Wednesday, December 4, 2013

Lessons from IBM and Google

Organizations need to change and adapt in order to survive for a long time. The NYT article “Lessons in Longevity, from IBM” talks about how the technology company has survived over a century and has been able to do so because it adapted from a hardware company to a software and services company. Below are a few examples of other companies that changed their strategy and business model, and a few who didn’t.

Companies that changed:
  • Netflix: Moved from its DVD rental model to an online streaming model, which has turned out to be extremely successful and profitable.
  • Yahoo: Founded in 1994, it adapted its business model from search to content and advertising, and still manages to remain one of the most visited sites in the US.
  • BitTorrent: After a number of copyright and other legal troubles, most of the P2P platforms went out of business, but BitTorrent changed their model and started providing services to companies who required mass distribution of legitimate software like Microsoft Windows updates or patches for games.

Companies that failed:
  • Research in Motion: RIM’s Blackberry was one of the most dominant smartphones but lost huge market share to iPhone and Android when it slowed product innovation.
  • Nokia: Again, Nokia was one of the most popular cell phone companies but they failed to innovate and were then bought out by Microsoft.
  • Barnes & Noble: Barnes & Nobles failed to adapt to changing customer needs and sentiments and lost a huge proportion of sales to Amazon, and other online book retailers.

In the NYT article, the author Steve Lohr compares IBM with companies like Google, Microsoft and Apple. He makes an interesting note about Google: “The assets most prized at the company are brains and data.” To me, that is the key. Along with intelligent people, Google mines such a large amount of data and uses advanced artificial-intelligence techniques to make sense of it all. This places it in a position where it can predict the trends in the near and not-so-near future, and make informed business decisions. These are evident from its early adoption and innovation in mobile technologies like Android and Google Glass. Companies should take a cue and understand the pivotal role “intelligent searching, discovering and sharing of information” has played in making Google successful.

Companies can use data to suggest what new products, services or markets should be launched or entered. It can be used to easily run trials with a small number of products or some other metrics in a limited scope, for little cost and at low risk. It can be used on feedback from customers, vendors, or employees to find trends which may not be obvious. Intelligent use of data can help organizations make major changes with little risk.

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