Around the year 1900 there were 100,000 horses in New York.
London in 1900 had 11,000 cabs, all horse-powered. There were also several thousand buses, each of which required 12 horses per day, for a total of more than 50,000 horses.
In addition, there were countless carts, drays, and wains, all working constantly to deliver the goods needed by the rapidly growing population of these cities.
All transport, whether of goods or people, was drawn by horses.
If you had a horse related business, then business was booming. Everything from clearing away the huge amounts of horse manure to grooming, feeding and housing the ever-growing population of horses.
Fast forward a few short years to the advent of electrification and the development of the internal-combustion engine there came new ways to move people and goods around.
By 1912, autos in New York outnumbered horses, and in 1917 the city’s last horse-drawn streetcar made its final run.
So in 12 years your business went from being on top of the world to losing more than half its revenue. Five years after that you were bust and all your knowledge, industry connections and skills were totally obsolete.
DON’T BE A TURKEY
Failing to anticipate changes, especially changes in technology, is what kills most businesses. Just ask these guys:
Kodak invented digital photography, yet despite this could not or did not use this early lead to its advantage. It let other competitors eat it’s lunch.
Borders finally got into e-books but it was too little, too late and consequently it also paid the ultimate price.
When the guy running his booming horse business in the early 1900’s started to see these new-fangled electric streetcars appearing, he might have chuckled to himself and thought that this form of transport was just a passing fad. After all horses had been used as means of transport for thousands of years.
Then a few years on, when more and more of his revenue was being eroded by the new technology, he might have started pining for the “good old days” when things were going well. He might have even become angry about what was happening and expected the government to intervene.
See anything similar happening today?
Various industries including manufacturing and brick and mortar retail are either in crisis or on the verge of crisis.
Globalization, the Internet and new technology is hurting them – big time.
They are whining and crying about the state of things, lobbying for government intervention and hoping the good old days will soon return.
But the good old days aren’t coming back – at least not for them.
Why don’t they just embrace the new technology and get onboard with it? Some of them will but most won’t.
The reason most won’t is because they have the same mindset as a turkey does.
Nassim Taleb, best-selling author of The Black Swan, tells the story of a turkey who is fed by a farmer every morning for 1,000 days. Eventually the turkey comes to expect that every visit from the farmer means more good food.
That’s all that has ever happened, so the turkey figures that’s all that can and will ever happen. In fact on day 1000 it’s at the peak of it’s confidence. After all it now has 1000 days worth of track record on which to base it’s confidence.
With a track record like that what can possibly go wrong?
But then day 1,001 arrives. It’s two days before Thanksgiving and when the farmer shows up this time he hasn’t got food in his hand, instead he has a recently sharpened axe.
The turkey learns very quickly that its expectations were catastrophically off the mark – that the good old days weren’t going to last forever. So now Mr. Turkey is dead.
The moral of the story is don’t be a turkey and don’t run your business like the turkey would have.
HOW TO ENSURE YOUR BUSINESS SURVIVES AND THRIVES FOR THE LONG HAUL
Your ultimate competitive advantage is anticipation and taking action based on this anticipation.
It’s going to take guts, you’ll have to take risks and you’ll have to invest in research and new technology.
You need to constantly be pondering questions such as:
- What business do I need to be in?
- What technologies are coming that are going to disrupt my industry?
- How can I take advantage of the coming changes in technology rather than fight them?
You need constant strategic innovation – innovation that your customer cares about.
Skunkworks projects are one of the best ways to stay abreast of emerging technology while still continuing to run your current operation.
A famous example of a skunkworks project is the first Apple Macintosh computer.
Google have even made it part of their company’s culture by allocating 20% of employee time on side projects that interest them. Hugely successful Google products such as Gmail, Adsense and Google News have come from these skunkworks projects.
What resources are you investing in emerging technologies and trends in your industry?
Day 1,001 is coming for your business and your industry and if you aren’t ready with a new plan, your business could well suffer the fate of the turkey.
Having a culture of innovation, anticipating what is coming in your industry and running some skunkworks projects in your business will give your business a massive competitive advantage.