The Exponential Era. David Espindola

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Introduction

      In the fall of 2018, we had the opportunity to engage in a discussion with a board member of a Fortune 500 logistics company. Having recently founded Intercepting Horizons, LLC we shared our thoughts on how we had entered a new era in which strategic trends and converging technology vectors were impacting organizations at unprecedented speeds. We called it the Exponential Era.

      We discussed how existing planning cycles were no longer effective in this new environment, and how our services would focus on helping companies identify inflection points and develop an innovative strategic planning process that is responsive to fast‐changing conditions. We would help companies pinpoint not only what strategic trends and converging technologies would impact their business, but equally important, when.

      We felt confident in our ability to provide such services because we had learned over decades of successfully chasing Moore's law that it is possible to develop a time‐enriched strategic planning process to intercept business inflection points and stay up with and sometimes ahead of exponential change.

      This was enough to get the board member intrigued. He confided in us that his CEO had been contemplating these exact questions – when would these business inflection points impact their industry and business?

      This informal conversation led to an introduction, and subsequently we started researching the company, its industry, the competitive forces, and the converging technologies that could represent a threat or an opportunity to this very large enterprise that for more than 100 years had been tremendously successful.

What we discovered in researching new entrants to their industry and identifying technology vectors relevant to their business had us concerned.

The Threat of Being Amazoned and Uberized

      Keep in mind that this company was the undisputed leader in its industry. They continued to experience year‐over‐year net revenue growth and healthy margins, rewarding investors with solid dividends, and repurchasing a significant amount of stock shares. The repurchase of shares might have been a sign of uncertainty about the company's prospects and an attempt to boost the share price in the short term. However, the leadership team displayed nothing but total confidence in the company's ability to stay competitive and grow.

      What had us concerned, despite the company's position as a category king in its market, was the potential for disruption. For many years this company had operated under the following conditions:

      The enormous size of this market and the potential for profits were very attractive to potential disruptive entrants with the following contrasting characteristics:

      Indeed, what we found is that there were several exceptionally well‐funded, fast‐moving technology companies that were entering their markets.

      It would be very disconcerting for any company to have its market leadership challenged by the likes of Amazon, Google, Uber, or other highly capitalized fast‐moving companies. No one wants to be in that position.

      The number of companies that have been “amazoned” is legendary.¹ An entire industry has been “uberized” due to Uber's unrelenting long‐term investments in technology. Now, imagine being in the unenviable position of potentially being susceptible to competition from both Amazon and Uber at the same time – that is the threat level that this company was dealing with.

Our research had also revealed that the convergence of several emerging technologies could completely alter the market landscape that this company operated in. We leveraged Artificial Intelligence algorithms to mine patent databases and discovered, for example, that several large companies like Walmart and Amazon were investing in the ability to manufacture products on demand and on the move. The confluence of 5G, Internet of Things (IoT) and GPS capabilities, and the convergence of 3D printing with autonomous vehicles, is just one of many possible technology‐driven disruptions on the horizon that could completely change their industry.

      This additional background information helped us understand what might be driving the CEO's quest for knowing “when.” Despite all their successes, this was a company in the eye of a storm, faced with disruptive forces and competitive pressures unlike any they had experienced before. It was vital for this company to get ahead of the inflection point. They needed to be nimbler and more aggressive than their competitors in targeting converging technology investments. They needed to overcome their history and get their entire culture ready for the disruption and transformation of their entire business.

      The CEO was absolutely correct in his thinking as he sought to answer the question of “when.” Bringing an innovative idea to market too early can be just as fatal as being too late. Think about Apple and the Newton personal assistant device.² Or Lady Florence Norman who introduced the motorized scooter circa 1916.³ These were all great ideas, as proven by Apple's eventual success with the iPhone, and the motorized scooter craze we see around the world these days – they were just timed incorrectly.

      Not too long after our discussions, the company announced that it was committing a significant amount of dollars in technology investments over the next five years.

      This announcement was a positive sign. It showed that the company understood the challenges ahead. The fact that the CEO was seeking answers to the question of “when” told us he had a significant level of awareness that time enriched decision making is of the essence. However, as we will see in future chapters, we have witnessed and studied several companies that, notwithstanding full awareness and willingness to invest, were unable to make timely decisions, change their culture, and stay apace with the disrupting forces they faced.

      The key point in sharing our interaction with this Fortune 500 company is to emphasize that any company, no matter how big or successful, can be subject to the disruptive forces of the Exponential Era. Newly formed ecosystems, powered by easy access to converging technologies, can provide the fuel to rapidly dislocate stagnant or poorly managed companies and industries. Our first word of caution is: do not be deceived by your success.

      In the Exponential Era, it is very easy to be caught off guard, because what may look like calm seas, can quickly turn unexpectedly. If you can't foresee a major storm coming and can't prepare for it, it may be fatal.