October 17, 2013
What would you do if you were starting from scratch? This is a question businesses seldom ask themselves. Yet it's an essential one, a destructive one and ultimately one that's at the root of reinvention.
The classic paradox of business is that once you grow, you lose your edge. Where once was disruption, now there's predictability. Steve Blank, father of the Lean Startup movement, says that a startup is an organization designed to search for a sustainable, repeatable business model. It follows, then, that an established company is an organization designed to perpetuate an existing business model. Perpetuating business models is what got Kodak in trouble when it missed the digital camera market (indeed, after mobile phones, the most prolific camera on Flickr is a Canon, by a company that made the jump to digital scanners and printers). Perpetuating business models is why Blockbuster isn't Netflix -- the former framed itself in the video store business, not the entertainment delivery business. [ Trying to explain disruptive technology to colleagues? First rule: Don't talk about disruptive technology. Read more: Disruptive Technology: Follow Fight Club Rules. ] Startups often trump big companies simply because they have nothing to lose. They're more tolerant of risk, more aware of their own mortality and more willing to gamble. They don't know what business they're in, so they thrash around, trying things out. Big companies have started to take notice. In 1950, the average company on the S&P 500 stayed there for half a century. In 2012, a company stays there for 13 years. The barriers to entry that made large organizations comfortable and complacent have quickly eroded in the face of ubiquitous computing. To be sure, bigger organizations still have their advantages: -- They have market intelligence. Had Blockbuster properly framed the business it was in, it could have won. It had millions of customers' rental histories, billing information and addresses. It even had an inventory of content and strong ties to the media industry. --They have buyers. While a startup has to scrape and scratch for every new customer, an established vendor has access to senior executives and pre-approved budgets. -- They have resources. Revenue from cash-cow products and business units can fuel innovation, without the endless rounds of fundraising and nail-biting finance a startup must face. But there's one huge disadvantage: they're stuck with their legacy systems. So back to the original question: What would you do if you were starting from scratch? Global CIOs: A Site Just For You Visit InformationWeek's Global CIO -- our online community and information resource for CIOs operating in the global economy. Would you build a messaging and calendaring system, or use a hosted model like those from Google and Microsoft? Would you invest in hardware, or use virtual machines and public clouds? Would you buy a backup system, or use a service? Increasingly, organizations are realizing that IT itself isn't strategic -- it's what you do with it that matters. In the last decade, both the front office and the back office have gone digital. Everyone around the boardroom table knows that technology is essential for them to do their jobs, whether that's a COO streamlining the factory floor or a CMO automating marketing. The difference is that none of these people view technology as their job the way a CIO once did. They're intolerant of delays, and they're acutely aware that the real cost of technology is integration. Many of these executives see themselves as starting from scratch. They don't have baggage, legacy systems or preconceived notions about technology. They see it as a means to an end, not an end of its own. If you're an IT professional, once you know what you'd do if you were starting from scratch, I have a second question for you: Why aren't you? Because someone else -- in another department or another company -- is.
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