In busi­ness, dinosaurs may be big but none is invul­ner­a­ble. And, when they become vul­ner­a­ble, death can be swift.

Dig­i­tal Music News (@digitalmusicnws) cre­at­ed an excel­lent ani­mat­ed graph­ic [link] to show just how rapid­ly com­pact discs (start­ing in 1983) replaced vinyl records and cas­settes. By 2004, com­pact discs were becom­ing passé thanks to the advent of dig­i­tal music. At that time, CDs had a 95% lock on the music-dis­tri­b­u­tion mar­ket; and the com­pa­nies that drove all those sales were, by and large, big com­pa­nies. One source report­ed in Octo­ber of 2011 that the “CD-for­mat [is] to be aban­doned by major labels by the end of 2012” [link]. The Huff­in­g­ton Post declared CDs “dead” in Jan­u­ary 2013 [link].

Words can’t pro­vide the dra­mat­ic impact of see­ing the ani­mat­ed graph­ic, but let me try. CDs did away with cas­settes and LPs in 20 years; dig­i­tal music did away with com­pact discs in about half that time.

Target Dinosaur

Dynamos to dinosaurs: in busi­ness, it’s an old sto­ry that’s new every day. Just check the rapid devo­lu­tion of the tra­di­tion­al spring-wound watch indus­try after quartz tech­nol­o­gy chal­lenged its pri­ma­cy. That’s an old sto­ry. What’s new? Try two days ago and the announce­ment of the Apple Watch [link]. It took less than a day from the announce­ment for Bloomberg to report that many main­stream (quartz!) watch­mak­ers were toast: “Apple Watch Threat­ens Low­er-Priced Swiss Time­piece Brands” [link]. Says the Bloomberg piece:

Things aren’t going to look too rosy for small­er or more low-end watch brands,” said Ariel Adams, a watch blog­ger whose site A Blog to Watch gets 70,000 dai­ly views. “In the short term, all but the most sol­id watch brands are going to suf­fer and mon­ey is sim­ply going to be fun­neled away from them in antic­i­pa­tion of the Apple Watch.”

Swatch’s stock dropped 1.8 per­cent yes­ter­day, bring­ing its annu­al decline to 17 per­cent. Swatch Chief Exec­u­tive Offi­cer Nick Hayek and com­pa­ny offi­cials declined to com­ment to Bloomberg News. At an event in Zurich, he was cit­ed by Tages Anzeiger news­pa­per as say­ing the com­pa­ny is “not ner­vous.”

Not ner­vous? I hear that from many man­agers who aren’t being respect­ful of three musts for any leader:

  • Know­ing that things are chang­ing is not enough. Find the true source of the change. While tech­nol­o­gy played a key role in the evo­lu­tion of the music indus­try, was it the tech­nol­o­gy of music that drove growth and trans­for­ma­tion or was it the tech­nol­o­gy of liv­ing? As soon as run­ners want­ed some­thing even more portable than the Sony Walk­man cas­sette-then-CD play­er, it should have been obvi­ous that peo­ple desired mobil­i­ty in all their data needs. This makes observ­ing and organ­is­ing those obser­va­tions into pat­terns para­mount for almost any indus­try when there are sig­nif­i­cant changes in the human expe­ri­ence. No firm oper­ates in a social vac­u­um, and tech­nol­o­gy has been increas­ing­ly dri­ving human expe­ri­ence? This is a not-triv­ial dif­fer­ence. Know­ing where the epi­cen­tre of trans­for­ma­tion resides is a rather impor­tant start­ing point for any­one who needs to know what’s next.
  • Learn how tech­nol­o­gy is chang­ing the busi­ness mod­el. Be ready to aban­don the assump­tion of con­ti­nu­ity. While it is true that the record­ed music indus­try inno­vat­ed con­tin­u­ous­ly and rather seam­less­ly from vinyl to tape to disk, it was not until the indus­try busi­ness mod­el was chal­lenged (think Nap­ster and ring­tones) that the indus­try lost its way. Why? Because the par­a­dig­mat­ic shift required “think­ing in new ways” about the very fun­da­men­tals of the record­ed music indus­try. Those who con­trolled the sta­tus quo chose to try to keep it that way, not lead the change. The dynamos of the time were dri­ven by iner­tia and defence of the sta­tus quo. Like­wise, the busi­ness mod­el for any­one who makes a watch that just tells time now has thick moss grow­ing all over it. Entire indus­tries and com­pa­nies (and their respec­tive) lead­ers must devel­op a sense for aban­don­ing the assump­tion of con­ti­nu­ity — a core strate­gic premise of the past 75 years — and com­mit to sys­tem­at­i­cal­ly think­ing about the future in new ways, using an unob­struct­ed view of what is pos­si­ble. This has two ben­e­fits. First, it will force man­agers to engage in a con­ver­sa­tion focussed on what could be rather than assum­ing what should be. Sec­ond, any sug­gest­ed change in basic strate­gic premis­es sets the stage for devel­op­ing a robust fore­sense of what future-tense oppor­tu­ni­ties are wor­thy to be giv­en the bulk of the avail­able time, ener­gy and resources.
  • Under­stand, at the most fun­da­men­tal lev­el, the “job” peo­ple are try­ing to get done. Peo­ple have prob­lems. So do com­pa­nies. So do nations. If you are able to tease out a want/need/desire that is actu­al­ly very sta­ble across time and tech­nolo­gies, and if you are able to under­stand how an evolv­ing tech­nol­o­gy can be brought to bear on wants/desires/needs in an inno­v­a­tive way, then you are solv­ing prob­lems, not just sell­ing prod­ucts or ser­vices. When tech­nol­o­gy is seen as a solu­tion to a prob­lem, a way to get a job done bet­ter, it becomes empow­er­ing rather than threat­en­ing or all-con­sum­ing. Tech­nol­o­gy in search of a prob­lem has nev­er been a great premise for dis­cov­er­ing new ways to cre­ate val­ue. This sug­gests that “fore­sense” is not about pre­dict­ing the future and more about under­stand­ing how the solu­tions to prob­lems can, no, must evolve as the world advances and tech­nol­o­gy makes new things pos­si­ble.

Dynamos can become dinosaurs fast; it hap­pens at the speed of nextsens­ing.

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