What defines a great business tomorrow?
How do you create a futuristic change management strategy for dealing with business model disruption?
We don't yet know. However, history can probably teach us a few lessons about the future of business.
Jim Collins, one of the most successful business authors of all times, laid out a case in 2001 for how businesses go from good to great, by case studying companies who outperformed their competition over a sustained period of time.
10 years later, has this thinking withstood the test of time?
One of those companies was Circuit City, which filed for bankruptcy in 2008. Today, with the unprecedented speed of change, you can go from being good to great to obsolete overnight, if you don't deal with change appropriately. In the highly competitive consumer electronics space, Best Buy - its main rival - literally killed off competition from Circuit City by constantly evolving, adapting, and changing. Circuit City stood still, but the products it sold evolved with the speed of Moore's Law. By constantly changing and shifting with the times, Best Buy instead proved that if you constantly disrupt the market, your competition cannot keep up. The best way of dealing with change in business, is perhaps to create it.
I believe that the closest we can get to defining a "great" business of the future is to say that it is one that is built to be adaptive, to be constantly shifting, and fluid enough to be upgradable to adopt technological opportunities.
Nokia's leadership failed to upgrade. When the multi-cultural, diverse, and internationally savvy companies of Silicon Valley switched from simple mobile platforms to Smartphones in the late Twenty Noughties, Nokia was caught off-guard. They failed to change and adapt with the times. Now, Apple's iPhone and its concomitant iTunes ecosystem, as well as Google's Android operating system dominate the smart phone market. Nokia was a great company, and now it is failing to compete in a disrupted market place. According to the Harvard Business Review, one of the key reasons why Nokia was caught off-guard is that it had a board which was comprised of 100% Finnish, middle-aged men, at a time when consumer shifts were being driven by technological Generation Y natives.
Innovation truly resides at the intersection of different ways of thinking, and Nokia failed to think different.
Jim Collins defined "greatness" as financial performance several multiples better than the market average over a sustained period of time. Collins finds the main factor for achieving the transition from good to great to be a narrow focusing of the company's resources on their field of competence.
This focussing doesn't apply to either Google or Apple, two of the dominant tech players in 2011. What business Google is in it's hard to really know, but it has to do with data and information. With its acquisition of Motorola Mobile, its gamble on travel, experiments in space, social media plays, and advertising forays, it doesn't neatly fit into any one box, yet today it would rank as a great company because it's constantly disrupting business models around the world.
Apple, equally, started as a computer company, and is now something more akin to a media/entertainment ecosystem. What Steve Jobs told us we needed, we bought. We trusted that this change-focussed company would deliver a thought leading phone, even though it was outside of their comfort zone, we loved them for giving us access to their brand in a relatable way through the iPod, and we made the switch from PCs to tablets as a result of their market-leading introduction of the iPad. Both Apple and Google are key disruptors and influencers of every business model's embracing of the Cloud, and its inevitable side-effects. If you constantly disrupt the market place, your competitors cannot keep up.
Borders and Blockbuster are perhaps the latest examples of being caught off guard. In an age where Amazon sells 105 digital books for every 100 analogue books, these two business models have failed to keep up and gone from good to great to obsolete, sometimes within months of being successful. Netflix and Amazon, with less of a focus on analogue bricks and mortar, and a larger focus on digital adaptation and customer-centricity, have made the leap, embraced change, and disrupted the rules of the game in cinema and publishing.
To keep us constantly on our toes and to engage in some scenario planning for the future, I find that this question helps:
What do you think - what business models are the next ones that are likely to be disrupted and fail?
What future thinking do you think businesses need to adopt to deal with disruptive trends?
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