54 Distribute and Be Damned
Manyika, and Woetzel, in my opinion, do not pay sufficient attention to
a fifth factor – environmental change – that will have an equally important effect on how we live and work in the future, but their other four
categories are important examples of the driving forces behind world
change over the next century. We live in disruptive times, but then we
have always lived in disruptive times since the period of the industrial
revolution at least. A comparison of the 1955 Fortune 500 firms to their
2016 counterparts shows that only 12 per cent of the earlier companies
survived and prospered: while Boeing, IBM, Proctor and Gamble, and
Kellogg went from strength to strength, American Motors, Studebaker,
and Detroit Steel were replaced by Facebook, Microsoft, and Apple,
what Mark Perry refers to as “creative destruction”.
59
There is a raft of titles that seek to encourage CEOs and organisations to embrace this creative destruction, ignoring the fact that for the
vast majority of people news of the impending demise of their relative
prosperity is always a painful prospect. Gans observes that “as a concept disruption has become so pervasive that it is at risk of becoming
useless”,
60
and instead he focusses on Christiansen and Bower’s original
problem: how is it that great companies, doing what made them great,
fail? Gans begins with the compelling example of Encyclopedia Britannica, a company that devised an entire sales technique that served it
extremely well for decades: consumers became convinced (or convinced
themselves) that paying hundreds of dollars was a signal that they cared
about their children’s education, purchasing this symbol in a format – a
series of printed volumes – that often would be opened no more than
once or twice a year. Having refused to licence their content to Microsoft in 1985, Britannica fell victim to a far cheaper but more accessible
format – the Encarta CD-ROM – which, in turn, was replaced by Wikipedia, “an encyclopedia that wasn’t a business at all”.
61
Britannica had
first been marketed in the United States in the 1790s, and in the 1930s
over 2,000 sales people were employed to promote the title door to door
(I even applied for – and failed to become – just such a salesman upon
completing my first degree in 1990). With the rise of CD-ROM and then
the Internet, the once-successful strategy that Britannica had been committed to for the best part of a century made no sense anymore so that,
in 2012, the print edition came to an end and, with it, the door-to-door
sales force.
The very notion that someone would come to your door and try to sell
you an encyclopaedia is utterly preposterous in the twenty-first century,
as relevant to modern life as a village blacksmith to shoe a horse or log
drivers to manoeuvre cut trees down the river to treatment plants. There
are plenty of other examples of companies that have fallen foul of technological advances – Kodak’s success as a producer of film for cameras
was simply too great for it to invest properly in digital cameras, while
Blockbuster closed its last stores in 2013. Disruption that has taken place
Manyika, and Woetzel, in my opinion, do not pay sufficient attention to
a fifth factor – environmental change – that will have an equally important effect on how we live and work in the future, but their other four
categories are important examples of the driving forces behind world
change over the next century. We live in disruptive times, but then we
have always lived in disruptive times since the period of the industrial
revolution at least. A comparison of the 1955 Fortune 500 firms to their
2016 counterparts shows that only 12 per cent of the earlier companies
survived and prospered: while Boeing, IBM, Proctor and Gamble, and
Kellogg went from strength to strength, American Motors, Studebaker,
and Detroit Steel were replaced by Facebook, Microsoft, and Apple,
what Mark Perry refers to as “creative destruction”.
59
There is a raft of titles that seek to encourage CEOs and organisations to embrace this creative destruction, ignoring the fact that for the
vast majority of people news of the impending demise of their relative
prosperity is always a painful prospect. Gans observes that “as a concept disruption has become so pervasive that it is at risk of becoming
useless”,
60
and instead he focusses on Christiansen and Bower’s original
problem: how is it that great companies, doing what made them great,
fail? Gans begins with the compelling example of Encyclopedia Britannica, a company that devised an entire sales technique that served it
extremely well for decades: consumers became convinced (or convinced
themselves) that paying hundreds of dollars was a signal that they cared
about their children’s education, purchasing this symbol in a format – a
series of printed volumes – that often would be opened no more than
once or twice a year. Having refused to licence their content to Microsoft in 1985, Britannica fell victim to a far cheaper but more accessible
format – the Encarta CD-ROM – which, in turn, was replaced by Wikipedia, “an encyclopedia that wasn’t a business at all”.
61
Britannica had
first been marketed in the United States in the 1790s, and in the 1930s
over 2,000 sales people were employed to promote the title door to door
(I even applied for – and failed to become – just such a salesman upon
completing my first degree in 1990). With the rise of CD-ROM and then
the Internet, the once-successful strategy that Britannica had been committed to for the best part of a century made no sense anymore so that,
in 2012, the print edition came to an end and, with it, the door-to-door
sales force.
The very notion that someone would come to your door and try to sell
you an encyclopaedia is utterly preposterous in the twenty-first century,
as relevant to modern life as a village blacksmith to shoe a horse or log
drivers to manoeuvre cut trees down the river to treatment plants. There
are plenty of other examples of companies that have fallen foul of technological advances – Kodak’s success as a producer of film for cameras
was simply too great for it to invest properly in digital cameras, while
Blockbuster closed its last stores in 2013. Disruption that has taken place