Change Management Part - 1

When you closely observe everything around you, you will find that everything changes with passage of time. Day changes into night, summer into winter, young become old, communication techniques have evolved from pigeon carriers to instant messaging, steam engines have been replaced with solar forests. Traveling has also changed from donkey/camel riding to Virgin Classic. These are just a few instances of change. This change phenomenon is not restricted to nature only or evolution of science. It is everywhere. 

Business environment is no exception. Production techniques have changed from hand-crafted material to mass production and now we are talking about the fourth industrial revolution. Laws governing business transactions have also been changed. The Income Tax Act of 1922 that was adopted at the time of independence in 1947 was replaced with Income Tax Ordinance 1979 and later it was also updated to Income Tax Ordinance 2001. Over the period of time since 1947, many changes have been made in Import/Export procedures, company formation, labour laws, banking transactions to name a few. Business environment has also changed drastically with cheap imports from China, global oil politics, geopolitics e.g. Afghan war, war on terriorism etc.

Again, if you think carefully of the change around you, you will find that it’s gradual. It heralds itself much earlier. Let’s look at how day changes into night. Daylight does not instantly dim to pave way for night’s darkness, it just gradually fades into darkness. The duration of light and darkness changes on a daily basis but it is not instant. It gives you ample time to adjust for darkness and for daylight. The duration between summer to fully transform into winter is anywhere from two months to four months and likewise for winter to summer. So, it is also not instant but gradual. 

First industrial revolution began with the invention of the steam engine in 1760 and lasted for eighty years till 1840. The Second Industrial revolution began 1850 with mass production of steel and lasted for fifty years. The third industrial revolution started in 1900 with the invention of the radio and now we are at the brink of the fourth industrial revolution with advancements of Artificial Intelligence. A gap of some 250 years between the first and the fourth industrial revolution. All this progress from handicraft to artificial intelligence is gradual, giving us sufficient time along the way to adjust ourselves for the coming change. 

As a result of this change around us, we have also changed whether we like it or not. The habits of youngsters have changed drastically from their elders. Now, smartphones are ubiquitous. Youngsters spend more time on it. They use it to socialize with their friends, shop at the luxury of their couch, hear their favorite music on the go. A few years earlier these were unheard of. Life expectancy has doubled since 1900 and now it is approximately 70 years. We have an aging population, and an aging workforce. People are migrating towards urban areas. As per the UN, 55 percent of the world's population exists in cities and towns. 

All this change in demographics, technology and business environment thus creates business opportunities but at the same time it also raises concern for established businesses because they are being disrupted by new technologies, entrepreneurial spirit and exposing its obsolescence in this new era. In this ever changing scenario, businesses must reinvent themselves to survive the onslaught of innovation in everything from business processes to technologies to products. “It is not the strongest or the most intelligent who will survive but those who can best manage change.” - Leon Megginson

Let’s look at two failures who did not adapt to change. 

Lotus 1-2-3 was a standalone spreadsheet program launched in 1983. It was the first killer application of the IBM PC and significantly contributed to the success of IBM PC-compatibles. Lotus's solution was marketed as a three-in-one integrated solution: it handled spreadsheet calculations, database functionality, and graphical charts, hence the name "1-2-3". It was so popular that it affected sales of computers that could not run it. "They're looking for 1-2-3. Boy, are they looking for 1-2-3!" InfoWorld wrote. Noting that computer purchasers did not want PC compatibility as much as compatibility with certain PC software, the magazine suggested "let's tell it like it is". Let's not say PC compatible or even MS-DOS compatible. Instead, let's say 1-2-3 compatible. PC clones advertising often prominently stated that products were compatible with 1-2-3. Microsoft developed a competing spreadsheet, and the first version of Excel was released in 1985 for Apple Inc.’s Macintosh Computer. Featuring strong graphics and fast processing, the new application quickly became popular. Lotus 1-2-3 was not available for the Macintosh, which allowed Excel to gain a following among Macintosh users. The next version of Excel, and the first version to run on Microsoft’s new Windows operating system, followed in 1987. With a graphics-heavy interface designed to run on the latest Windows computers, the powerful program became popular. Lotus was slow to release a Windows version of its spreadsheet, allowing Excel to increase its market share and eventually become the dominant spreadsheet application in the mid-1990s. Lotus lost its leadership position because of its inability to adapt to the changing environment. It could not see the forthcoming GUI age. It did not adapt, hence, it did not survive.

In 2002, Research in Motion - the company unveiled its first phone. In 2006, it added the trackball so users could scroll around the screen. BlackBerry figured out a way to make its phone indispensable to the wealthy and powerful. And having it really meant something about who you were as a person; it was a status symbol. At one time, BlackBerry controlled 50% of the smartphone market in the US and 20% globally. In the mid-aughts, BlackBerry phones were everywhere. Its demand declined rapidly, and in 2016, BlackBerry stopped manufacturing its own phones. So, what happened? The iPhone was launched in 2007 and it brought a cellular revolution by breaking with prevailing mobile phone designs. It eliminated most physical hardware buttons, and discarded a stylus for its screen-based interface, instead featuring only a few physical buttons and a touch screen. BlackBerry didn't view the iPhone as competition since it didn't cater to the business market. So it carried on its business as usual. But it underestimated how quickly the smartphone market changed. There was a new updated iPhone every year, and other smartphones, like the Motorola Droid, began to hit shelves. BlackBerry was slow to change. The phones missed out on a bunch of features that appealed to consumers, like front and back cameras. These shortcomings ultimately led to its downfall. Its  global market share began a downward spiral, going from 20% in 2009 to less than 5% in 2012. By the time it finally released a spec-competitive touch-screen phone in 2013, it was just too late. It did not see the coming of the smartphone era.  It did not adapt, hence, it did not survive.

(to be continued)