The fall of the invincible Tech Titans? — Lessons from past empires
With an ever-expanding portfolio of products, services and technology strands, today’s tech titans have unprecedented impact on our lives. They’re some of the most valuable companies in the world and they seem invincible, but winners always do. As a history buff, I found myself comparing them to the seemingly undefeatable empires of the past and wondering if there are lessons to be learned from their meteoric rise and ultimate demise.
How empires grow …and fall
When asked what led to the downfall of some of the great empires, conventional wisdom immediately points to Huns for the Romans, or the invasion of Russia for Napoleon. These were merely the turning points, though. Often, the root cause of their decline can be found in earlier stages of their development.
I found it helpful to think about the evolution of empires in four stages.
Let’s take the Roman Empire for example, which has long been the empire par excellence for the Western world. It experienced an initial ‘honeymoon’ period of growth and expansion, followed by a period of affluence, sometimes even decadence, and finally its ultimate collapse under the weight of internal struggles and barbarian invasions.
Each of these four stages highlights one of the main risks that empires, and potentially tech giants, face.
Risk 1: Overextension
Through the initial expansion of its borders, an empire sows the first seeds of its future decline. Holding vast territories creates administrative and logistical challenges and problems when it comes to defending against local insurgents. The Romans did not have sufficient forces to defend their borders long-term. Ultimately, military overspending to maintain the empire resulted in a slowdown of technological advancement and decline in civil infrastructure.
Likewise, as the war between tech giants extends into different spaces (new products and brand lines), there will be more to protect with ramping cost and resource requirements. How many battles can one fight at the same time? Where should the best engineering resources be deployed? These are difficult trade-offs faced by any tech company (startup and titan alike) every day.
Risk 2: Complacency
It is perhaps inevitable that, after years focused on the same subject, a leader will lose the zeal that once made them exceptional, and success can lead to complacency.
English historian Edward Gibbon argued in his book ‘The History of The Decline and Fall of The Roman Empire’ that a turning point for Rome was when its citizens became complacent and began outsourcing national defense to “Barbarian” mercenaries.
Competition from other tech players and the ongoing risk of disruption should keep them on their toes, but the threat of complacency is a real one for tech leaders when their trajectory is up and up and their scale makes them seem unstoppable.
Risk 3: Crisis of leadership
The most successful, enduring empires have each had a very driven, iconic individual leading them — whether Alexander the Great, Julius Caesar, Genghis Khan, whoever. And each of those leaders had a very distinct way of doing things and their own attitude to running an empire.
There is something admirable about a leader who sets no limits to what he or she can accomplish. A more subtle and hard to detect crisis of leadership occurs when leaders cross the thin line between setting their sights high and being over ambitious.
Similarly, most tech giants also have a clearly identifiable founder. But the departure of these founders can highlight the risk of relying heavily on an individual for drive and a competitive edge.
Risk 4: Inability to respond to external challenges
Adaptability is essential for survival. Venetian ships ruled the waves of the Mediterranean for many centuries until, during the Voyages of discovery, the focus of European maritime trade moved to new Atlantic trade routes. Venetian ships were simply not suitable for ocean voyages and by the 16th century Venice was no longer the predominant naval power it had once been, with economic power instead shifting to the Portuguese and Spanish fleets.
In the world of tech, new platforms emerge continuously. Every technology advancement is tectonic and virtually no incumbent has remained dominant through more than one or two industry shifts.
Another external challenge, that is perhaps unique to the modern corporate age, is regulation. All of the major platforms are under increasing regulatory scrutiny. Some are even calling for tech giants to be broken up, just like the industrials giants of the Gilded Age.
Are the current tech titans at risk?
If we consider these factors, a sudden collapse of any of the current tech titans does not seem imminent.
Complacency, for instance, is not a word that comes to mind. Having learnt the lessons from the demise of Yahoo and Myspace, they’re all familiar with the existential threat posed by outside tech disruption and are investing heavily in new emerging frontier technologies, such as VR/AR and Artificial intelligence.
Similarly, while the titans will need to learn to live with greater societal demands and strong public pressure, it would require a very brave government to breakup any of today’s titans.
If anything, overextension seems to be one of the bigger threats to the titans’ hegemony. Competition between the global platforms has shifted to an all-out ecosystem war, where everybody is in competition with everyone else. How many battles can any empire fight before resources are depleted, increasing the likelihood that the next big thing will be missed?
Western titans may draw some inspiration here from China. In the West, large tech companies typically acquire competing platforms, rather than trying to work with them. Asian companies take a different approach. Rather than destroying competitors by creating in-house copy cats, increasingly they are helping new winners succeed by strategically investing in them. The players that they invest in are partners. They are strong independent companies with dedicated entrepreneurial leadership in their own right. But when the right time comes, the Alibabas and Tencents of this world can help to accelerate their growth. This allows them to benefit from value creation within a tightly integrated ecosystem of partners, without risking management overextension.
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There are lessons here for the tech giants, their direct competitors, and the startups aiming to achieve greatness in their own field. A key warning to any leader in in the tech space is that you can’t be too big to fail.
For long-term survival, they must stay on top of new tech developments and be prepared to adjust to avoid disruption. Overextension should also be avoided by identifying where it is best to build in-house and where to partner with another. And then there is the ongoing challenge of maintaining a founder’s mentality as a company scales or the founder exits.
The job of a tech strategist remains full of challenges and it can be difficult to predict the future. But the past is a valuable source of learning that can help us all to choose the right route for success.
