It’s a commonly trumpeted fact that only 12% of the Fortune 500 companies of 1955 remained on that list in 2015. Depending on who you talk to, those 61 companies left standing represent the natural cycle of innovation in a consumer-driven economy, or a merely sign that all good things must eventually end. At the current churn rate of companies listed on the S&P 500, 75% of current companies will be replaced in 10 years.
How’s that for a motivation to adapt to new technology? It’s literally a do-or-die scenario for most modern companies – at some point in its lifecycle, every company will face the challenge of changing along with new technology or fading from the marketplace.
Many executives and innovators need look no further than former photography giant Eastman Kodak as the poster child of a company sunk by an inability to adapt to new technology. Yet at the end of the day, Kodak’s demise was not simply about technology. It stemmed from a failure to adapt its core business model to that emerging technology.
Three Paths to Emerging Technologies
Chris Curran at CIO Dashboard recently outlined three key drivers for experimenting with new technologies:
- Demand-Driven – It’s easy to chase down a new technology when a customer demands a new feature or new platform, but that can also result in your innovation department rapidly moving off-mission. As Henry Ford learned early on, leaning too heavily on customer demand would have only resulted in a faster horse; it can be a good way to drum up business, yet avoids true innovation. Since companies have little motivation to truly experiment, they also leave themselves open to disruption by a smaller, more visionary competitor.
- Technology-Driven – Just like consumers, many innovators simply chase the newest technology. Most likely, your company may not need a Virtual Reality experience or a Snapchat presence, but it’s important for corporations to experiment with new platforms, coding frameworks and other emerging opportunities. Too often, however, this becomes an unstructured exploration of new things rather than true experimentation with a business objective in mind.
- Business-Driven – Innovators that look at new technologies through a business lens first, rather than a technology lens, are far more likely to hit upon successful innovation projects. Through a product thinking mindset that puts customer needs and business objectives first, innovators can establish a framework for aligning new technology strategies with the core business and rapidly validate ideas with prototyping and testing within the marketplace.
Shifting Your Business Model
Typically, innovators view emerging technologies through the lens of the company’s current, successful business model, rather than mapping out how a new technology might open new lines of business for them. This approach often requires an entirely new business model than that of the core business unit.
For instance, MP3 players only became widespread after Apple shifted the digital music business model by creating the iTunes store to support the iPod. Airbnb leveraged digital connections to upend the hotel industry landscape with a fundamentally new approach to customers.
Despite its work in digital photography and even photo-sharing digital experiences, Kodak’s failure to truly shift its business model away from silver halide film was the ultimate death knell for the company. It’s the role of the innovator to not only recognize which technologies can support new products or business lines but also evaluate emerging technologies unencumbered by the pressures of the core business unit.
At the current rate of change in the marketplace, business as usual means a business that may not exist in 15-20 years.