmith shop in 1852. Instead of waiting around for the business to fail, the company acquired smaller precision metalworking businesses that gave it the expertise it lacked to allow it to enter the automotive business. Studebaker made it to the 1960s before it was eclipsed by the Big Three, but in 1913, its automobile production was second only to Ford (Tii:F).
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