The Next Big Thing Is Small

  • by , Op-Ed Contributor, December 16, 2014
We’re in a battle between legacy providers and new incumbents, and the assets that made companies of the past succeed now appear to be liabilities, How do companies best equip themselves for the future?

Traveling around the world, one of the curious things about America is that for all its technology billionaires, its venture capital money, and its focus on innovation, the day-to-day reality of U.S. living isn’t as advanced as one would expect.

Ironically, the problems mainly stem from the U.S. being the first to innovate. The country has a legacy of airports built for the air travel of 1960s, where retrofitting scanners is difficult. We have cities build around the optimism of personal car ownership and abundant cheap energy. We have some of the slowest Internet speeds, the poorest infrastructure and the most backward banking system. It was built before anyone knew better; what was once an asset is now a liability.

The most transformative technology happens in leaps or paradigm shifts, where the last mover has the advantage because they get to reinvent with the new. I visited newly coined and recently bombed Montenegro in 2001, a nation that struggled with building the most basic of landlines for decades, to find it jumped directly over that era and built a stunning 3G network.

The Chinese public transport suffered years of neglect, and then they leapfrogged years of learning to create the most ambitious high-speed train network the world has seen. Kenya had huge issues with its banking infrastructure, but solved many problems with one leap to MPesa’s as a mobile banking solution. Due to massive currency changes, Romania had no coins for parking meters (or parking meters!), but immediately found that payment by mobile operator billing was a better way.

Leapfrogging is transformative and it covers the main success stories of today.

Blockbuster eaten by Netflix, Barnes and Noble killed by Amazon, Kodak embarrassed by Instagram, or even Nokia and the iPhone, all businesses destroyed by the power to jump over assumptions.

We live at a time when energetic, successful companies are being bundled together: Uber, Airbnb, Fon, Relay Rides, TaskRabbit, for example, are part of the sharing economy. It's a nonsense title, unless American Airlines is sharing a plane.

Other people talk about the disruption economy, about how the attitudes of Uber, Coursera, Airbnb, Tesla and alike are driven by a culture not just of being different to existing competitors, but by starting afresh.

We love these buckets, but they distract. The reality of business in 2014 is driven by a unifying element. More than any other time, the small can eat the big.

Uber wasn’t big enough to contemplate establishing the costs of acquiring employees and owning cars, Airbnb couldn’t worry about the huge resources needed to build things. Our businesses are leveraged more than ever by the power of thinking and understanding technology.

The remnant memories of how things were done, decades of learning and lazy assumptions can be friction to paradigm leaps.

If I ran a large company today, I wouldn’t be interested in bringing in consultants to overhaul the company from the ground up. The companies that most need help are simply too big to change and too vulnerable. Instead, my company would have a policy of renewal and succession management.

In this world, BMW would see its role as personal transportation provider, not a carmaker. They would have created experiments five or 10 years ago that could have produced what Tesla, Uber and Zipcar are today.

With this thinking, Marriott or Regus would have created Airbnb. Sandisc may have made DropBox, while Verizon could have developed WhatsApp or SnapChat.

Twenty years ago, technology companies would have sold their services to large companies or been bought by them. Now they know, in the age of network effects, that the phone address book is the most powerful marketing mechanism in the world. It's aided by cheap start-up costs and easy scalability. These companies can now take on and kill the incumbents.

So the challenge becomes: how do you think small? What new seeds can you create today to carry the mantle of your company into the future?

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