What does it take to create a sustainable business model? Most people answer the question with comments about cash flow maximization, the creativity of the company’s business plan or their approach to attracting and retaining talented employees.
They often overlook the most important factor of all - having a product that will be in demand for years to come. Many companies fail because they can’t foresee the inevitable decline of their product. The Smith Corona Corporation is a prime example. From 1919 to 1995, Smith Corona was a national leader in the typewriter industry. Just before the turn of the 20th century, they were forced to file for bankruptcy. They failed to come to terms with the declining demand of their product, despite the fact that countless white papers showed the typewriter industry was in rapid decline.
“Although Smith Corona also manufactures word processors, facsimile machines and other office products, the core of its business -- and its brand identity -- has been typewriters, which have been made largely obsolete by the growing use of personal computers in the home and by small businesses. In addition to Smith Corona, only one other American company, Lexmark International, still produces typewriters in any large quantity,” wrote Laurence Zuckerman in his 1995 article for the New York Times.
The thinning industry should have been a warning to the ailing company, but they seemed to ignore all red flags. Numerous studies were written in the 1980s and 1990s on the growth of the computer industry, but they seem to have ignored the research and imperiled their own company in the process.
Entrepreneurs Must Depend on Objective, Peer-Reviewed Studies
Entrepreneurs must constantly assess the evolving landscape of their industry. The unfortunate reality is that truly sustainable businesses are as nonexistent as unicorns. Every business is threatened by obsolescence, because competing products hit the market every day. The question is whether those products will shatter the foundation of their business or fade as quickly as they are launched.
Savvy entrepreneurs will carefully research industry trends to identify problems that threaten their sustainability. Unfortunately, even business owners that make an effort to be objective may overlook ominous threats to their company’s future.
The problem is that researchers present highly biased and often in accurate studies. It is too easy for people to cherry-pick studies that align with what they would like to believe. Entrepreneurs are likely to find solace in studies that tell them their product will be in high demand for years to come.
This illustrates the importance of peer-reviewed studies. Peer-reviewed studies have been vetted by multiple experts, so they tend to have much more validity.
By focusing solely on Studies that have been peer-reviewed, entrepreneurs will have a much better understanding of the challenges and opportunities in their field. They won’t easily succumb to confirmation bias by reading studies that confirmed their hopes and aspirations.
One of the biggest examples of the importance of peer-reviewed studies is in the vaping business. Demand for vaping products has increased dramatically in recent years. By 2025, it is expected to be worth $47 billion. This is great news for companies that sell vaping kits and supplies.
However, a lot of the demand hinges on future research in the field. Major studies so far have indicated that vaping is healthier than traditional cigarettes. Vaping companies should be encouraged by these studies, because many have been peer-reviewed.
However, research in other fields has not been extensively peer-reviewed. Entrepreneurs in these fields need to be more cautious before making long-term projections or investing in new capital.
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