Over the last 15 years, businesses at the cutting edge of competition have been forced to make far-reaching business process changes, to keep up with technology.
- In the 90s, they adopted IT as an extension of existing processes, for efficiency. Email, for example, improved customer communications and collections.
- In the 2000s, they front-ended (integrated) some core processes with technology, to pursue new markets, sometimes with new products. An example is e-commerce, back-ended by much process digitisation and legacy integration.
A new species of company
And yet, this is not enough. These businesses are overtaken every day by start-ups with no legacy to protect, no integration to babysit and total freedom to pursue new business models, based solely on technology.
On 9 August 2011, Apple overtook Exxon as the US company with the highest market capitalisation, in a clear illustration of “brain” (information technology) over “brawn” (real-world exploration, production and marketing of petrochemicals).
Apple is an atypical example of the new generation of tech wonders. It managed to overcome the death of its legacy business model – PC sales – by using its digital nous to commandeer other threatened business models – music and media distribution. In a complete reinvention, the company stunned the world with addictive new device formats (iPod and iPad), supported by closed distribution channels (iTunes store and Apple Store), and became an overnight darling of developers, consumers, even employers.
To say Amazon is a retail company is to short-sell it. In fact it is a new kind of business that has changed the rules by basing its business processes solely on technology – extending it with real-world channels where still necessary. In May 2011, the company was selling more e-books than physical books. Where physical product is involved, widely dispersed pickup points are overtaking centralised warehouses.
Google, likewise, is not a media company but a new-world business that has changed the rules of media advertising. It has done so on the back of a stupendous range of tech innovations and convergences, including search, news aggregation, maps, cloud-based productivity, unified communications and more.
Being the new Apple
How to be the next Apple or Google? Well, that depends entirely on whether you have the next great idea. But the successful companies listed above all have a few shared traits:
- They were built on a purely technological basis, with technology as the very raison d’etre of the company – not some operational underpinning. At some point, legacy integration won’t cut it anymore. Business models and markets are quite simply evolving too fast.
- If not entirely new-world in life span and business model, they’ve reinvented themselves completely. Don’t be too married to your legacy business model, systems and processes.
Throw out the bathwater
Here’s the paradox – technology is paramount, but not any one technology or system. Systems themselves are mere consumables, to be thrown out when they stand in the way of reinvention and competitiveness and replaced with new systems, platforms and channels, from the ground up.
The difference can only be appreciated by company leaders with the right mindset. What’s really killing slow, old companies is the legacy mindset. If your market is threatened and your CEO is concerned only with protecting your legacy without a thought for overhauling the business, he or she is treading water. So don’t get too attached to an idea, a product line, a channel, an operational platform, a company culture, even your staff or management, if these stand in the way of growth and survival.
Keep the baby
Clearly, in today’s business climate and more caring corporate culture, nobody wants to throw out their staff or CEO, and nobody can afford to turf their business model and start afresh with nothing but the shirt on their backs. So how do you manage the transition from a business that has run its course to one that will take you into long-term growth, staffed with digital natives and converts?
Evidently, the answer lies in parallel lives. Locally, Naspers has shown the way in this regard. CEO Koos Bekker has led the company through enormously turbulent times for print media, not by extending the legacy business through integration with new platforms, but by creating entirely new businesses, including Media24 and Multichoice, and investing in others, such as China’s instant messaging platform Tencent. These new interests are running alongside Naspers’s existing ones.
It has new enterprise architecture, staff, processes, marketing and publishing channels – in fact a whole new business model that transcends the one-way information dissemination of print and embraces much broader, more interactive content, including broadcast and mobile. Amid continuing change in troubled economic times, the company remains dynamic, even volatile, but it has laid the foundations for a return to less disruptive evolution and future growth.
For it, and others like it at the cutting edge of competition, there is simply no other choice.