Your future strategy – do you want a faster horse or a luxury watch?
Have you looked at adverts for watches lately? Watch manufacturers spend a fortune on promoting watches but not to tell you the time any more. It’s because everyone now has a super-accurate device in their pocket that will do that for them.
So watches have become high-end items of jewellery now their original purpose has been taken away by the mobile phone. It’s a smart move on the part of the watch companies because their original business is disappearing. I doubt very much that 5 years ago they saw this happening and so now most of them are playing catch-up.
I believe that most businesses are asleep when it comes to understanding how technology is about to hit everyday life and will wipe out many as we know them.
In previous blogs, I have looked at the questions that I think boards should be asking to manage this technology threat and whether leadership teams have the skills to manage the subsequent impact.
In this blog I thought I would reflect on ‘technology creep’ and give you food for thought for your own business future.
I’ve been in the mobile phone business since 1987 and a couple of years ago I started to list the businesses that had been destroyed or changed out of all recognition by the hand-held device that we used to think just made phone calls. This is the very shortened version
- The camera
- The watch
- Any device that plays music
- Ways of playing games
- The CD and the DVD
- The home fixed telephone line
- The paper diary and address book
- The stand-alone GPS
- The pedometer and other forms of health monitoring
The reason I keep this list is to remind me of how technology changes lives. It always has done but it used to do it reasonably slowly. The speed of the shift from the horse to the internal combustion engine seems glacial compared to the changes that have taken place in the last 20 years. And everything we know about technology says that the speed is accelerating.
In “The Second Machine Age” by Erik Brynjolfsson and Andrew McAffee, the authors document in detail the exponential growth of computing power and the effect it is beginning to have on the economy.
Even though it was incredibly slow by comparison, the change from the horse to engine power caught many companies unawares and many of them went under. Some were far-sighted, some were lucky (like the watch companies) and found a new niche. We are going to see this happening again unless business really starts to understand the strategic threat from the new technologies. But this time it will be much, much faster.
Why does this happen? Why don’t perfectly intelligent people see what appears to others to be blindingly obvious and what can companies and boards in particular do to avoid falling into this trap?
I talked in my last blog about strategic processes for boards to start thinking about the future and key here is to get as much input as you possibly can to help you understand what the threats and opportunities are for your business.
As the banks will tell you, past performance is no indication of the future – Henry Ford used to say that if he had asked customers what they wanted the answer would have been “a faster horse”.
So industry trends may be interesting but also very misleading. It may be, as Kodak found, that another product will come along and annihilate your business. It may be that the output of your business is still required but that the way of creating that output will be totally different.
If you are one of the big accounting practices, will you still need all those fresh-faced young auditors ticking lists when machines can do that so much more cheaply?
I believe these are the questions smart boards need to ask themselves. I’d be delighted to hear your views.