Mutable Business is not a Digital Transformation Project

Here at Bloor, we bang on about the need for businesses to be Mutable and how information technology (IT) can enable, or indeed inhibit, organisations’ attempts to adapt and evolve at pace.

For sure, IT isn’t the only factor in enabling mutability. Nor is the need for business to be mutable something new. Back in 1960, Theodore Leavitt’s article “Marketing Myopia” identified industries and companies that had missed significant market shifts, and suffered as a result, because they were too focused on what they were making rather than what customers really wanted. Sometimes, businesses might be aware of changing market dynamics, but their size, structure and culture seem to throw up all sorts of barriers to change, making them as difficult to manoeuvre and change direction quickly as a supertanker.

A particular bugbear of mine is the conflating of mutability with digital transformation. To be mutable is to be in a constant state of evolution. Yet, talking to IT vendors and businesses, digital transformation is seen as a project, or at best a series of projects with all the implied change management practices and controls that go with them. Have a read of this blog by Chris Skinner, CEO of the Finanser. Even if you are not into Financial Services, his blogs are always very readable and insightful and sometimes quite provocative. On the topic of digital transformation, he is quite forthright. The punchline is that you often need to change the management to enable genuine transformation.

But let’s lighten up for a minute. I’m going to list some notable business and industry mutable failures through industrial history and then suggest a few modern mutable success stories. No doubt you will all have your own examples which you think are more noteworthy than mine. I’d love to hear them and then debate their merits before pulling them into a more comprehensive list.

Mutable Failures

• Canals killed by the railways. In reality, the arrival of railways didn’t actually kill the canals, it killed the canal barge operators. The canals themselves survived… just.
• Horse-drawn buggies were killed by the arrival of the automobile. It was a mechanical engineer, Carl Benz, who saw the opportunity, not the people who made the horse-drawn buggies.
• Kodak killed by digital cameras. We all know the story.
• Xerox failed to recognise the potential of the desktop GUI (graphical user interface) and mouse they developed. Apple and then later, Microsoft used the ideas to dominate the desktop computer market.
• Blockbuster killed by Netflix. In, reality Blockbuster died because it failed to react to the move from renting DVDs to on-line streaming.

Mutable Success Stories

• Netflix. It started as a DVD rental company, just like Blockbuster. But it did see the change coming and moved rapidly to deliver a streaming service and become a major player in the entertainment industry.
• Amazon. A small Seattle bookseller that saw an opportunity, using the internet, to disrupt first the book retailer market, then the publishing market itself, before using its own technology to radically reshape the way in which IT is consumed.
• Ryanair. While SouthWest Airlines was the first “low-cost carrier”, it started from scratch with that business model in mind. I include Ryanair because it is a great example of a more traditional carrier changing its spots almost completely and taking the low-cost model further than even SouthWest dared. Love it or hate it, Ryanair is the now the biggest airline in Europe and is using its technology platform to move into car hire and hotel booking.
• Ocado. Started out as an on-line grocery retailer running its own warehouses to deliver food to customers’ homes. Now makes more revenue, and profit, by licencing its automated warehouse systems to other retailers and sees itself as a technology company, not a retailer.
• Microsoft. The archetypal “fast-follower” of the IT industry. Its ability to pivot rapidly and get the whole organisation aligned to a new revenue stream or model owed much to the culture of Bill Gates and the operational drive of Steve Ballmer. Ballmer becoming CEO threatened to derail that cultural ability, but the appointment of Satya Nadella has reinvigorated the organisation and enabled it to pivot to the Cloud and become, along with Amazon, one of the dominant payers in that market.

I think all these examples demonstrate some, or all of the elements of marketing myopia, cultural change (or lack of it), new technologies, and even sheer entrepreneurial opportunism, that have driven market disruptions in the industrial era. Not all mutable failures result in the death of a company, but they usually do lead to a slow, lingering decline into obscurity.

You will have your own favourite examples of success and failure. I’d love to see them, argue about them and add them to the list. They could even become the basis for annual Mutable Business Awards.

I look forward to an engaging interaction. In the meantime, I must get back to the Bloor day job of researching and reviewing technologies that enable the Mutable Business.