InformationWeek

February 21, 2000

Business/IT:
Industries Must Change Or Die
In this age of the Internet, innovation will win every time because the customer is always right

By Bob Evans

Bob Evans enial: "A rejecting or refusing to acknowledge; a refusing to receive, believe, accept, or embrace." Those are the formal dictionary definitions; in more everyday patois, it might be defined as "whistling past the graveyard or getting caught in the headlights. Pig-headed. Stubborn." And, if those fit, very likely doomed.

Sound familiar? Hauntingly so? Like maybe something your company has experienced recently? Where you can laugh about it if you and the organization have moved beyond it--but where it's killing you if the Big Charade is still going on? Or maybe you have customers who are scrapping and hustling, but just can't seem to get with the Transformation Thing--you try to prod and cajole and speak frankly, but they seem lost and you really have to wonder if they'll be in business at this time next year. "A refusing to receive, believe, accept, or embrace." Road kill.

We've all seen those tags hung on various industries and companies. We've seen the raw, blunt force of business innovation powered by technology take 200-year-old markets and industries and turn them upside-down and inside-out in a matter of months; we've seen business models mutate from sterile exercises in cost-cutting to bold ventures predicated upon customer-centricity and vigorous growth. And, in the process, we've all taken some shots. For the lucky and/or farsighted, those were merely glancing blows; for those with less vision and agility, the shots were painful, debilitating, crippling, or even fatal. Those who've survived have very likely become a great deal smarter in a very short time--with the lesson being that just as time waits for no one, the relentless surge in today's business world is battering everyone.

Along the way, entrepreneurship has exploded all around us. The entrepreneurs behind these engines of new growth are in large part rewriting the rules by which U.S. business will work for the foreseeable future--rules about your customers and how you treat them, rules about your employees and how you treat them, rules about partners and suppliers. And, to be sure, rules about competitors: how to identify them and analyze them--and how to decide whether to attack them, ignore them, or work with them to build something of great value to customers that wasn't available earlier. From the buoyant stock market to stunningly low unemployment, the impact of today's entrepreneurial wave can be seen far and wide.

One area that's just beginning to feel that impact is the rarified world of venture capital: the omniscient seers, the market makers, the ones holding in their hands the fates of so many innovators and strivers. It used to be--and probably still is, at least for a while longer--a rule of life that you can't be a successful startup without venture capitalists. Or you can't do an IPO without them. Or that unless you have their blessing, their dollars, and their heavy-handed control, you'll never make it, so you better accept that fact now and turn over 40% of your company--because in 45 days it'll be 51%, and after that you might as well think about a career in public service.

Quick: Who is the venture capitalist's customer--the entrepreneur or the investor? Is this an old model that's being perpetuated because, well, that's just how it is and we have the power--all of it--and we're not going to change? And haven't we all seen how the wrecking ball of the Internet has shattered those types of old, static, closed, monolithic models? Is the venture-capital business going to be the next to get zapped into the 21st century because a critical mass of innovators begin to pursue a Better Way?

I'm not weird enough to try to say that the venture-capital market as we know it is dead or dying, or even noticeably ill. What I am saying is that if you want to know who's gunning for trouble in today's economy, look for an industry that says, "My model doesn't have to change." This bull market has created a lot of wealth for a lot of people, and angel money is everywhere. Lots of visionary companies are starting aggressive venture funds to help trigger and get close to new high-growth companies. In the age of the Internet, chokepoints--which venture capitalists have in some respects been for a long time--don't work; entrepreneurship and innovation will win out every time. Because the customer is always right.

BOB EVANS
Editor-in-Chief
bevans@cmp.com

Back to the Columnist page
Send Us Your Feedback
Top of the Page