Disrupters learn from the losers
Technology leaders must think like Disruptors
A decade ago, the five most valuable companies on the S&P 500 were Exxon, GE, Microsoft, Gazprom, and Citigroup. Now? It’s Apple, Alphabet (Google), Amazon, Microsoft, and Facebook. Things change. And they change fast. And many technology leaders are not ready for it. In some ways, none of us are.
Amazon is maybe the ultimate disruptive company; it essentially ushered along a completely new way of thinking about commerce. But interestingly, before Amazon started there was another disrupter called Webvan. In 1999, myself and a group of fellow Wharton MBA students in an e-commerce course won a prize in a contest sponsored by Salomon Smith Barney. (There are so many elements of irony in this but I will save that for another blog.) Our topic? Webvan vs Albertsons: How e-commerce will disrupt brick and mortar grocers. Our conclusion was that the bricks would always be around to some extent but that everyone would become more comfortable with buying groceries online thanks to Webvan. We were right about some of that! More important at the time is that the now defunct brand sponsored our $1000 per team member prize!
Perhaps the ultimate success of Amazon is the fact they learned from the mistakes of their Webvan predecessor. Webvan is the best example of a company that tried and failed at a bold attempt to disrupt a stodgy industry. It raised $375 million in its IPO, achieved a peak stock market value of $1.2 billion, then flamed out spectacularly before filing for bankruptcy in July 2001.
Facebook completely disrupted how we think about relationships and staying connected to friends and family. But before them there was MySpace. Google and Apple, in their own ways, did the same for accessing and sharing information. But they borrowed heavily from the playbooks, both winning and losing games, of Alta Vista, BlackBerry, and Apple 1.0 (remember Jobs was fired by Apple?)
In my career, I’ve met plenty of leaders and managers — up through the executive level — who absolutely think disruption isn’t real, or won’t come for them. And I have met several techies and startup guys who are on their 10th attempt and think everything is ripe for disruption. They are both wrong to some extent. There are some industries that are just begging to be disrupted: real estate title companies and public education come to mind (sorry if the latter offends).There are certain industries that would be a little bit harder to disrupt. Airlines come to mind, because the cost of entry is massive. But … you could argue Southwest disrupted the airline industry to some extent. Their stock is still mostly hot, too.
The reality is that anything CAN be disrupted. Mind blowing statistic for amateur corporate historians: 88% of the 1955 Fortune 500 doesn’t exist anymore. You can argue that 1955 was a long time ago and business models are obviously very different, and you’d be right — but you’d also be proving my point. To quote Varsity Blues, a B-movie that came out right around the time Webvan was imploding: “Things change, Mox.” We’re all candidates for disruption to some extent.
That is going to require a new way for technology leaders, CIOs, CTOs, and others with decision-making oversight to approach their day-to-day jobs. What might that look like? Here are six ways I see it shifting.
Scenario planning: We will constantly prepare for disruption or downturns by thinking through our potential reaction to certain market events. We’ve ideally been doing this for years, but too many CIOs are still spending part of their supposedly strategic time just putting out fires.
New business models. We must continue building a closer relationship with the business units. We can’t be seen as “IT” or “infrastructure.” It needs to be baked in. My current team is talking to as many external clients as we can, along with our colleagues, so that we better understand demand. We must continue to think about new ways of working and new business models for delivering services.
Experimentation. We must be comfortable with taking risks and failing fast. We must try out new things and not be afraid of the possibility of experimenting and throwing away. The best unicorns started off as 10, 20, 30, or 150 failed ideas. If you want a good read on making (tons of) money despite massive failure at some points in the past, check this out from HBR.
New org model. We must cease the “us” versus “them” thinking that has corporate IT and the business operating as separate entities. We are partners driving value. It’s that simple. I disdain the use of the word “The Business” as “Clients” of IT. We are all colleagues working together to drive value for external customers and profitable growth for the company.
Invest in talent. We must begin to compete for the software engineers, user experience designers, and innovators that are currently going to the startups and the more Innovative companies. In order for us to change we must invest in new talent as well as training our existing talent to think differently. This is hard for many technology executives who came up in a world where products and processes were paramount to people.
What else would you add about how technology leaders in enterprise can think differently about potential disruptive forces?
Be well. Lead On.
Adam
Related Posts:
Disruption: Thinking like our ancestors
Innovations Changing Our Industry
Adam L. Stanley Connections Blog
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Kodak missed a tipping point and went bankrupt. Blockbuster Video fought the wrong enemy and went bankrupt. Taxi drivers, hotels, travel agencies, and so many other industries are now fighting less against themselves than against new entrants that actually seek to solve a problem, to fill a need, to change old norms. Perhaps more so than most of these industries, the commercial real estate industry has been slow to both recognize and embrace change. I am convinced messenger service companies remain in business solely because the CRE industry continues to mistrust the transmittal of critical documents to anyone or anything not human!