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The Sky is Falling, The Sky is Falling

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The Sky is Falling, The Sky is Falling

On December 16, 2015, Posted by , In Uncategorized, With No Comments

I am a bit of a contrarian at heart so when I see large groups of people lining up ondigitization1 one side of an issue with no apparent opposition my natural inclination is to look at that big group of people and try and understand their point of view and then proceed to pick holes in their position.  I reckon the IT industry, and perhaps global business, is in this state now and has been for a number of years.

The rallying call.  This is the age of disruption and you need to to disrupt or you will be disrupted.  Or to put it another way, advances in IT are changing the world, the way organisations operate and the face of society as we know it.  If you don’t get on board you will be left behind and become the modern equivalent of the dinosaur.  As we all know the dinosaurs became extinct.  Our position is perhaps not quite as extreme, organisations will simply become irrelevant and bankrupt rather than actual extinction!  Still, it’s not a great future to contemplate.

Now don’t get me wrong, I think the essence of the message is right.  Technological change is speeding up and we do need to be able to move with the times.  The issue I have is that the  message appears to be deliberately alarmist and provides little constructive advice on how to move forward.  It has a real Henny Penny feel about it.

You remember Henny Penny or perhaps Chicken Little.  While there are various versions of the story essentially a chicken is hit on the head by a falling acorn.  This traumatic and unexplained incident causes the chicken to become convinced that the “sky is falling”  and that the world is ending.  So they set off on a quest to tell the king and save the world.

I wonder if we risk being like Henny Penny.  We have seen technology disrupt some businesses, most notably the digitisation of music and media, and have assumed that this means all industries will be equally disrupted.  I get that technology has and will continue to impact all businesses.  Some will be negatively impacted, others will carve out small most likely temporary competitive  advantages that will help them in their market.  But will it fundamentally revolutionise all industries in the next few years as many commentators appear to want us to believe.  I think that’s unlikely.  I reckon a more likely outcome is that for most industries, technology will provide a significant step forward, quantum change perhaps, followed by rapid evolution, but it will come short of outright revolution.

Perhaps I can illustrate with a market I think I know something about, retail.  Amazon.com was one of the first scale online retail pioneers.  It was founded in 1994 just over 21 years ago.  Yes, they have done and continue to do very well and have had a significant impact on the industry.  If you are a book seller in particular, then the presence of Amazon as an online retailer has had a major impact.  Add into that  the digitisation of books/media and you have a double whammy.  Significant disruption here, no doubt.  For the rest of the retail sector, however the impact is less significant.  According to eMarketer, online sales are still less than 10% of the market (5.9% in 2014) and most traditional retailers have adopted their own form of online retail now turning a once disruptive technology into an industry sustaining innovation.  Better yet the traditionalists are now  pushing back by leveraging cross channel plays like click and collect that a pure play online retailer like Amazon cannot match.  The impact.  Amazon is trialing pick up centres to compete with their version of click and collect.

So is Amazon disruptive for the retail market.  Yes it is.  It and other early adopters have lead a significant  evolution, and I choose that word deliberately, in the market however the sky hasn’t  fallen on most industry incumbents (outside of digital media), who on the whole took 10 to 15 years to react.  Further the sky isn’t likely to fall anytime soon as the incumbent’s stake out the majority of the online retail space.

This pattern seems to be playing out in other industries as well.  Take education for example.  Online universities and other education sites have blossomed threatening the education status quo.  Traditional institutions are reacting and beginning to leverage the power of online education to support their students.  How long will it be before the best of them perfect education’s version of multichannel.  I bet it won’t be long and maybe then you will see the online universities react by moving to include a “real world” component back into their solution.  A quantum leap by a disruption followed by rapid evolutionary response by incumbents.

What’s the lesson here?  Yes technology is a powerful force for change and yes as an incumbent you need to put yourself into a position to respond to the changes that technology brings but the sky isn’t falling, there is no need to panic and history suggests you don’t need to be first to succeed (look at Apple) you simply need to evolve in line with the opportunities as they unfold.

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