In October of 2000, I gave a speech at an IBM customer event that took place in a very memorable location, Radio City Music Hall in New York. The thought that I was speaking from the same stage where so many great artists have performed over the years, and given acceptance speeches for Tony's, Grammy's, MTV Music and other awards was pretty cool, although, as I told the audience at the beginning of my speech, in my fantasies I was invited to the stage by Carlos Santana or Jennifer Lopez, not by my friend and colleague Bill Zeitler.
My speech focused on the major changes going on in information technologies, and I said that the IT marketplace is being pounded by what seems like a succession of major asteroids. After each of these asteroids hit, companies that do not adapt to the major changes taking place will be left behind, and their place will be taken by new companies born from the new competitive landscape.
When I look back at the 35 years since I joined IBM, it is impressive how many once powerful IT companies no longer exist or are shadows of their former selves. Contemplate the fate of companies that as recently as the late 1980's were the leaders in their industries, Digital in minicomputers, Cray in supercomputers, and Wang in office systems, all done in by technology transitions that they did not adjust to in time. These same technology transitions almost did us in at IBM in the early '90s before we turned things around, a story told by our former CEO Lou Gerstner in his excellent book Who Says Elephants Can't Dance?.
Every company in our industry, no matter how large or small, is but one asteroid away from oblivion, even more so now in 2005 as the rate and pace of change has accelerated. So, as someone whose bio says "I am responsible for identifying emerging technologies and marketplace developments that are critical to the future of the IT industry," i. e., watching the sky for asteroids, what do you do?
In looking back at major strategies I have been closely associated with, I think that there are three major kinds of things you need to do. To begin with, you need to identify potential dislocating changes as early as possible, and try to answer some key question. What is the nature of the change? How likely is it to happen, and in particular, is it inevitable no matter what you do? When is it likely to hit?
Since many of the disruptive changes we are talking about are technology-based by nature, you want to hang out in research labs, universities and related places to learn what might be happening as early as possible. In my opinion, companies and nations that invest in long term research and nurture technical talent are in the best position to cope with rapid technology and market changes. Be it parallel computing, the Internet or Linux, I first got wind of their potential from watching the activities in the research communities way before their impact was apparent in the larger marketplace. Research and education are about the best insurance policies I know of against being done in by unanticipated change.
Once you become convinced that change is coming, you need to make some tough strategic decisions. What are the implications to your business and what should you do about it? Will the change disrupt existing businesses, both your own and those of competitors? How can you best integrate the coming changes, disruptive as they are, into your existing strategies? How quickly should you move? The answers to these questions, and the ensuing actions you take, can spell the difference between life and death for segments of your business if not the whole thing.
I don't have to go beyond my personal experiences in IBM to find examples in this spectrum of actions and answers. At one end, bad decisions led to the loss of our multi-billion dollar networking business. Even though we were major players in NSFNet, a major part of the Internet backbone in the early '90s, we did not want to commercialize the NSFNet offerings for fear that they would compete with our highly profitable SNA networking products. On a much happier note, in the Fall of 1995 we were one of the first large companies to embrace the Internet in just about everything we did, and created the very succesful e-business and On Demand Business strategies. Someplace in between is the mainframe transition from bipolar to CMOS technologies in the early '90s. We did eventually make a succesful transition -- otherwise IBM would have joined the list of ex-companies -- but because we waited too long to take action, the transition was done while going through a major financial crisis, and we almost did not make it.
Then comes the really hard part. After you have identified that a disruptive change is inevitably coming and developed a sound strategy to factor the impact of the change into your business, you need to put the strategy into action. You need to mobilize all the parts of your company affected by the change to do whatever needs to be done. This is really difficult, especially if the actions require transforming the culture of the organization, a culture that was likely forged by the succesful execution of the very strategy now threatened by the incoming changes. Your successes and strengths from the past may very well be your own undoing, as is the case in Greek tragedy. With IBM's mainframe transition, for example, our people were aware of all the facts, rationally understood that the bipolar, proprietary mainframe was no longer competitive, and agreed with the new, more open, CMOS-based strategies being formulated. But many were just unable to accept the reality, and postponed making the business decisions that we eventually made when it was almost too late.
In business, especially in the times of very rapid and broad changes we are in, just staying alive is a major challenge, let alone being a leader in your industry and growing the business. There are really exciting opportunities out there, but you need to stay ever watchful for those asteroids that can potentially wipe you out if you are not careful.