Disruption, transition and knowing your business

Serendipitously (and how many blog posts do you get with a two-dollar word like that as an opener), two articles this weekend provide echoes of each other on the disruptive nature of transition. In particular, the fact that periods of fundamental change might seem like one event from outside, but can be a series of ’shocks’ to those who live through it. As Brian Micklethwait says on Samizdat“technological change is (often) … quite abrupt but not completely abrupt.”

So we tend to think of the ’industrial revolution’ as a point in history, with businesses and processes being ’pre-revolution’ or ’post-revolution’, whereas it was a collection of events that ultimately created a kind of positive feedback, accelerating change and developing it in completely new ways. The distance of history imposes an inevitability on the narrative, but that probably wasn’t how it appeared to those involved.

We are currently at a point somewhere in the digital revolution. We know what’s changed, we can see other things that will change, we expect other consequences to flow; but we simply cannot know where this process will end up, nor when history will say that it has ’finished’. The revolution so far has disrupted the music business, the insurance business, the news business, books, TV, retail and will work right through everything including the individual’s relationship with the state, but we can only guess at the outline of what ultimately will be played out.

But that shouldn’t be a counsel for inaction. Whatever business we’re in, we can’t just wait for history to declare the revolution over and start our work from there. We need to change now, but with enough flexibility to adapt as the market adapts, and with awareness that our strategy needs to be able to cope with ’disruption’ as well as ’adaptation’. Future shocks are just as likely to be as game-changing as the ones we’ve already been through.

This is where the Yelvington piece pays close reading. He says that Kodak managed the first transition to digital photography well – it was the market leader in cheap digital cameras – but a subsequent change floored it (why do you need a cheap digital camera if your ’phone has a 5MP facility?). Back to history again – after the invention of the Spinning Jenny, skilled spinners were thrown out of work and there was a huge quantity of cheap, mass-produced thread. Skilled weavers were therefore in huge demand and wages for them shot up – until Cartwright invented the power loom when their livelihoods collapsed. In both Kodak and the weavers’ cases the first waves of change were ridden well, but the second waves wiped them out.

What is your business? What are people (ultimately) paying for? As Yelvington says:

“Your business isn’t what you think it is. Kodak at its peak looked like a photography company, but it was really a giant chemical manufacturing business … newspapers looked like news and information companies, but they were really expensive commercial advertisement printing and delivery systems.”

This is a point echoing the classic ’marketing myopia’ paper of 50 years ago, that railway companies thought of themselves as being in the ‘railroad business rather than the transportation business’, and one that Mark Ritson expanded on when writing about Blockbuster and NetFlix. You could make a similar point about HMV – it didn’t think of its business as selling music, but as selling CDs.

If you don’t focus on what it is your business does, you can’t hope to ride the waves. Knowing what the actual point of your business is means you can embrace any technology that achieves it, and ditch previously useful technologies that stop helping you.

A final link to Adam Tinworth’s blog (where I found the articles mentioned above) and a great quote from him:

“I’m always surprised when I run into publishing executives that seem to be operating on the assumption that the internet’s disruption of publishing is done now, and we just need to figure out how to adapt to it. ‘fraid not, chums. We’re in a period of perpetual change, and that requires a whole different approach.”

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