In today’s era of rapid change and potential disruption, business leaders are often prone to exercising their bias for action. When change threatens an industry, such bias for action might be viewed as advantageous. If an industry is hit hard by disruptive threats, doing something—anything, even if it’s risky-is often perceived as far superior to the status quo.
My 25+ years researching business success and failure patterns finds that this kind of risky, do something—anything–approach generally does not bring success. But, unfortunately, it can seem like a favorable option when times are tough in an industry.
We’re seeing that today in retail, an industry where online shopping has brought disruptive change. A recent Wall Street Journal article’s title “Mall Landlords Roll the Dice” communicates how easy it is to be lured by risky moves when massive technological change affects an industry. The article, written by Esther Fung, appeared in the Wall Street Journal on June 21, 2017.
According to the article, “Mall landlords are investing millions of dollars in technology to help protect them from changes.” The article goes on to say, “Some of the investments aren’t faring so well.” An example described in the article is a mall owning company writing off its investment in a start-up company that designs physical stores with interactive features for on-line retailers.
The article’s roll the dice headline indicates that risk taking is easily seen as the answer to disruptive threats. But, risky investments in technology ventures in response to disruption often don’t pan out. As we move toward a world where it is said that every company will have to become a technology company, it is important to remember that this pattern regarding disruption and risk taking is not limited to retail, but occurs in other industries as well. Pouring funds into technology investments that fit a company poorly can be a drain on resources in any industry.
For example, Federal Express (now FedEx) went through this years ago when email threatened its overnight delivery of paper documents. Back then Federal Express invested in developing Zap Mail, a technology to protect against the disruptive threat to the overnight delivery of documents. Zap Mail did not pan out and was eventually shut down. The endeavor was really not a good fit for Federal Express.
Eventually, however Federal Express did find opportunity in the changing technology that threatened its business. Although the internet led to email, which had a disruptive impact on overnight document delivery, the internet also spawned ecommerce, which became a growing new opportunity for FedEx to deliver goods purchased online. And, ecommerce delivery is a much better fit for FedEx than was developing the electronic communication technology the company invested in when it developed Zap Mail. Thus, FedEx can be more successful ecommerce delivery than it ever could have been with Zap Mail.
The lesson: rolling the dice is not the answer to disruptive threats. Identifying opportunities that truly fit your business and are less risky is far more likely to foster a win. And, winning is far better than merely rolling the dice. So, since there are ways to think through business opportunities to identify those with less risk, do you really want to roll the dice, or do you want to win?
