Established industries aren’t ripped apart overnight. That takes time, though when momentum builds, change happens fast. How can incumbents manage through the monumental changes currently under way? One answer is to take a cue from pivotal technology companies leading the change.
Many of the companies leading today’s technology-driven transformations across industries are leveraging transitional strategies, or more specifically transitional business platforms. Few old-guard players have recognized the power of transitional models, but companies such as Netflix, Uber, Apple, and Tesla know that waiting for the time to be right means waiting until it’s too late. Netflix founder Reed Hastings, for instance, always wanted to do on-demand video, but the technology infrastructure wasn’t there in 1997, the year he founded the company. Rather than giving up, he founded a DVDs-by-mail business until the time was right. Similarly, Google’s interest in Nest isn’t primarily a play to control the thermostat: it’s a Trojan Horse into the connected home.
Getting in the game helps define the game, but it’s essential to have some idea — even a vague one — of what the game might eventually be. For the next generation, that game will often be about pushing the production and provision of products and services ever closer to the moment of demand. From distributed energy generation to 3D printing to crowdfunding to the Internet of Things and data analytics, all of these technologies enable us to provide what customers want, where, how, and when they want it. Businesses able to most cost-effectively provide it will win. This dynamic will persist for many years as technology improves and businesses learn to apply it in new ways. We’re only in the early stages. Companies that focus on defending established business models will lose in the long run. Companies with foresight will pursue transitional models to be part of driving the change.
A transitional business platform such as Netflix’s DVD rental business provides a potentially profitable business opportunity that gets to market and enables, rather than hinders, transition to future business models as technologies, customer behaviors, regulations, or other factors evolve.
A transitional business platform such as Netflix’s DVD rental business provides a potentially profitable business opportunity that gets to market and enables, rather than hinders, transition to future business models as technologies, customer behaviors, regulations, or other factors evolve.
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