By Shiek Shah | CEO
Interesting times indeed – Whether you get your news from the daily papers, TV or from social media, you cannot escape the news of the tremendous amount of disruption that is going on in the business world caused by changes in consumer behavior. It started with online shopping for books at Amazon and has now progressed to just about everything imaginable done online. You can buy diamonds (Blue Nile), groceries (Amazon Fresh), and automobiles (Tesla), deposit a check online, consume music and entertainment on demand and so on and so forth.
This massive disruption has caused ALL incumbent industries to shake in their boots. Walmart, the biggest company in the world, acquired Jet.com (an unprofitable startup) for $3.2 billion last year to compete with Amazon. Bebe closed all of its stores because it could not compete with Amazon. Macy’s, JCPenney, Sears, Michael Kors and a bunch of other retailers are shutting a large number of their stores as consumers become increasingly comfortable with online shopping. Banks will continue to close branch offices as most banking can now be done online. Grocery stores are not immune either. Amazon just announced that they are buying Whole Foods – wait, what? I suspect Amazon will use Whole Foods to improve Amazon Fresh and Amazon Go.
The effects of technology on industries that are a century old are swift and deep. Take the auto industry – the combustible engine was developed over 150 years ago and while we have made great improvements over that time, the basic principles have not changed. The battery technology is changing all of that. Electric cars are here to stay. Autonomous driving technology is developing rapidly. Ride sharing is gaining popularity. So if you are a 100-year-old Ford Motor Company that manufactures gasoline cars, you should feel threatened. The future isn’t bright. Ride sharing means less cars to manufacture. If you make less cars, there are less car loans to grant and therefore less drivers to insure. Electric cars means fewer parts to repair. So if you are an auto loan company, an auto insurance company, or an auto repair company, take heed – changes are coming.
Pick any industry and I will show you how technology is rapidly disrupting it. If you are an intermediary (think stock brokers, real estate agents, insurance agents, and bank tellers) – worry! Technology will replace you – it’s just a question of when! The cascading effects are astounding and the rate of change is accelerating.
So, what do you do if you are a company in an incumbent industry? My recommendation is to first become nimble and agile. You have to make sure your company can react quickly to changing trends. Most of the time, the legacy IT systems are dead weight on companies trying to become nimble and agile. As you refresh your technologies, think about how you can retool, so you can pivot on a dime. If the functionality that you are refreshing is the basic foundation for any enterprise (think payroll processing, AP, AR for example), look at cloud solutions, outsourcing solutions and best of breed solutions so you can not only refresh faster, but expand and contract as necessary. Then innovate, innovate, innovate. What was true 5, 10, 20 years ago is most likely not true today. So hire bright, young people that may not know much about your industry, but do know the trends for their generation. Companies who make decisions based on data have started hiring anthropologists to help mine their data in a holistic way. They ask questions that your typical data analysts do not and in doing so, may uncover trends earlier and then react more quickly than fellow competitors. Bottom line – become the disruptor or risk being disrupted!
Interesting times indeed! – Should you be excited or worried? It all depends on your perspective …