Adapting to the changing times
Jun 18 2013
Will later be past
The order is rapidly fadin’
And the first one now
Will later be last
For the times they
are a-changin’ ”
— Bob Dylan, 1964
Times, they still are a-changing’, but faster and more profoundly than ever before in the history of mankind. Companies that were darlings of Wall Street and Dalal Street are biting the dust. Upstarts and startups are bulldozing their way up the corporate ladder. Gold is losing its lustre. Sovereign governments are going bankrupt and being bailed out. Those who thought that global warming was invented by the Green Party, are waking up to hurricanes like Sandy and a tsunami that caused the Fukushima disaster.
Eastman Kodak pioneered photography. It was the market leader for 70 years. In 1976, Kodak’s market share was 90 per cent in the US. The firm made money on films and not cameras. It believed the company was in the film business and not in the business of capturing, storing, improving and accessing images. The firm also felt that competing with Fuji in the economy segment with “cheap” brands would affect its premium positioning. While Kodak remained on the high horse, it was slower in the digital race. On January 19, 2012, Kodak became another mighty to fall. It filed for bankruptcy.
Borders, the second largest book and music store in the US, downed shutters in 2011 closing 399 stores and laying off 10,700 employees. The official analysis for the debacle was presented by its president Mike Edwards, “We were all working hard towards a different outcome, but the headwinds we have been facing for quite some time, including the rapidly changing book industry, e-reader revolution and turbulent economy, have brought us to where we are now.” That was his view. But the internet was the wrong murder suspect as it was more a case of suicide. Borders failed to craft a sensible digital strategy and adapt to the internet world. It too filed for bankruptcy in February 2011.
In less than a decade, the ubiquitous Blackberry, which changed the work/life balance of corporate executives, has been relegated to the fourth position after Apple, Samsung and Nokia. It is fighting back to remain relevant in a world of smart communication devices with touchscreens and intuitive apps.
The Indian music retail chain Music World, is closing its retail outlets. Sanjay Gupta, group corporate head, marketing, while confirming the decision to exit music retailing business said. “Music World has, for the last 16 years, been India’s premier music and home video retail chain. However, in the past few years, the onset of digitisation in music and the shift in consumer preferences towards music and video downloads have rendered the business model unviable.” The waves of disruption are coming to our shores. The maverick e-commerce player Flipkart has downed shutters of its music service Flyte recently. It has also discontinued sales of consumer durables such as television sets, refrigerators, air conditioners and washing machines since last month.
In order to stay alive and relevant, one needs to read the tarot cards of disruption and adapt ahead of the curve. While Eastman Kodak was caught in the disruption of digital imaging, Fuji rode the digital wave and survived. Nikon, Leica and Canon transitioned successfully into the digital world. Border was caught in the storm. But Amazon has emerged as the largest online store on the planet.
Finnish firm Nokia was once the rockstar of mobile phones. But Apple, with its iPhone, knocked Nokia off the pedestal. The new mobility kid on the block, Samsung captured the second spot. Nokia teamed up with Microsoft and has bet its farm on the Lumia series of smartphones to emerge as a serious competitor. The jury is still out and the new battleground nations will be India, China and other emerging economies, where the volume and scale play would happen. There are constant rumours of Apple doing a Celeron play. Readers will remember that Intel launched Celeron as a cheaper version of its Pentium chip to disrupt and cannibalise its own market share at the bottom of its pyramid to prevent a competitor from doing so.
Technology, however, is not the only disrupter of businesses. History tells us how wars, civil turbulences, wrong economic policies, poor governance and bad politics have caused entire industries to perish and affected geographies to decline from prosperity to backwardness.
Last month, I visited an establishment, which used to be a famous sugar plantation in Louisiana. It had a stately mansion, many slave quarters, a sprawling sugar plantation and a factory. In 1860, there were 1,300 sugar plantations in Louisiana. Sugar was shipped from the port of New Orleans, which stood on the banks of Mississippi. Today these plantations have become museums and tourist destinations. There is no master, no slave, no sugar and no trade. Why? After the fall of New Orleans on May 1, 1862, the Union army overran and forcibly occupied the plantations. The civil war led to the wastage the sugar farms and factories. With the emancipation of the slaves, ‘cheap’ workforce was no longer available.
Sugar plantations required plenty of ‘cheap’ labour. That is why indentured Indian labour left the port of Kolkata for distant lands: Trinidad in the Caribbean, Mauritius in the Indian Ocean and Fiji in the Pacific, to work in sugarcane plantations. The ravages of civil war in the US and the abolition of slavery disrupted the business model so badly and so quickly that it was unable to adapt or recover. This was 150 years ago. Even today, the same logic prevails. The only difference: businesses have to change and adapt with the blink of an eye. It is only the smart, the visionary and the agile, who shall survive.
(The writer is managing director of Deloitte Consulting, India. These are his personal views)