How Accelerating Technology Is Transforming Business Models in 2013


Image by: Gisalo Giardino
By Victor Averin

We know there has been a technological shift rather than a cultural one. For most businesses, stasis was the rule, at least historically. When you entered the business world more than ten years ago the past would be a good indicator to the future. But because of technological advancement business models and strategies are also changing and are becoming dynamic.

Business Models Are Getting A Shorter Life-Span

Saul Kaplan in his book, Business Model Innovation Factory, points out that technology cycles are becoming shorter than corporate decision cycles. Typically a firm or company will use the same business model for a generation but for the future you must “think big, start small, and scale fast.”

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For example, about ten years ago Google already revolutionized internet searches, but they had one problem, people would search, find what their looking for, and leave. Google wanted users to stay, so they one upped their competition by providing an email service with 1 GB of storage! No one could refuse back then. It changed the game; Yahoo and others were only offering 2MB-4MB.

What Google did next was double storage efficiency every 12 months (Kryder’s Law) according to Moore’s Law and exponential technology growth. In 2015 we can expect 10,000 GBs of storage. Essentially, as technology advances and people turn to the digital age, more and more information will need storage, and so Google capitalized and changed the good ole’ email, static, business model into a constantly evolving one.

We can expect our computers to be 100 times more powerful in 10 years, and 1,000 times more powerful in 15 years, and 1 million times more powerful in 30 years. We’re seeing similar trends and exponential growth in every field, gene sequencing, green energy etc.

The future will not hold the same pace as the past.

Open Innovation Is On The Rise

Open innovation has also grown into a successful business model. Many business are starting on the path of open innovation rather than keeping everything away in proprietary labs, more are implementing various strategies such as partnerships, joint ventures, license agreements and crowd sourcing in combination to get the right information into the place where it can do the most good.

For example, as soon as Kinect (Microsoft’s interactive game console) was released into the market, external sources like hackers, MIT professors, and regular individuals transformed the Kinect into hacking, tracking, and re-purposed tools. Microsoft’s reaction was initially negative and didn’t condone such tech tampering.

Instead of suing these individuals Microsoft embraced them. Once market enthusiasm soared Kinect sales took off with 2.5 million of the motion sensors sold within the first month after launch, Microsoft capitalized from open innovation and gained new information and insight about Kinect, and attracted a new demographic of hackers and techies. They’ve learned applicable information for the future.

Advance Technology Will Create Economic Abundance

The population has doubled since the 1960’s but instead of predicted dystopian societies with war and famine, the opposite occurred, there is now less famine and war. The world is richer, better fed, and less violent than forty years ago. Renewable energy will likely become cheaper than fossil fuels. Technology is saving the world.

Completely original strategies will be the crux of the economy because they are necessary for the population increase like vertical farming and automated manufacturing will increase efficiency, and lower cost for higher quality products. For example, our computers are exponentially faster and cheaper since the 70’s.

What You Can Do To Prepare

Innovators that incorporate open source strategies, shift business strategy according to accelerating technology never stop leading the market, for example, IBM, Google, and Microsoft.

You should be researching the future of technology like mobile payments and banking and its impact on the way consumers shop. Possibly think about changing your current business strategy to one up your competitors.

Will you offer digital payments or digital files in place of physical payments and products? Will you provide an interactive service that can beat online chat and be used on any device? What are the steps to accomplish these goals? These are the questions you should be asking.

Learn from blockbuster’s mistake. Their failure in adapting to a new competitive landscape (with internet success of Netflix) lead to their bankruptcy. But now Netflix mail-order discs have no competitive edge any longer either because everything is heading toward streaming and downloadable files.

To adapt Netflix has begun to incorporate streaming, and downloadable films and shows on numerous pieces of hardware like video game consoles, t.v., and mobiles instead of holding onto their mail-order business model.

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