Friday, August 01, 2008

Message to Corporate Dinosaurs: The Meteor Has Landed

65 million years ago something unexpected happened that altered the course of Earth's history forever. Dinosaurs had reached the apex of evolutionary fitness and had ruled over land-based animals for millions of years. They had become indomitable masters of their surroundings. Then, suddenly, in a geological instant, they vanished.

Geologists and paleontologists call this the "K-T event." Whatever happened 65 million years ago was so devastating that it caused an abrupt change in the fossil record, marking the transition between two major geological eras, the Cretatious (K) and Tertiary (T). The K-T event wiped out half of all land-dwelling creatures on the planet, eradicating the strongest, fittest, and most powerful species but sparing many smaller, weaker ones. Among the weaker ones were mammals, which of course eventually gained dominance. What is most curious about the K-T event, or any mass extinction, is why inferior species survive while superior ones perish.

The answer is agility, and the fit often sacrifice it in favor of sheer mass.

The dinosaurs as a species did not turn to dust in an instant. Rather, they gradually died off over a period of 10,000 years or so, most likely of starvation in the wake of severe global climate change. All creatures were subject to these conditions of extreme scarcity, but the dinosaurs were at a distinct disadvantage because their size required them to find comparatively more resources to survive. From an evolutionary standpoint they got careless and allowed their size to compromise their ability to adapt in the face of change. Meanwhile, millions of smaller species thrived because of their much more economical consumption of energy. I believe we are witnessing a similar extinction event in today's business ecosystem.

The untouchable corporate monoliths of the industrial age may be headed toward a similar fate as the dinosaurs, threatened by the global impact of the Internet Era. For these 8000-pound T-Rexes, what used to be uncontested dominance over resource-abundant business territories is withering into a struggle to fend off swarms of new and nimble competitive breeds encroaching from all directions. The digital age has declared open season on traditional business models and has little appreciation for historical aristocracies. It's anyone's game, and everyone is stepping up to compete.

Michael Hugos of CIO magazine blogged about this phenomenon, citing how Kodak, GM, and Ford have sustained deep wounds in the face of new competitive threats. He says of today's corporate heavyweights,
"They are rigid hierarchies through and through; it’s in their genes; it seems they are not and cannot be agile."
If this is indeed the case, then these companies' existence is endangered. Today's business environment increasingly favors organizations that can self-organize quickly and dodge the effects of constant change. Heavyweights cannot maneuver around change, so they become big targets that sustain constant damage. Lacking the ability to adapt, time will eventually erode the pedestals out from underneath them.

Some heavyweights are attempting to inherit agility through acquisition, such as News Corp. via its jaw-dropping purchase of MySpace. Yahoo! and Google (yes, even they are threatened) have strategically acquired web-based social networking prodigies Flickr and YouTube, respectively, to remain a step ahead in the game of evolution.

No industry is immune from this arms race of innovation, though. It is corporate Darwinism on an epic scale. Newspapers, movie companies, record labels, retail outlets, auto makers, schools, restaurants, every business is affected by today's rapid pace of technological change. And many large, market-dominating predators are most at risk because of the sheer magnitude of effort required for them to suddenly do things differently.

I believe we are on the cusp of a massive corporate extinction event similar to the K-T event. The blast has struck and it will take years for the dust to settle. Meanwhile, the chaos has disrupted the economic balance of power, offering new advantages to the small and nimble. Like the dinosaurs, large companies may not perish overnight. But for those not able to adapt, the death knell has already begun to toll.

2 Comments:

At 12/11/08, 7:40 AM, Blogger paulkerishuttletonyoung said...

Wow! You put that sooo well! I think you are right on target!
I was just trying to look up your new address(for Xmas), and found this. I am very impressed!
Keri Young

 
At 12/29/08, 10:24 AM, Anonymous adam hartung said...

Markets are going through major shifts related to advances in digital solutions and global access to low-cost resources. Those companies that will thrive are those that will create new solutions which adjust to these shifted markets. Just because a company survived last year and has a few bucks does not mean it will succeed in 2009 and onward. It requires innovation to deal with these major changes, and only those companies that innovate will create returns allowing them to emerge as strong, viable competitors. Read more at http://www.ThePhoenixPrinciple.com

 

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