From Fortune 500 to Fortune 5: how long-term innovation roadmaps are changing the industry landscape
By Patrick van Hoof, Innovation Director at Huge
We all know the list — the infamous Fortune 500, a collection of the largest US companies by revenue. Since its first appearance in 1955, there have been quite a few changes. There are winners that inevitably started losing, and challengers who grew large enough to bump incumbents out of position. Some industries have a long history of having a solid representation, such as manufacturing, “fast-moving” consumer goods, and automotive.
Occasionally, completely new industries were created, most notably the IT and high-tech sectors that grew rapidly in the second half of the last century. Shifts like these have caused industry lines to blur and raises the question: Do industries disappear? I am inclined to say no. However, the industry map with its many borderlines is continuously being redrawn. And one of the most significant iterations has been on-going for more than a decade now.
Technology is no longer an industry, but an expertise to transform and reimagine any business. On top of that, the speed and impact of technological development is increasing exponentially, and so whoever is at the frontier will reap all of the rewards.
When Intel, Oracle, Apple and Microsoft came along in the sixties and seventies to join IBM, technology became a full-blown business sector. Focusing on computing hardware and software products and services, it quickly became known as the “tech” industry. These days this tech industry covers all things digital, including the automation of a lot of cognitive tasks that make humans and software-driven machines substitutes, rather than complements. As a result of this, technology has an impact on all other industries. It is no longer about the “what”, but more about the “how”.
While the traditional large companies are slow moving, and having a hard time adjusting to new realities, tech companies apply their knowledge and skills outside of their traditional realm to solve problems or provide better solutions than those currently offered. Is it about the smarts? No, it is primarily because they were born in the digital age, or what my former professor Erik Brynjolfsson at MIT calls “the second machine age,” with the first one being the industrial revolution in the 18th and 19th century.
Studying today’s landscape places four companies at the front of the pack: Google, Facebook, Amazon, Elon Musk Inc, which includes Tesla, SpaceX and his other brainchildren such as the Hyperloop. Now, before you angrily pound the keyboard and unleash havoc in the comment section, Apple and Microsoft are mentioned later. Traditionally considered leaders in tech, they are quickly becoming leaders in general business. My hypothesis for why this is the case is two-fold: First, CEOs are still digital age founders, and they have always had an endgame in mind, including a multi-decade roadmap to make it happen. Let’s see if these hold true for the companies mentioned, and which of the six would fall into the Fortune 5.
Larry and Sergey have always had lofty ambitions. “To organize the world’s information and make it universally accessible and useful”–Google’s mission statement–is neither a short-term nor an easy goal. By forming a new parent company (Alphabet) and taking on new executive roles, they are confirming the notion that their end game is something much bigger even; and they need the right structure to scale and diversify risk. I would not be surprised if it comes down to “optimizing the use of all resources”, human and non-human, on this planet and the next.
The Zuck is definitely on a similar long-term quest. Glass-is-half-empty people would call it a quest for world domination, but I like to think of it as offering the digital half — if not a much bigger share — of humanity’s existence, maximizing both profit and societal impact. In his own words, Facebook in the next 10 year aims to “connect everyone, understand the world and build the next generation of platforms. Achieving these goals will involve many different efforts and steps along the way”. Sounds like a long-term, preconceived roadmap to me. Oh, and in the near term that includes casually disrupting the retail, telecom, banking, and possible other sectors.
“Earth’s most customer-centric company” has taken a lot of heat due to the New York Times’ expose about its culture. However, the piece’s focus on how employees frequently resort to elbow throwing to achieve short-term goals takes the attention away from what Amazon is trying to do. Jeff Bezos still reminds the company’s owners of the importance of long term thinking by referring to the original letter to shareholders from 1997 — the year Amazon went public. Given Bezos’ side projects, among which are an aerospace company and a 10,000-year clock, it is safe to assume that he has something grand in mind for Amazon as well. He is aiming for more than selling you books and groceries. By anticipating your daily needs, and speeding up delivery, it will be more about “frictionless living”. That is as customer-centric as it gets.
Then there is Elon. He certainly doesn’t think of the automotive industry when he considers the future of Tesla. For him, life on Mars is the end game — in his lifetime anyway. His vision for it is so specific that he’s given himself a deadline–2040. By the end of the next decade, Musk claims that humans will have begun to colonize Mars, and he’ll have managed to save humanity even if Earth doesn’t make it. Steps that sound radical in themselves– the California Hyperloop, reusable rockets, and battery-powered homes — are all just pieces to one bigger puzzle.
Who will be entry number 5? Obvious contenders are Apple and Microsoft, which are both in the middle of a transition aimed at securing their position on the interstellar stage. With the originals, Bill Gates and Steve Ballmer, handing over control to Satya Nadella, we are now witnessing the Big Mic’s push away from the 20th century tech industry and into the second machine age, and the company’s Tim Cook is trying to move beyond personal computing and electronics hardware innovation. As for Apple, it’s clear by now that they are no longer just after your home ecosystem, but are also staking claim on your transient environment by preparing a move into automotive. Is this part of the late Steve Jobs’ long-term roadmap? I would like to think so. It is hard to imagine that a visionary with such strong need to control the future of personal computing did not leave his team a book of secrets. Since the current leadership team is flawless in execution, we can safely assume that if there is such a book, the company will indeed be on the Fortune 5 in 20 years. The other reason why I am not quick to round off the short list is of course the current startup craze. It is very well possible that a prince will kiss one of the so-called unicorn startups, and turn it into a very real winning racehorse.
In a recent research report, PA Consulting surveyed 750 senior executives of businesses across 15 countries and nine sectors. The survey findings show that the executives have no innovation skill set, nor have they surrounded themselves with people who do. Not only is this a disturbing fact, it is the primary reason the digital companies have been able to enter into new and completely different markets, such as luxury goods and transportation. It’s not just the skills and expertise, but the long-term goals that the CEOs of these firms have. The founders of these companies didn’t just start a business; they took the first steps on a long road to solving some of the world’s greatest challenges.
Seemingly unrelated things can actually be very much related, it just won’t be as obvious in the short-term. So start drafting your roadmap for humanity, and if nobody understands it you may actually be onto something big.