When companies are looking for ways to improve their business, they generally turn to new technology. From sales efficiency software like SalesForce.com and Marketo, to office productivity and collaboration tools like Cisco Jabber, the world is jammed packed with countless new technologies aimed at supporting your business demands and goals. For IT leaders, this represents the significant yet difficult challenge of selecting the right solutions for your business, which can be tricky, because in essence you are just making an educated guess. Guess right, and you’re the genius who got in ahead of the curve. Guess wrong, and your company just bet thousands, if not millions, of dollars on the wrong pony.
Once upon a time, business leaders debated the merits of wacky, newfangled gadgets and concepts like fax machines, computers, email, voicemail, cell phones, online banking, and advertising online instead of the Yellow Pages. While this may seem silly because these concepts are all now the norm, many companies (that probably don’t exist anymore) waited too long or flat out refused to jump into the pond of the future with both feet. Today, many companies still often wait too long to adopt new technology and suffer immensely because of it. Below are three examples of colossal misses when it comes to evaluating new technology for your business.
Case #1: Blockbuster
History has shown that when businesses do not embrace new technology, they often experience significant or even catastrophic loss. Probably the best modern example of this is Blockbuster, the onetime powerhouse of the home video market that slowly withered to nothing by waiting way too late to adopt a technical business shift. Blockbuster fell to the likes of Netflix and other online streaming services mainly because they didn’t embrace or believe that on demand, internet based video selection would become the new primary format for movie consumption.
Basically, Blockbuster was happy with their ways. They owned the home video market with basically no competition, and in their own mind, they would continue that dominance until the end of time. The one thing Blockbuster didn’t prepare for was…new technology. As more people turned to the evolving internet to satisfy their needs, a new avenue for on-demand content and shopping from your bedroom was created, and Blockbuster executives simply missed the boat on this soon to be goldmine of opportunity.
Another key mistake that Blockbuster made was underestimating how new technology would change the customer experience. Blockbuster built their empire on their huge distribution network with over 9,000 stores and 60,000 employees worldwide. They bet that customers would always want the experience of walking into a store, perusing movie titles, and walking out with a couple of DVDs and maybe some popcorn. Blockbuster never thought that people would forgo this experience for simplicity, but unfortunately for Blockbuster, Netflix saw this shift coming.
Had Blockbuster’s IT leaders fully evaluated and researched the merits of on-demand video, they could have easily maintained their status as top dog of the movie rental world instead of a historical example of not properly evaluating and embracing new technology mixed with overall corporate stubbornness.
Today, Blockbuster has been turned into dust and memories, while Netflix is now worth $32.9 billion dollars, 6 times more than Blockbuster’s net worth at its peak.
Case #2: AirBnB
Another key example of a Digital Transformation blunder is the “what if” surrounding the tech giant Airbnb. Airbnb, the peer-to-peer “room for rent” company, began as a start-up looking to take advantage of emerging technologies and a change in consumer habits. Now worth an estimated $30 billion dollars, Airbnb, while massively successful, actually represents major missed opportunity for established hospitality companies like Marriott, Hilton, and Ramada.
In reality, Airbnb should have been a business expansion by an existing hotel company. A company like Marriott, with the capital, name recognition, and experience could have easily created an Airbnb like option for travelers looking for cheaper solutions. Had their IT team researched this tech based option, they could have claimed this space as a successful addition to their overall offering. Airbnb, which is now available in 34,000 cities across 191 countries has created their own hospitality network, but imagine what it would have been if it was built off the back of an existing giant instead of from the ground up. Instead, Airbnb is a growing option for travelers and poses a serious competitive threat to the hotel industry.
Case # 3 Uber
Similar to the story of Airbnb, Uber, who is poised to displace local cab companies all over the world (just like Netflix did to Blockbuster), could have easily been adapted by existing transportation conglomerates like Greyhound or The Yellow Cab Company. Similar to the story of Blockbuster, existing Cab companies did not see the need to create an easier option for hailing a ride since there really wasn’t any significant competitive threat to the cab industry. The concept of the taxi had been around and thriving since the 1600’s after all, so no one ever thought it was going away….except maybe Travis Kalanick and Garrett Camp, the founders of Uber.
In comes technology. With smartphones and mobile apps, today’s consumers required simple, fast, and reliable solutions for their needs. While ordering a taxi was never considered a difficult or time consuming task, Uber changed that by allowing people to call for a ride with the click of a single button. Suddenly, calling a taxi became a daunting chore that involves searching for a number, calling it, and actually speaking to a human, which is akin to torture in a society dominated by text messaging. In addition, Uber’s business model of drivers in personal vehicles keeps their costs super low, making it cheap and easy. On top of all that, you don’t even have to have any money or your credit cards with you to use Uber; all you need is your handy mobile phone. New technology at its finest. What’s not to love?
What’s the lesson?
These examples expand the importance of evaluating new technologies and researching additional business concepts for existing companies, and the IT team is critical for this endeavor. All companies should create and maintain a Technology Advisory Board that reviews new technology and evaluates how it might fit into your business. This doesn’t have to be a big initiative, just a quick gathering to look at new options and methods. Over the past few years, many organizations debated about the importance of Cloud storage and Office 365 for business. Now, that debate has ended and Cloud has taken over. The history of business is packed with companies that succeeded because they were early adopters of new technology (Just ask Mark Cuban), so it’s important to always aim to be ahead of the curve and not let new technology scare you. The choice is simple: get on board early, or someone else will get on the train at the next stop.