It sounds a bit like a nightmare, you go to bed and when you wake up your business is gone. I don’t mean gone in the sense of a fire, flood or earthquake. What I mean is that your business disappeared because there’s no demand. It might seem far-fetched, but when you think about it you can really see it all around you. Let’s take an example that played out over the last 20 years or so. Of course, 20 years is not overnight but bear with me while I explain.
The disruption of Kodak
Once upon a time, there was a company called Kodak that created film for cameras. That was a good business to be in. Cameras captured important moments in life, and you needed film to capture them. The film had to be developed and had to be printed and then people put them in photo books. There’s even a phrase, a Kodak moment. Although Kodak developed a digital camera in the mid-70s, they did not believe that the digital cameras could ever take the place of the traditional film-based cameras. Boy, were they wrong! Digital cameras took the market by storm. The market for film-based cameras dried up in only some hard-core enthusiast still use them digital cameras were the winners of the battle. Kodak filed for bankruptcy.
Ok nice story, you might think. But this isn’t the whole story because the digital camera itself suffered the same faith as the film-based camera. When the first smartphones came to the market around 2007, most notably the Apple iPhones but also other vendors, people suddenly didn’t need a separate device to take pictures. They had a smartphone so why would you need a separate camera to take pictures? Smartphone manufacturers also see this and constantly are improving the models that they’re making with even more megapixels and even more cameras in a multi-functional device. The result? In 2010, 121 million digital cameras were sold. In 2018 the number dropped 84% to 19 million cameras. There goes your business, all because of the smartphone.
Moral of the story
The moral of the story? You might have a business today, but are you sure you’re going to have one tomorrow? Skeptics might say that this is something that takes years and years to pan out. And in hindsight they are right. But when you’re in the middle of this process, are you sure that you going to see it is clearly? Kodak really didn’t believe in the viability of the digital camera because they had such a successful business with films that made such a huge profit.
There are more examples where we see businesses suddenly being under pressure. Taxis, once a heavy regulated business with medallions and large entry fees, get competition from companies like Uber and Lyft. Hotel chains suddenly see Airbnb becoming a competitor, almost out of nowhere. Banks that have been around for hundreds of years compete with nimble startups that want to take their clients and business, especially the very profitable ones.
I can go on and on with examples of disruption in business and almost no business is immune to this. So, what can you do about it? There are some strategies. I know some publishers in the computer magazine trade that know that the heyday of the print magazine is over. They can still make money, but it’s becoming less and less and at some point, it’s not going to make sense anymore, because the group of readers is just too small.
Telecom companies notice that the number of people who still have regular phone lines, is becoming smaller and smaller. Postal services in the Netherlands like Post NL, see a decrease in the number of letters that are sent, on the other hand they see a large increase in the number of packages that are sent.
None of these examples are almost overnight casualties with perhaps the exception of the electric cigarettes, that might be banned because of an alarming number of deaths for this ‘save alternative to smoking’.
When you look at what’s happening around the world, are you sure that your business is safe? There might be new technology, which is better than yours, that can take over your business. There might be a new business model that allows a competitor to grow much faster than you could in much faster time than you would expect.
So, awareness is key and with awareness also comes the need knowing how to innovate and experiment. Don’t be afraid to fail, as long as you take the lessons learnt and avoid the pitfall of the next generation or product.
The key to all of this is largely digital. Not so much the digital transformation that you need to go through. This on its own is quite a challenge. According to a recent study, 70% of digital transformation fails. Digital transformation puts you on par with your competitors but if you want to win you need to be ahead of the pack. That’s what I call digital imagination. What can we do with all of this data that we have or that we might gather to create something our competitors do not have, and our clients really want?
For a digital imagination to work it’s necessary to have the right components in your IT landscape that can connect anything to anything, translate messages and transfer messages from one format to another insecure version, with the right tools for management monitoring and monetization. This isn’t something that you necessarily need to do all on your own. Look for partners that will add value to your products or services and make them part of the bigger ecosystem.
Ignorance is dangerous
Ignoring problems seldom make them go away. Markets that are in decline seldom turn around and start growing again. Making your market grow will require some pretty amazing digital imagination and a good dash of luck. It’s the proverbial blood, sweat and tears in combination with top-notch IT solutions that will give you the best chance of survival.
Digital transformation or digital imagination requires several elements. Do you want to read which elements? Download the Digital Transformation white paper.