Five Key Lessons for Today from the Rise and Fall of Yesterday’s IT Leaders

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The first entrants into a new market created by a disruptive technology will establish an unassailable competitive advantage and reap the lion’s share of benefits in terms of customers, markets, and profits. At least that’s the theory. Take the early bank ATMs, for example, or the recently introduced smartphone bank apps for categorizing small business expenses or remotely depositing checks through photography. Ultimately, other banks caught up, but the first movers held an advantage, as NationsBank’s former CEO Hugh McColl once observed astutely to von Simson, “IT innovation can help you gain market share, and customer inertia helps you keep it,” even when the technology becomes commonplace.

But that’s only half the story. First movers often enter the market before it’s been definitively reshaped by the disruptive technology. Too often they try to mold new technology around old business models, with disastrous results. Consider the three PC leaders of 1980: Apple built its computer image as a consumer product and was held to a five percent market share until the iPhone made its debut. Commodore molded its product line around a high-end calculator with a $600 price and an unacceptably low level of help desk support. Tandy modeled its product strategy on the old minicomputer business model with an integrated line of processors, Tandy-developed applications, and its own Radio Shack stores for distribution and support. None of the three could succeed against the layered models of Intel processors and Microsoft operating system atop multiple applications and distribution channels. The volume of companies adhering to the Wintel model swamped everyone else. More recently, there’s the example of the big three – Amazon, Facebook, and Google – all capsizing forerunners like Friendster, MySpace, AltaVista, and dozens of others.

The IT sector is at another turning point as mobile devices dampen the demand for PCs – just as PCs formerly dampened and then buried the demand for minicomputers. Simultaneously, the purchase of new on-premise servers and licensed software is being displaced by public cloud infrastructure and software services. Add cybersecurity as another question mark for the next decade. In sum, this transformation points to an era of “creative destruction,” in the phrase coined by the Austrian economist on entrepreneurship Joseph Schumpeter. As agile and often new firms will produce creative new solutions, slow-footed companies will be destroyed.

These two prospects will require special assessment: the new companies rising to these opportunities and the old companies threatened by impending change. What lessons can be learned from the histories of corporate rises and falls during equally ferocious transformations of the past?

Ernest von Simson, a senior partner of Ostriker von Simson, a consultancy that assists the largest worldwide enterprises in the selection and deployment of advanced technologies, and author of The Limits of Strategy: Lessons in Leadership from the Computer Industry, has identified five key lessons.      


Related Topics : A Big Market for Big Data Jobs, Midmarket CIO, IT Management Automation, SharePoint, Technology Markets

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