Blog #3: Crushing Dreams

Key Takeaways

• No search engine comes close to Google, but that doesn’t guarantee permanent dominance
• The next round of tech titans to rise should focus on demographic trends to find the right strategic position 10, 20, and 30 years from now
• Technological advancements will provide key enabling platforms to the next generation of most-valued companies.

The article “Seven Ways to Fail Big” identifies several seemingly obvious pitfalls in business expansion, in a way that even an 11 year-old can understand. Last night after dinner, we were debating whether we should cut down a beautiful red oak tree in our yard after discovering it has a fungal infection called hypoxylon canker. My step-daughter argued that any benefits of cutting it down such as being able to build a pool, would be negated when she becomes a multi-billionaire. We proceeded to examine her plans to build the next Google and were admittedly unsympathetic skeptics.

Using the framework in the article, we examined her idea for the seven sirens. The first pitfall we identified was “Wrong Technology Bets”, which the piece says “may be ill-conceived from the start”. As of January 2020, Google owns 87.35% of market share worldwide, with the next highest competitor being Bing at 5.53% (Statista, 2020). By the time she could become a tech prodigy, what would it also take in order to achieve a differentiated market position as the world’s #1 search engine (or even #2) when other successful firms have tried, and arguably based on the numbers above, failed?

Examining the shift between the world’s most profitable company by market cap in 2006 vs 2016 shows a tectonic and global shift, from the top 6 including only 1 technology company to only including one company that is not technology. While ExxonMobil's market cap shrunk from $362.5b to $356b, their drop from #1 to #5 was more because of the rise of Apple, Alphabet, and Amazon, rather than their own decline (up until that point). This shows that if her company looks to the horizon to ride (or create) the next wave that will tower over today’s titans, she could reach her goals and laugh her way to the bank after all.

There are clues in demographic trends section of the lecture from week 3 as to how she can craft a stronger plan to keep us in luxury in our old age. First, a company seeking to be the “next” anything needs to target the population growth in developing countries. According to the slides via IMF Global Demographic Trends, the majority of the planet’s 9.1 billion souls in 2050 will be in developing countries at a rate of 9:1 (Zak, 2020).

Other key demographic trends such as the ongoing urbanization across the globe and the forecasted size in population and GDP of Asian cities must be part of her strategy moving forward.

Finally, technological enablement by ongoing advances in bio-physical computing, high-performance grid computing, renewable energy, and machine learning could be the wind that helps her company’s wave crest above the others.

References

Statista. (2020). Worldwide Market Share of Search Engines. Retrieved from Statista.com: https://www.statista.com/statistics/216573/worldwide-market-share-of-search-engines/

Zak, T. (2020). Week 3a - External Strategic Analysis. Pittsburgh: Carnegie-Mellon University.