Phil Biggs covers the automotive industry for NewsTalk 1340 WJRW
March 25, 2013 – 11:30 am ET
GRAND RAPIDS, Mich. – If we look back just five decades or so, think of the popular brands and products that filled our commercial landscape – Pan American airlines, Gimbels department stores, and Burroughs adding machines, to name just a few. All are gone now, all became obsolescent as new technology, new services, and new ideas overtook them.
It is clear that the world is in the midst of a massive societal and technological shift, in the same way we moved from an agrarian culture in the mid-18th and 19th centuries, though the industrial revolution in the early 20th century, to the information age and post-information digital revolution we are experiencing right now. So, what transformation lays ahead next? Is what we see the beginning of the end…or the end of the beginning?
While it is true we are entering a transformational phase in American history, change is a good thing…eventually. Nearly every traditional U.S. industry, product, and business process is undergoing significant change. Transformation has crippled certain industries, and the price could be their demise. Industries such as fishing, mining, wholesaling, and traditional agriculture face extinction due to dramatically lowered demand and shrinking revenues – partly because of severe regulation and partly because of societal changes that affect their livelihood. For example, the fishing industry has become overburdened with regulation affecting everything from catch limits to allowable bait to restricted harvest areas. Many lobstermen today believe that ten generations of commercial fishing will end in our lifetime.
Other industries such as aerospace, retail, manufacturing, and health care will likely survive but will look radically different by the middle of next decade. Some companies today won’t be with us tomorrow and, while we may mourn the loss, what follows may be good. What if the new order of business provides greater choice, better quality, faster and more efficient technology? What if those companies that survive are more conscious of the environment, more socially responsible, more globally aware? In that respect, change is of course a good thing.
Competing with new technology presents an unfair advantage…or does it? The advent of the internet has opened new information sources that have enabled average consumers to create their own products and services in real time. This causes havoc as traditional industries scramble to keep pace with changing technology and marginalized products. For example, traditional broadcast media such as AM-FM radio are under siege. With listeners migrating away in droves to internet and XM-like alternatives, and formats shifting frantically from classic rock to rave dance to all-talk, advertisers continue to leave the space. This revenue loss is helping to accelerate radio’s somewhat tragic decline. And so staying in the radio space has been painful – as change has come to disrupt its roots and ruin its core value proposition.
But there is some good news for those radio executives willing to embrace risk: podcasts, iHeartRadio, Pandora, Tunein, and other streaming applications present threats but also alternative revenue sources to those willing to forge new alliances. The answer lies in traditional radio’s ability to identify which of these listener alternatives will make the best match to re-invent its future. Not for the faint of heart, or for those only looking to preserve past successes.
Partnerships and alliances are alternatives to obsolescence. Today nearly all companies face the task of transforming even their most successful niches. Consider these heavyweights combining to create new markets or new projects – Ford & Toyota (truck powertrain breakthroughs), Microsoft & Nokia (iPhone alternative), Google & Intuit (next generation search engine), or IBM & Oracle (Cloud solutions). In the new global economy where rapid response to marketplace changes is imperative, these alliances are becoming a competitive necessity. They enable companies to gain new competencies, obtain unique resources, share risks, or make quick moves. But seriously…Google in need of a partner?? In these times, yes.
This explosive growth of alliances is not without complexity or conflict – but circumstances did not warrant their existence four or five decades ago. Then, bitter rivals kept more than a comfortable distance and did their own problem-solving or idea generation. Today, strange bedfellows have become allies, even brothers in arms, and they co-invest together because they can’t afford the high costs of entering new global markets alone. Burroughs, Gimbels, Pan American and most other companies around fifty years ago never had to seek this kind of arrangement. Today they could hardly refuse it. This new business model is the path forward as we reach the end of the beginning and move ahead into what comes next.
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