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.
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.