One of the moments in my career that had a deep impact on me was a conversation with an account manager in my previous consulting firm. I gave a presentation to a whole account team about using innovative solutions to help companies getting value out of their existing IT investments during economic downturns.
After the presentation, I met the guy during a smoke outside (he was smoking, I was just chatting with a colleague) where he said in all honesty that this was not going to fly with his client. Why is that, was my obvious question. He explained that his particular client suffered really hard from the economic downturn and didn’t invest anything anymore in technology related projects. He argued that this makes sense because the company was in the process of mass firing people, so how could they justify spending money on technology transformation projects if it couldn’t even pay its own employees?
I have to admit that as an external consultant, you are not always realizing the daily sorrows and worries that a company and its employees have. You’re often parachuted in, firefighting on a project, start up something, but after a relatively short time you leave again to your next engagement. However, this situation was so real. The account manager was genuinely concerned about the faith of his client.
Keep on moving like a shark
I kept on and off thinking about that one particular case for a while and the Aha-Erlebnis came a little later after coincidentally hearing about the fact that several shark species need to keep on swimming, otherwise they die.
Does this hold for companies as well, or more specifically for this particular client? Is the approach from the executive management to stop almost all investments and focus on the reality of today, rather than tomorrow (since there might be no tomorrow) a good or a bad thing? Will this “stop swimming” cause the death of that company, as it will do for a shark?
Internet driving competition in traditional markets
In order to better understand the background of this particular business (sorry can’t disclose exactly what market it was in), you need to understand that it was in a very very traditional market sector. A certain type of service that existed already far before the first computer was around.
As with many other sectors, it regarded the rise and ubiquity of the Internet as a big threat for its business. You can say the same for the music, movie and newspaper industry.
But is it really a threat, or is it an opportunity?
I’m pretty sure that the average music and newspaper executive that grew up before the Internet era, is convinced that it is a threat. Look at the way certain big newspapers are closing off all content behind a pay wall, or how fiercely the music industries hunts down downloaders.
But let’s be honest with each other, how much innovation have we seen in the above-mentioned industries? Decades long, we’ve seen very few innovations happening that were started or pushed by these industries. You can almost say that they had a monopoly in their market and all of a sudden their biggest fear is not a competing newspaper or a record label, no it’s… innovation itself.
In a liberal economy, we stimulate competition because that drives innovation. If you only have one supplier in a market, that supplier has no urge at all to keep improving its services and products. Why should they? It’s not that its customers are going to buy from another non-existing competitor.
So, is the Internet – and actually technology in general – the big driver for innovation in those markets? You’d think so, yet they still fight fiercely against it.
“Wait a minute…”
… I hear you saying, “what about all those bands that don’t get money because people download their music, and what about the loss of income for the record label?”
Very valid points, but what if the whole concept of “record label invests and pushes artists in the market and gets money for it” is outdated? What if that system we know already for decades became obsolete? How can these bands still earn money then?
Well, what about the mineworkers in coal mines? What about them? In a short time span, the industry moved on to other sources of energy and coal became obsolete.
I’m just trying to explain here that it’s not because we know something is working already for decades, that it will be relevant for an eternity. ESPECIALLY if that particular business or industry almost refuses to innovate.
One piece of advice: never fall for the trap of feeling comfortable in your success. I’m not that old yet, but I did see some successful businesses come and go in a matter of a few years, because they failed to keep on going for that extra mile.
Oh, and regarding how bands can earn money… In China, the place where they invented copying as it seems, they’ve been quite creative with this. Several artists actually explicitly distribute their copied CDs in markets almost for free. This gives them a better chance of being heard by people and they get their income from sponsor deals and performances. So, as you can see, the music industry CAN adapt to changing market conditions and be very innovative in their delivery model!
Stop becoming obsolete
Now, to link back to the story that started this blog post: what about the account manager’s client? In hindsight, I should’ve said to provoke a discussion: “well perhaps they just deserve to become graciously obsolete then”.
Knowing the account manager, he probably would’ve slapped me in the face and yelled “help me getting this client back on track, stupid!” and I would’ve secured a nice new gig 
One of the key mistakes that almost all of these “being threatened by becoming obsolete” companies make is the lack of focus on… people. I said it before, and if necessary I will repeat it every single day: BUSINESS IS FUNDAMENTALLY HUMAN!
That is a key message in our Social Business Design philosophy: your employees, your customers and your partners are human; treat them with that respect and dignity. The moment you start only focusing on your products and forget that it is actually the people that bring you these profits, you are becoming obsolete.
So, tell me. Do you want to succeed or survive?
Ping me on lee.provoost@headshift.com or http://twitter.com/leeprovoost to help your company becoming a social business.
This post originally appeared on the Headshift blog.
Great post Lee. It reminds me of a Forrester report I once read that suggested a CIO’s role should be modeled on that of a big city mayor. You can’t survive long by just re-paving roads and picking up garbage. That’s not enough – you need the IT equivalent of Urban Renewal! How can you modernize or replace to reduce maintenance of the existing? Where can you invest to improve: the equivalent of adding a highway exit ramp to make business easier in an industrial/office park.
You can’t turn things around if you’re standing still.
Hi Richard, thanks! Nice analogy with the city, it probably makes it a bit more tangible for some people.
I have to add that “not standing still” also implies that you should dare to completely question the thing you are doing. An example that a mentor once taught me and I use often is that clients sometimes come to you and ask them to help to drill a hole in the wall. We consultants tend to focus on getting the best drill to create that hole. We will think whether we can make the hole bit smaller, whether we can use silent drills to make less noise etc. But we often don’t ask ourselves why do we need to have that hole in the first place?
That’s exactly the same mistake that a lot of companies make, they don’t ask themselves: “is the thing we are doing still relevant given the initial problem we wanted to solve?”