Just as television shows age, so do businesses. It is important that managers of these businesses not fall into the same trap as many television executives, better known as “jumping the shark.”

In television, there is an expression – “jumping the shark – that describes a common reaction of writers and producers when a successful show begins to age and lose it attractiveness.

The phrase refers to a scene in the fifth season of the show Happy Days where Fonzie (Henry Winkler), wearing swimming trunks and his leather jacket, jumps over a shark on water skis. Jump the shark from that point forward became the pop culture phrase that meant that a television show had passed its peak. It was defined as being that point where the makers of the show started doing more outlandish plots and tricks – even to the point of ridiculous – in an effort to sustain an aging show.

The important element to note is that, in their attempts to do this, they never changed the formula. They just kept trying to pound the same formula harder and to a more outlandish extreme.

By contrast, some of the most successful, long-standing shows have been successful because they would periodically innovate and change the formula. They stay true to the most important foundational elements and to their audience but add fresh elements that breathe new life into a show.

In most of these cases, the television executives took some risks but those risks paid off. The classic example of this was the Star Trek series. In the second series, the popular death-defying captain, William Shatner, was replaced by the cerebral Patrick Stewart, a Shakespearian actor by training who hardly fit the previous mold of a dashing, swashbuckling hero. The plots changed commensurately as the show delved into deeper moral and cultural issues while keeping many of the same foundational science fiction elements. Those innovative changes dramatically improved the show and caused it to surpass the almost cult-like success of the first series.

While most people view television shows as entertainment, it is nevertheless a business and television shows tend to follow the same kind of S-curve trajectories as traditional businesses. All businesses get mature. All businesses get tired and can start to fade. When this happens, there is a natural tendency for managers to revert back to what they have always done except to more of an extreme – add more sales people, increase the advertising and promotion budget, add more features to the product, etc. It is simply… jumping the shark.

How to know if your business formula is aging

There are some clear signals to indicate that you have reached this point:

  • You haven’t made any significant changes in some time and growth is beginning to slow or even decline
  • Recent features or benefits you have added to your products or services cannot command higher prices or more market share
  • You are pouring more and more money into traditional investment areas but are seeing diminishing returns on those investments or no returns at all
  • Prices are declining under competitive pressures

Managers should be very concerned if they begin to see these signals because they are lagging indicators. They usually indicate that you are well down the road to stagnation. It is also not uncommon at this point in the life cycle for other, emerging competitors to be working on the next generation products or business models. It is well past the time to act! It is time to urgently engage in strategic innovation.

Moving to strategic innovation

We call it strategic innovation because it is innovation that must make a strategic impact. It is strategic because it is created with an understanding of the forms of innovation that are likely to have the most impact at that point in the life cycle.

It involves understanding customers even better than the customers understand themselves and having a strong sense of what type of innovation will provide the most benefit to the customer.

It is an awareness of the external environment and knowing potential sources of innovation that may be emerging and creating new opportunities.

Innovation is not just about coming up with more features to the product. It is more than just continuous improvement (although continuous improvement is a form of ongoing innovation). Innovation for tiring businesses is about finding ways to adjust or change the formula to keep it fresh or preferably make it even more successful.

An urgent call to action

If you find yourself with these lagging indicators, you indeed have an ailing patient on your hands. While some may begin to feel that it is time to set up a doctor’s appointment, you actually need to be heading for the emergency room. You need to act – rationally, but quickly.

Step 1 – The diagnosis

Before you can take decisive action, you have to know your situation, your strategic position. Those lagging indicators are signs of underlying strategic issues such as:

  • Are you now in a commodity trap?
  • Have you exhausted your current product trajectory?
  • Are there new competitive threats emerging and pulling away segments of the market?
  • Are you failing to create true differentiation that is valued by the customer?

Step 2 – The prescription

Once you have characterized your strategic position, you will need to identify potential sources and forms of innovation. Could it be a next generation product, a major redesign of a key strategic process, a change to business model or some other potential innovation that could have strategic impact? Because resources and time are usually limited, managers must be astute at narrowing down the choices.

Step 3 – The treatment

As complex as they are, steps 1 and 2 are nevertheless easier than the execution. There is never a crystal ball and there is never a clear indication of what option will work best. Fortunately, newer techniques have been developed that utilize exploratory processes for pursuing more than one option until a clear winner emerges.

So what is the likely prognosis? Fortunately, much more is known today about how innovation works and how innovation can be tailored to produce specific results. Just as with the medical technology of today, innovation technology has advanced to the point where the prognosis can be quite good. The first step, however, is recognizing that you have to move well beyond “jumping the shark.”