Why new technology creates a threat as well as a potential competitive advantage
New technology is arriving quicker than ever before. In removing friction to build better products we basically made the case for deploying technology to serve better those who you seek to serve. Offering better digital experiences to ultimately improve the bottom line.
“Technology goes beyond mere tool making; it is a process of creating ever more powerful technology using the tools from the previous round of innovation.” –Ray Kurzweil
Embracing the tech of tomorrow is the way forward. It has the ability to enable a life without friction. And that is how we should look at technology.
As an enabler. As a means, not an end.
Human progress is neither automatic nor inevitable… Every step toward the goal of justice requires sacrifice, suffering, and struggle; the tireless exertions and passionate concern of dedicated individuals.
Martin Luther King, Jr.
Of course, he was referring to the progress of mankind concerning racial equality but something very applicable to technology can be derived from this quote.
Progress is not without sacrifice.
Predicting what is going to be the next big thing is no exact science and therefore impossible. But one thing is. By doing nothing you will definitely risk losing out.
If you’re not moving forward, you’re falling back. Wait long enough and you become obsolete. Irrelevant.
Search engines changed how we approach writing, marketing, and understanding intent. Mobile devices changed the way we design interfaces, interactions, and experiences. Voice technology stands to make a similar impact and those who neglect to ride this wave risk losing out just like those who fell behind on search or missed the mobile wave. Read more on the idea of voice being the next wave here.
Industries will be disrupted by players who are changing the game using technology. Some will ride the wave and some will get swallowed by it.
That is the way it has always been and how it will be for the foreseeable future.
But new technology also has a tendency to wipe the slate clean. It is hard to beat Hubspot in their SEO game with blogs. It is hard to steal away market share of a multinational supermarket chain who has brick and mortar stores everywhere.
That is when you play their game without any innovating. To elaborate on this point, let’s go through one of the most well-known case studies ever.
How to prevent ending up as a victim of a disruptive change.
A generation ago, a “Kodak moment” meant something that was worth saving and savoring. Today, the term increasingly serves as a corporate bogeyman that warns executives of the need to stand up and respond when disruptive developments come to their market.
Given that Kodak’s core business was selling film, it is not hard to see why the last few decades proved challenging. Cameras went digital and then disappeared into cellphones. People went from printing pictures to sharing them online. Sure, people print nostalgic books and holiday cards, but that volume pales in comparison to Kodak’s heyday. The company filed for bankruptcy protection in 2012, exited legacy businesses and sold off its patents before re-emerging as a sharply smaller company in 2013. Once one of the most powerful companies in the world, today the company has a market capitalization of less than $1 billion.
While the common belief is that the sole reason lies in myopia meaning that Kodak had a narrow-minded marketing approach and focused on only one aspect out of many possible marketing attributes. In the process ignoring the actual demand of the customer. Basically, we’re saying that Kodak completely ignored digital photography but is that realistic given they were the market leader by miles and had an army of people with 100k+ salaries whos sole job it was to think about marketing, strategy, and product?
Basically, we’re saying that Kodak completely ignored digital photography.
It’s a bit more complicated than that.
The first prototype of the digital camera was created in 1975 by Steve Sasson, an engineer for Kodak.
So they had the technology but fail to recognize its potential. Not really.
Kodak invested billions to develop a range of digital cameras. Ultimately embracing simplicity and carving out a strong market position with technologies that made it easy to move pictures from cameras to computers.
So did they miss the real disruption when phones became good enough to take pictures with, and people shifted from printing pictures to posting them on social media and mobile phone apps. This is where it gets interesting…
Before Facebook even was a thing, Kodak acquired Ofoto in 2001 which you could use to get Kodak prints of digital pictures.
Imagine if Kodak had truly embraced its historical tagline of “share memories, share life.” Perhaps it could have rebranded Ofoto as Kodak Moments (instead of EasyShare Gallery), making it the pioneer in social media where people could share pictures, personal updates, and links to news and information.
In real life, unfortunately, Kodak used Ofoto to try to get more people to print digital images. It sold the site to Shutterfly as part of its bankruptcy plan for less than $25 million in April 2012. That same month Facebook paid $1 billion to acquire Instagram, the 13-employee company Kevin Systrom had co-founded 18 months earlier.
Spotting something and doing something are two very different things.
Doing something and doing the right thing are also two very different things.
But Kodak did not make these mistakes.
They had the talent, the money, and even the foresight to make the transition. Like Kodad, companies often see the disruptive forces affecting their industry They frequently divert sufficient resources to participate in emerging markets.
Their failure is usually an inability to truly embrace the new business models the disruptive change opens up.
Kodak created a digital camera, invested in the technology, and even understood that photos would be shared online. Where they failed was in realizing that online photo sharing was the new business, not just a way to expand the printing business.
3 lessons you need to take away from this article.
- Define the business you are in today; Instead of explaining what you do, define the problem you are solving for customers. The job you are doing for them. For Kodak, that’s the difference between framing itself as a chemical film company vs. an imaging company vs. a moment-sharing company. For us, that’s the difference between framing ourselves as a digital tech company and a removing friction to make life easier company.
- Find the opportunities the disruption opens up; Perceived as a threat, disruption is actually a great growth opportunity. Disruption always grows markets, but it also always transforms business models. Research shows that executives who perceive innovations as a threat are not able to adept in their response while those who see opportunities are expansive.
- Recognize the capabilities you need to realize these opportunities; Market leaders are usually best positioned to seize disruptive opportunities. They have capabilities that are not easy for new entrants to replicate, such as access to markets, technologies, and capital resources. Of course, true innovation requires more than money and size to compete in new markets in new ways. Approach new growth with appropriate humility.
As Ryan Holiday says: The Ego is the Enemy.
