The Enterprise Bang! Moment
The increasing rate of technology advancement is decreasing the time enterprises have to react to competitive pressures brought about by those same advancements. A Bang! moment arrives when the incumbent can no longer react before they fail in the market.
The specific timing is unknowable, but the outcome is assured. Carmen Reinhart and Ken Rogoff, in This Time Is Different, coined this phrase and noted, “Highly indebted governments, banks, or corporations can seem to be merrily rolling along for an extended period, when bang – confidence collapses, lenders disappear, and a crisis hits.”
The analogy lies in an enterprise is “merrily rolling along” until changing market conditions brought on by disruptive new technologies trigger a collapse. Their ineffective strategies for dealing with the crisis are familiar:
• Ignore it
• Disparage it
• Leverage regulators to prevent it
• Attempt to implement without understanding
• Acquire it
• Never be as good as it, but survive
Uber is an interesting case, with its competitors still largely leveraging regulators. Microsoft’s reaction to the iPhone is another example, with an outcome that resembles a Bang! It is possible to come up with an effective response that is too late to matter.
The Enterprise Bang! Moment outcome is organizational failure in an industry that is still viable. Think Polaroid and Digital Equipment Corporation. The difference between those examples and a true Bang! is both had time to react, but chose not to.
The root causes lie in human nature, aversion to change and risk. People are driven to stay in their comfort zone, and moving away from what is known creates discomfort. Large organizations also do not encourage risk-taking. There is always risk in attempting a new approach, which drives the comfortable choice of staying with the known.
This frequently manifests in enterprise software. Line of business applications are notoriously poor from a quality and usability perspective and yet are still largely being developed and delivered in the same manner as they have been for decades. A mediocre, but known outcome, is preferable to trying something new. Since software is key to implementing most innovations, poor execution will make it a large contributor to the Bang!.
Breaking down the strategies noted above, the first three are simply delays to response. Historically, companies could afford to waste time and then proceed to address the problem. But as the pace of innovation continues to increase, the option of delaying becomes a luxury that many companies will no longer be able to afford.
The next strategy, attempting to implement, is where the aversion to change becomes actively problematic. The process is slow and the outcome is poor and has minimal impact on the competitive situation. Remember all those websites corporations built in the early days of the Web because everyone had to have a website? Companies did it only because some new companies had a website and were making a market impact.
Failing to solve the problem organically, many organizations attempt to acquire their way to success. But the same aversion to change and risk typically prevent the successful integration of the new, yielding poor results in combating the competitive threat. Historically, this has been sufficient for the dinosaurs to muddle on.
The key point of the Enterprise Bang! Moment is the pace of change is compressing the time available to react to where there is no time to respond. And Bang! there is failure in the market, leading to failure of the organization. We have yet to see an organization that was unable to react in time due to the inherent nature of their structure and processes. But it is only a matter of time. Uber was close to causing an entire market segment to collapse, but the regulatory fight slowed them down just enough.
Large enterprises, regardless of industry, should look to the future and proactively change how they assess changing market conditions and the processes that govern how they respond to change. The days of using old methods to deliver innovation-driven value are drawing to a close.