Lifecycle of Idea
The concept of the business lifecycle reflects the natural stages that all businesses go through, from the moment that the idea is developed into a business, until the moment that the business wraps up. For some businesses, the stages can last a long time, but for other businesses, the stages are relatively short, and the progression through them can be quite fast. In other cases, the business hits a point of maturity, starts into decline, and then is re-invented, to start the business life cycle over again.

The five stages of the business life cycle are development, startup, growth and establishment, expansion and, finally, the maturity and possible exit stage (Petch, 2016). Target’s business is in the maturity stage, but the company is highly successful as a competitor in the big box retail space, and therefore not at all considering exit. It is what would in the BCG matrix be considered a cash cow – a large stable and consistently profitable business. It is precisely because of that maturity that Target is seeking to revamp and enhance its digital presence. The company needs to spur growth in an industry that is not experiencing a lot of that. This means that Target needs to not only defend its existing market share, but also to win share from its major competitors like Walmart and Amazon, and furthermore to win business from smaller players as well.

The e-commerce side of retail is a growing business still. This side of the retail business is growing at 15% per year, which means that it is not a mature business, but rather e-commerce exists in the expansion stage of growth (Ali, 2019). It is long past the startup stage, which was twenty years ago, but that is a much higher growth rate than the retail business or US economy as a whole, both of which are more in the maturity phase. This expansion stage is why Target is aiming to enhance its digital business, because this is one of the areas where there is much stronger growth potential than exists in the rest of its business.

The expansion stage is characterized as a situation where the business is firmly established, which is the case for e-commerce in general, but firms in the industry seek to capitalize on its stability by broadening their horizons. For Target, that is precisely what this strategy is about. E-commerce is seeing continual evolution in terms of technologies and consumer preferences, and these changes are a large part of what is driving this business forward. For retailers, staying on top of the latest e-commerce trends is critical to matching the growth of the industry as a whole, and a failure to keep modern will likely result in the company falling behind the competitors that are leading the way in terms of innovating new strategies and adopting new ideas.

Continued success during the expansion stage relies on the business having a plan to expand, but doing so with a degree of caution. Expanding too quickly, or too rashly, without a coherent strategy, is likely to result in difficulties or outright failure, as was the case for Target when it expanded into Canada. The new enhanced digital strategy for Target is rooted in leveraging the company’s existing brand strength, which generates traffic, and which also brings in loyal customers. With a better e-commerce experience, both on web and mobile, Target hopes that it can capture a greater share of the shopping dollars, and ideally start to bring in new customers as well. This is what the expansion stage is about, both getting more money from existing customers and attracting new customers, especially those who have heard of the brand, having positive associations with it, but might otherwise patronize other businesses that have a stronger e-commerce presence.

Profit Generation

There are two ways for a business to increase its profits. One is to earn more revenue and the other is to reduce the costs of doing business. Ideally,...…and become the benchmark that other companies look towards. This requires a permanent and sizeable investment, and a commitment from the top leadership to make digital the most important aspect of the company. It is already the main engine of growth for Target, so this is not a big stretch, but the company is much more associated with bricks-and-mortar retail, and that is still the major revenue driver, so shifting focus to digital leadership would definitely be something that has to be done on a strategic level, and driven by the company’s leadership.

The digital innovation unit should operate separate from the unit that runs the company’s digital properties. One of the reasons for this is that fostering innovation is difficult to do, and some people are more suited for that, while others are more suited for the day-to-day running of things. Target needs to ensure that its builds a culture of innovation, but this is easier to do with a smaller, more nimble team that is comprised largely of innovative people, and where the culture can be a little bit more innovative. Target is a reasonably innovative company, but innovation is not a historical strength, and it is unlikely that innovation and creative problem-solving will ever become a major part of the overall corporate culture. But this culture can be fostered within a given unit, and that is what is recommended.

All told, the enhanced digital initiative builds on what Target has done before, and helps to build out the infrastructure and culture to allow Target to continue to improve its digital presence, and become more of an innovator in the field. With the right approach, Target can make digital not just a point of strength, but a point of sustainable competitive advantage. That should be the goal – for this to be truly sustainable, Target needs to bake digital enhancement and innovation into the company culture, and create the conditions on the ground that are most ideal to sustaining this.

References

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