Most technologies just seem to come and go. Try explaining to a teenager today about how much fun it was to go to a record store and buy a new album on vinyl, cassette or — heaven forbid! — 8-track and it immediately becomes clear how defunct and meaningless those technologies have become.
In the Innovator’s Dilemma, Harvard professor Clayton Christensen argued that disruption occurs when a technology’s performance surpasses customer needs. When that happens, the basis of competition changes and a new technology arrives that outperforms the incumbent on some other parameter.
Yet some technologies, like Leonardo DiCaprio’s character in the The Revenant, simply refuse to die. When faced with a disruptive competitor, they find new purpose and continue to thrive for decades. A big part of the difference seems to be not just the characteristics of the technology, but how it is able to integrate itself with other innovations.
In 1960, Harvard professor Theodore Levitt published a landmark paper in Harvard Business Review that urged executives to adapt by asking themselves, “What business are we really in?” He offered the both the railroad companies and Hollywood studios as examples of industries that failed to adapt because they defined their business incorrectly.
Yet today, the railroads don’t seem to be doing too badly. Union Pacific, the leading railroad company has a market capitalization of over $80 billion, about 60% more than Ford or GM. Disney, the leading movie studio company, has a market capitalization of about $150 billion. That doesn’t seem too shabby either.
While nimble startups chasing the next trend are exciting, the truth is that companies rarely succeed by adapting to market events. Rather, successful firms prevail by shaping the future. That can’t be done through agility alone, but takes years of preparation to achieve. The truth is that once you find yourself in a position where you need to adapt, it’s usually too late.
Nothing really prepares you to be a leader. In most cases, you get the opportunity to lead by being good at something else. However, while being a strong performer gives you the credibility to lead, it says nothing about your ability to lead. Leadership is a skill in its own right and, for the most part, it’s one you learn on the job.
Of course, there’s no shortage of advice about being a leader. Some say that you should make decisions rationally, while others say you need to trust your gut. Just like some say that it’s important to exude confidence, while others say that it’s important to show humility. It’s all terribly confusing.
The truth is that all leaders have different styles and you’ll have to figure out what yours is. Nobody can do that for you. Still, one thing I wish somebody told me before I began leading people is what I would be required to do and how it would be different from any other job. So here’s four things you’ll need to learn in order to become a successful leader.
In Sapiens, Israeli historian Yuval Noah Harari argues that it was the exploratory mindset that led to European dominance over the world. Other empires, such as the Chinese and the Ottomans, had far greater military and economic power in the 18th century. Yet, it was the Europeans quest for understanding that made the difference.
To explore, you first need to come to terms with your own ignorance. We find the accomplishments of men like Columbus and Magellan so impressive precisely because they didn’t know what they were getting into. Yet they still had the the courage to sail boldly into the unknown when no one else dared to venture forth.
Today, scientific exploration is what fuels the modern world. We look at an iPhone and see the genius of Steve Jobs, but forget about the work of men like Maxwell, Faraday, Einstein and Turing that led to it. So science budgets are cut and skeptical politicians grill researchers about the value of their work. Yet without exploration, there can be no advancement.
In 1980, an obscure professor at Harvard Business School named Michael Porter published Competitive Strategy, which called for managers to drive efficiency by optimizing their firm’s value chain, maximize bargaining bargaining power with buyers and suppliers, while at the same time minimizing threats from new market entrants and substitute goods.
These concepts launched Porter into the top rank of strategic thinkers and profoundly influenced how businesses were run. Much like chess grandmasters, CEO’s worked to develop the right sequence of strategic moves that would position their firms to exert power and dominate their respective industries.
Yet much has changed in since then. Rather than an orderly marketplace defined by clear boundaries of industry and geography, we operate in a semantic economy where everything is connected. The most important assets are no longer the ones we control, but those that reside in ecosystems that we access through platforms. That changes the game entirely.
“Build a better mousetrap, and the world will beat a path to your door” is a phrase that has inspired generations of innovators and entrepreneurs. Unfortunately, they often find that a better mousetrap is not enough. You also need to find a customer who wants to buy a mousetrap at a price at which you can profit.
That, essentially, is the idea behind the lean startup, a concept originally developed by Steve Blank and then popularized by Eric Ries in his bestselling book. Blank’s key insight is that you can’t run a new business the same way you would manage an existing enterprise.
Today, concepts that Blank pioneered, such as customer development, minimum viable product and the pivot have become de rigueur for Silicon Valley entrepreneurs, but are still largely unknown in the greater business world. Yet, it’s becoming clear that lean startup methods can be effective for anyone that is trying to bring a new product or service to market.
When the world’s first digital computer was completed in 1946 it opened up new vast new worlds of possibility. Still, early computers were only used for limited applications because they could only be programmed in machine code. It took so long to set up problems that they were only practical for massive calculations.
That all changed when John Backus created the first programming language, FORTRAN, at IBM in 1957. For the first time, real world problems could be quickly and efficiently transformed into machine language, which made them far more practical and useful. In the 1960’s, the market for computers soared.
Like early digital computers, quantum computing offers the possibility of technology millions of times more powerful than current systems, but the key to success will be translating real world problems into quantum language. At D-Wave, which is already producing a commercial version, that process is already underway and it is revealing massive potential.
Blockbuster Video is a cautionary tale, but not for the reason most people think it is. As the story is usually told, the executives at the now defunct video rental giant ignored the threat coming from Netflix until it was too late. Their futile efforts to meet the challenge came too late and the company went bankrupt in 2010.
The real story is decidedly different. In fact, Blockbuster CEO John Antioco recognized the threat and began to make serious changes as early as 2004. Soon, its Total Access program was gaining ground against Netflix. Alas, both investors and franchisees balked at the cost of the changes, Antioco was fired and the strategy was abandoned.
Notice how the real story is much more ambiguous. It’s easy to conjure up images of “fat cat executives” who are asleep at the wheel. It’s far more unsettling to realize that we can come up with the right strategy, execute well and still fail. The truth is that the world is a messy place and if we are to learn something useful from stories, we need to get them right.
The field of artificial intelligence got its start at a conference at Dartmouth in 1956. Optimism ran high and it was believed that machines would be able to do the work of humans within 20 years. Alas, it was not to be. By the 1970’s, funding dried up and the technology entered the period known as the AI winter.
Clearly, much has changed since then. In 2011, IBM’s Watson system beat the best human players in the game show Jeopardy! More recently, Google’s DeepMind had similar success against Go Champion Lee Sedol. Microsoft has also opened a cognitive services division and others are sure to follow.
Yet for all the dazzling technological wizardry, we’ve seen little effect on most businesses. Artificial intelligence, much like PC’s in the early 80’s or the Internet in the early 90’s, remains little more than a curiosity for most managers. So I talked to Josh Sutton, who heads up the AI practice at Publicis.Sapient, to learn about what we can expect in the years to come.
The history of business has been defined by rivalries. Great companies, such as GM and Ford, Coke and Pepsi, General Electric and Westinghouse were locked in mortal combat and the choice for customers was binary. Strategy was a zero-sum game. You either won or lost. There was no in-between.
Businesses approached their value chains the same way. They pushed hard to maximize their bargaining power with customers and suppliers, while at the same taking steps to defend against new market entrants and substitute goods. Business was seen as war, and managers looked to Sun Tzu and von Clausewitz for guidance.
Now, however, it’s becoming increasingly clear that no one can go it alone and firms must choose where they will cooperate and where they will compete. This is especially true when it comes to innovation, where no single entity is likely to be able to develop more than a piece of the overall puzzle. Today, open systems are not a choice, They are an imperative.