Disruptive technology: Dead companies do tell tales

Companies nearly always have plenty of time to properly address disruptive technology. So why do so many fail to do so?

blockbuster store closing
Rept0n1x (CC BY-SA 3.0)

Blockbuster. Nokia. Kodak. Most businesspeople know what they have in common. They are all companies whose footsteps you don’t want to follow.

They were all market leaders that fell prey to disruptive technology. How can your company avoid that fate? I’ve been exploring that question, having taken as my topic for a recent conference the historical lessons that can be learned by organizations that failed to respond appropriately to technology disruption of their core businesses. I read a great deal about disruptive technology and enterprises that have collapsed due to inappropriate response to it, and I also conducted some research of my own, asking several senior executives to list organizations that have been disrupted technologically and what they thought of those organizations’ responses.

My immersion in the topic awarded me with two insights. First, disruption is a wicked hot research topic. Second, there is a boatload of very powerful and affordably implementable prophylactic measures that enterprises can adopt to make sure that they do not become the next Blockbuster, Nokia or Kodak.

I’d like to mention some of the best titles on my disruption reading list, but first a word about the conference where I spoke, which was the Flight Training Industry and Design Conference, known as Migration. Most conferences are set up as celebrations of best practices. There’s value in that, but there’s even more value in organizing a cerebration of mistakes one does not want to make. Disruptive technologies can come for any of us. To be prepared, we need to do detailed management autopsies on organizations that have inappropriately responded to disruptive technology wielded by competitors.

Some rather thorough autopsies were included in the books I read. Vincent Barabba is one contributor to the literature on disruption who has had a front-row seat at some of the biggest mistakes ever made by companies faced with disruptive technology. His résumé includes Kodak, famously disrupted by digital photography, where he was head of market intelligence; Xerox which many will remember invented but did not successfully capitalize on the mouse, the laser printer and the graphical user interface, where he was head of market research; and General Motors, where he was head of strategy. His book The Decision Loom: A Design for Interactive Decision-Making in Organizations has many great stories and powerful lessons.

And Geoffrey Moore has an extensive list of the disrupted. In Escape Velocity: Free Your Company’s Future from the Pull of the Past, he includes Sperry Univac, Honeywell, Control Data, Digital Equipment Corp., Wang, Data General, Prime, Kodak, Polaroid, Lucent, Nortel, Compaq, Gateway, Lotus, Ashton Tate, Borland, Novell, Nokia, Tower Records, Borders, Barnes & Noble, and Blockbuster among companies that suffered because they failed to craft an appropriate response to disruptive technology.

The thing that I was surprised to discover as I read these and other books was that disrupted companies were not blindsided. Disruptive technology doesn’t sneak up on anybody; it’s nearly always loudly heralded long before its victims fall prey to it. The media, including Computerworld, does a great job publicizing emerging technology.

Indeed, the technology future is forecastable. Most C-suite dwellers feel relatively confident that they know the general direction that technology is heading. Where organizations start getting confused is deciding what they are supposed to do about it. Kodak knew about digital photography; worse, it actually invented it. Steve Sasson, the Kodak engineer who created the first digital camera in 1975, infamously characterized the initial corporate response to his invention this way: “Management’s reaction was, ‘That’s cute — but don’t tell anyone about it.’” So Kodak’s leaders were aware, but in denial. When a disruptive technology appears on the horizon of your industry, you need to ask yourself, “How open-minded are this company’s leaders?” and “What voices are the executive management team willing to listen to?”

Another question companies need to ask themselves is whether they have the right leadership to deal with an era of disruptive technologies. To go back to Kodak: in 1989, its board of directors had a chance to make a course change when Colby Chandler, the CEO, retired. The two final candidates for the job were Phil Samper, who had a sophisticated feel for digital technology, and Kay R. Whitmore, who represented the traditional film business in which he had been involved for three decades. It’s hardly a surprise all these years later to hear that the board chose Whitmore.

Something else that you realize when you look at a lot of case studies of inappropriate responses is that disruptive technologies don’t just happen. They evolve. There is a window of opportunity to do something before the technology becomes truly disruptive. The digital photography window that Kodak failed to act within lasted more than a decade. How long is your window?

Futurist Thornton A. May is a speaker, educator and adviser and the author of The New Know: Innovation Powered by Analytics. Visit his website at thorntonamay.com, and contact him at thornton@thorntonamay.com.

Copyright © 2014 IDG Communications, Inc.

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