Thursday, November 29, 2007

Your business model called; its leaving (and its not coming back)

Let's say you found yourself a cash cow. Something that made you tons of money; day after day. And let's say that you get better and better at making your cash cow efficient. Pretty soon, you're rolling in dough. At some point you can nearly rest on your laurels while your money machine keeps churning. Eventually, you probably don't need anymore money, but that doesn't stop most people it seems. You just keep on wanting more (and why not, if the cash cow keeps delivering).

Its probably pretty safe to say that at this point in time, the advent of some technology enabled your cash cow. Maybe it was recorded media or a new video format or some computers in need of an operating system. Whatever it was, its likely that some recent technology gave you the building blocks to create your new cash cow business.

And, as you realized that technology enabled your cash cow, you also know that it's just a matter of time before it's going to disable it too. Usually by the advent of yet newer technology obsoleting yours. What do you do then? The best option is to see if you can morph your cash cow to be in synergy with the new technology. Kodak is a good example, they moved from pure film to a strong embrace of digital photography. AT&T is another - land phones are dying - they made sure they were in the mobile business.

Other models however aren't so easy to move with. Music CDs are sort of silly now and the new technology doesn't leave a lot of room for a new business model. What do you do then? You might think that you're the kind of person that if you spent a few years making millions (or billions) producing music CDs that you might eventually have enough of it all. If you truly can't save it then - you can take your millions, smile back upon the fun ride of building something great, and move on to something new.

You might be. But it doesn't seem like this is the way it works. Instead (statistically speaking) if you had an un-save-able dying cash cow, you'd defend it anyway. You'd start to use the millions your cash cow makes to try to change laws, start lawsuits, or stifle technology to artificially keep your cash cow alive. Quite literally, you'd use its own resources to hinder future technology that will hurt it (regardless if thats good, bad, or indifferent for humanity).

Technology enables business, art, and science. And it kills them too, usually by advancing to a point that makes the existing ideas obsolete. A few people miss LP records these days, and surely some still play and collect them. But that number will continue to diminish. I'm sure plenty of folks stuck with a horse-and-buggy because they thought automobiles were a stupid idea. Those people are mostly dead now, just like LP records will be some day.

Now, it might seem like I'm picking on the record industry. I'm not really, they're just a poignant example. Whatever you think, the people in that industry are not idiots. They *know* their business model is dead. Dead, dead, deaddity, dead, dead, dead. Music is really a service, the idea of putting in on a CD was always an artificial means of trying to turn a service into a product.

Instead of teenagers idolizing manufactured rock stars, the internet gives every indie band in the world an open forum. It wasn't that long ago that rock bands begged and prayed to get signed with a big label. Now they can start their own label and reach thousands of listeners, all for the cost of a website. Add a marketing and sales manager and you have a music-making company.

You don't need to be a futurist to predict some corporate business models that will be dead (remnants always remain for awhile) in the near future. Shrink-wrapped software, music CDs, desktop computers, and purely-gasoline automobiles to name a few.

What about if we go just a little longer term - say 30 to 50 years. Now I'd venture to say things keyboards, mice, paper books, bullets, telephones, and batteries.

You might disagree, but I think you're not thinking far enough ahead. I don't think people disagree because they think this idea is wrong. I think just like (or depend) on some of those things and don't want them to go away. If you sell batteries, you'll probably vigilantly tell me that we'll ALWAYS need batteries. In fact, although "30 to 50 years" might not be accurate, my predictions above are pretty guaranteed in some time frame.

A friend of mine disagreed with me when I said libraries were destined to disappear. He argued they won't because people will always like to read from books. "Will always" is a very long time. Most people like books because they're used to them, kids today are pretty used to reading off screens a fair bit of the time. Tomorrow's kids will be even moreso. And would you really be willing to bet we won't invent something better (in all ways) than a paper book in a 100 years? 200? Heck, I'd bet reading itself will be gone by then.

Coming back to the nearer future, the title of this article talks about dying business models. Finding ones in the global corporate marketplace is easy. What I'm more thinking about is *your* business model.

Whether you're a assembly-line worker in a Ford plant in Michigan, a C++ programmer (sorry, I mean "software engineer") in silicon valley, or a McDonald's fry cook. Its pretty damn likely that technology is going to kill your job or career (i.e., your "business model") in your lifetime.

I've read around the net that its a "bad time to be a photographer". Simply put, thousand dollar digital SLR cameras and photoshop have destroyed the historical profession of a photographer. Surely, a skilled photographer can take better photos on average than an amateur. But the rules are now changed. With multi-gigabyte memory cards, I can snap photos all damn day long. And the camera has gotten far better at helping me take great photos. And Photoshop can come in the backside and fix any minor problems I might have. Maybe its a bad time to *be* a photographer - but its a great time to *become* a photographer - anyone can be one in just a few hours! (Of course, thats exactly why existing photographers might think its a bad time to already be one).

Seriously, if I snap a quick thousand photos, its getting more and more likely that I'll snap a really good shot. Then I can sell it on the internet in many instant-gratifying ways for a fraction of historical stock photography. The profession as we knew it is likely soon gone.

I've seen this even in computer programming. Coding used to be much harder than it is today. It takes much less devotion and study to make programs these days and its getting easier all the time. You might argue that good programmers write the best code, but you rarely need the best code to get a website up and running. And programming is perpetually going to get easier. (It used to take HTML expertise to make a website, now it just takes a MySpace account).

Scary enough I can boot up Adobe Illustrator (or more precisely, Gimp in my case since I use linux) and I can do things that a professional graphic designer of 20 years ago could only dream of. This is really a frightening thought - I have a really exceptional lack of artistic ability, but Gimp gives me a baseline. I might not be able to reproduce Van Gogh, but I can make all the graphics I need for websites or Christmas cards or whatever.

In a grand view, this is probably a great thing for our world. More people can do more things faster. It all sounds great unless you're personally be obsoleted in the process. Complaining photographers have somewhat of a point. They spent years perfecting their craft. They learned tricks of lighting and developing and who knows what else just to have it taken away by some fancy new camera. Technology obsoleted their craft overnite (like the song says, "Video killed the radio star").

If you're not a photographer and you're sort of not feeling sorry for them, thats ok as long as you're careful to shine that mirror on yourself too. Like I said, if you spent years learning the intricacies of C++, tax law, medicine, or anything else - you surely have job security likely for awhile. But definitely not forever.

Whatever your business model - it is indeed, at some given rate, dying. And its always possible that a technology will come to be tomorrow that will destroy it instantly. And every year we shall see more fights ensue with people looking to save their business model.

Create a cure for cancer? Watch the chemotherapy companies go into action. Build an electric car thats cleaner, faster, and more economical than any gasoline one? Watch the oil and car companies head to Washington. Invent teleportation? Airline industry sponsored laws will quickly be up for debate.

If you're complaining that your business model is dying, you might as well complain that the sun is going to come up tomorrow. Its going to happen and you have two options - keep moving or retire. Be ready to throw out what you learned if you see it becoming obsolete.

If you're lucky you'll be on the forefront of that technology and you can start a company giving you your own technology-induced cash cow. Once that happens, you can sit back counting money. Until the next wave comes and your once new cash cow starts to crumble. Then, of course, you can adapt again or you can become the technology stifler yourself. Somehow I have a feeling that thats one job that will never go out of style.