There is little doubt the rules are changing in the business world, and the changes won’t get any slower. The average lifespan of a company listed in the S&P 500 has decreased from 67 years in the 1920s to just 15 years today according to Professor Richard Foster from Yale University, who further estimates that by 2020 more than three quarters of the list will be organizations who’s name we’ve never heard of. And it’s not like these new actors are playing by the rules, in fact is seems that what determines how much of a threat they are to current frontrunners is precisely how fast they can hack the system. Yet disruption is no news to our planet, in fact it has been around for quite some time, and past examples can bring valuable insights into current events.
Land plants had existed for 370 million years of head to head competition, with winners procreating and losers going extinct, until the creation of the petal flower reproduction system, some 100 million years ago. This ingenious innovation not only began using the existing network of insects for its own benefit, but managed to send the flying workers directly to specialized drop-spots which carried their reproductive organs, the flowers – a change that hacked the procreation competition system which depended until then on random and much less efficient pollination by wind. Needless to say, this catapulted all descendants of these first few flowering plants to the top of the game. Today, over 90% of plant species in the world are flowering plants.
This is how, by and large, innovation takes place. New players reshuffle the pieces of the environment to their advantage, and create new solutions that propel them to the top of the chain. The top performers then go on to the reshape their very landscape, strengthening their role in the ecosystem and increasing the dependency of (or interdependency with) third parties. The interaction between insects and flowering plants shaped the development of both groups – a process called coevolution – in an explosion of both insects and flowers during the Mid-Cretateous Period towards the end of the Mesozoic Era.
Today, Google’s dominance is a reflection of just how crucial its role has become for so many companies (and consumers) in a market which it has helped create. The same can be said of Facebook, Twitter, Apple, and other tech titans, as well as, in their respective niches, of Uber, Airbnb, Shopify, Spotify as well as many smaller organizations (and entrepreneurs), where the race is on for who can add more value for the most amount of people. This mixture of exponential technology, lowering market entry barriers and value-driven differentiation has sparked an insurgence of new companies and solutions thirsty to show their valor.
The effect of this revolution is staggering. As if new players reordering their respective segments and reshaping customer habits was not enough, further techno-scientific advancement in the fields of medicine, IoT, 3D printing, nanotechnology, AI, synthetic biology, renewable energy and sheer connectivity, amongst so many others, are each collaborating with massive inflections. And since these are riding on the back of technology, they follow exponential development curves which are almost all about to enter their vertical tipping point. As noted by Peter Diamandis and Steven Kotler, authors of Abundance – The Future Is Better Than You Think, in 7 years the average laptop will make 100 billion processes per second, which is the speed of the human brain, in another 15 this should reach 10^17, or the speed of all human brains put together. And where biology evolves at linear rates, technological development is exponential. It would be as if plants and animals now had to readapt not only to, say, a change in forest temperature, but also in rain, soil, sunlight, humidity, predators, invasion of competing species and whatever new factor could be created by mixing these elements.
So how are these new breeds playing the game? What is the common thread between the players that are reshaping the market, and what distinguishes the old-school from new-school mindset? Pay close attention to enough of these players and two common traits begin to appear.
First, they have realized that as consumers become empowered, we shift form an era of perceived value, inflated by propaganda, to actual value. These new mindset players carry a legitimate mission of helping their customers; profit now becomes a by-product of added value instead of a means in and of itself. This one slight shift in capitalism’s core axis brings a fundamental change. As observed by Raj Sisodia and John Mackey in Conscious Capitalism, what we have been living with until now is not really capitalism, but a form of crawny capitalism. Essentially, the game has been rigged by outside factors such as monopoly, service contracts, government grants, mass media marketing, misinformation and other such forces that directly intervene with customer choice, freedom, and ultimate satisfaction. Yet today, as technology allows for intelligent products (like Sonos’ speakers that “listen” and tune themselves to their environment’s acoustics) and massive consumer choice, voice, and ultimate empowerment, the traditional formula for inflating perceived value is quickly losing ground.
Second, these players have anchored their value proposition to a deeper sense or purpose. After all if the elements of the environment around us are shifting at exponential rates, the only underlying constant left to hold on to is our mission. Where a drugstore for example could previously define itself simply as an organization that sells drugs, in a new environment with epigenetics, LOC technology, mobile diagnostics, drone deliver and the growth of holistic medicine, amongst others, the very nature of medical treatment is changing, thus a deeper and more meaningful mission must permeate and direct the companies’ actions, say “to help people be healthy”. This allows for fluidity and quick readaptation to the changing environment without losing sight of the companies’ overarching role in its ecosystem.
It is said that earth has been through five major mass extinctions, each bringing a radical change in the diversity of organisms. The most recent, the Cretaceous–Paleogene extinction approximately 66 million years ago, caused the extinction of the dinosaurs and allowed for mammals to emerge as the dominant large land animals. Sad as it may be for the dying species, extinction is evolution’s concubine. Now this “tech-driven meteor” hitting earth will bring titanic forces of its own. Scary as it may be, with consumer empowerment and true-value driving this evolution, it will be interesting to see what new species emerge.