In May 2002, Curtis Rivers, a British stuntman, smashed the world record for the highest bungee jump – he jumped from a height of 4,632 m (15,200 ft) from a hot air balloon over Puertollano, Spain. The air was so thin at such a high altitude that Curtis, who has featured in films including Tomorrow Never Dies, had to resort to breathing equipment to keep his lungs from giving away and had to parachute to the ground. Curtis’ operations manager, relieving the moment later commented, “It was fantastic.” The record-shattering incident reverberated throughout the world of extreme sports, whose denizens are willing to risk a lot for a few seconds of thrill and even fear loss of their lives if things do not play out as they plan.
These days, CEOs of enterprises world over are going through a similar emotion as they plan their strategy for the digital ecosystem. In a world where customers are becoming digitally smarter, enterprises could counter a similar thrill that extreme sport enthusiasts often experience, if their risk pays off. On the other hand, there are chances that entire organizations could go down-under if their plans go awry or if they are not alert enough to recognize the trends that could change the lifestyle of entire generations.
Eastman Kodak, once a venerable pioneer of photography that was a household name for cameras and family pictures world over (remember seeing the ads in your childhood?), and whose market value exceeded $31 billion in the mid-90s, failed to notice the burgeoning potential of digital cameras, which were ironically invented by a Kodak employee! Kodak had introduced the Brownie camera more than 116 years ago and the Kodachrome film which was often the benchmark of still photography, was laid to rest in 2009, having lived out a 73-year prolific existence. But, the Rochester-based firm had protected its vital film business far too long and had to ultimately file for bankruptcy in January 2011.
Eastman Kodak had failed to acknowledge the emerging threat from digital cameras, which were ironically invented by a Kodak employee!
In June 2015, the iconic chief of Cisco, John Chambers claimed that while they had the world’s best sales organization, over the last five years, they had learnt to move away from their dependency on revenues from routers and switches. As a result, they had to change 41% of its sales leadership and had to take out 5,000 people – a fact that Chambers himself is not too proud of. Cisco and Chambers had realized its engineering unit was working in silos and were not focusing on selling business outcomes, faster delivery and a nimble approach. "We had to tie together our silos. We had to change our culture," said Chambers during the Cisco Live keynote presentation in 2015. In March 2016, the company made yet another reorganization of its engineering unit under new CEO Chuck Jones to become more customer-centric. These reorganizations helped the company quickly regroup and address the need to reinvent themselves to stay relevant.
"We had to tie together our silos. We had to change our culture" - John Chambers.
Often, companies fear change. Newer market entrants discover innovative means of delivering value to customers, thereby threatening to take away the pole positions enjoyed by their incumbents, who are stunned by the rate of change and are often too late to react. For example, companies such as Uber were never in the cab business and did not own cars – all that they did was put up an online platform for making your commute easy by deploying cabs which might not have any takers. Similarly, the storage market was initially a mash-up of Asian hard-drive vendors and products. Amazon changed it into a service, almost nonchalantly.
However, every threat is an opportunity. Executives will need to understand the complete ecosystem of their product or service and how it interrelates with the external environment. That way, they have a better sense of the underlying vulnerabilities and opportunities. The digital game can be a frightening one, similar to the one faced by bungee jumpers in a free-fall, but if tackled well, could well be a thrill worth experiencing.
Written by: Karthik Subramanian