Innovate or Die
By Samuel Greengard
The dustbin of history is filled with once high-flying companies that couldn't adapt and evolve with the times. Remember Digital Equipment Corp. and Wang? What about Kemper Insurance and Hollywood Video?
Organizations fail for a number of reasons. But one of the biggest risks in business and IT is sticking with a successful formula for too long--until it becomes unsuccessful and it's too late to adapt. The old saying, "If it ain't broke don't fix it" is downright dangerous in an era of radical and ongoing change.
The music and movie industries are prime examples of how myopic thinking can stunt growth. They've fought almost every consumer technology innovation ever introduced. Videocassette recorders, Digital Audio Tape, CDs, DVDs, digital distribution, you name it. I don't think executives in these industries would recognize an opportunity if it landed in their lap.
These companies have focused on protecting what they already have and fearing what they could lose rather than attempting to understand what they could have.
For example, instead of developing a digital distribution system early on, the music industry let the Napster plague spread and wound up shooting itself in the harmonica. Forrester reports that music industry revenues declined from $14.6 billion in 1999 to $6.3 billion in 2009. In fact, it wasn't until Apple introduced iTunes in 2003 that music companies had a way to distribute music digitally.
Basically, these companies presented the public with the option of paying 99 cents per track or paying nothing. It doesn't take a genius to figure out which option people will choose. Then, to make things worse, the RIAA (and the MPAA in the movie industry) imposed draconian DRM restrictions and resorted to absurd tactics to nab thieves and make life miserable for the vast majority of honest customers.
Sometimes you can do things wrong and still muddle through. That's the lesson learned from the entertainment industry. Yet one has to wonder what new opportunities, business models and revenues might be possible if these companies were more like Netflix, Google or Apple?
The takeaway here is that it's important to remain entrepreneurial and focus on how technology can enable opportunities--while improving the customer experience. Social media, cool website features, smartphone apps, cloud computing and new ways to produce, market and sell products create enormous upside--but only for people and organizations that don't fall into the trap of protectionism.