“There are three ways to make a living in this business: be first; be smarter; or cheat. Now, I don’t cheat. And although I like to think we have some pretty smart people in this building, it sure is a hell of a lot easier to just be first.” -John Tuld, Margin Call (2011)

It’s clear that the world is once again in the midst of a sea change in how we use technology, so much so that making the case is a waste of time. Instead, the real question is, what are you going to do about it? Volatility is frightening and must be approached carefully, but making bold moves during times like these is how fortunes are made.

Your business has two options: be proactive, or react. Reacting is the default human response. When confronted with something new, the instinct is to wait to see how everything shakes out. But a reactive posture is extremely dangerous. Things are moving quickly, and the time it takes to observe a new development, orient your business, decide, and act may be the margin between an opportunity lost or gained.

Being proactive, on the other hand, has the potential to reap many rewards. Being the first to integrate a new technology is an enormous advantage. Your competition is now reacting to you, and you hold the initiative. From a marketing standpoint, you can solidify yourself in the minds of your customers as “that company that offers automated booking.” Or maybe you’re the consulting firm that is known for innovation.

Before playing with something new, you’ll need to make sure you’re up to speed on what already exists. This is absolutely vital. Experimentation and rushing are not the same. If your fundamentals aren’t up to speed, you are in no position to take advantage of new technology. Do you have a company dashboard? Is your CRM optimized to its fullest extent? Paradoxically, the introduction of new technology is an opportunity to see if you are fully integrated into what’s already out there. Here, hiring an outside consultant can be useful since it’s quite easy to develop blind spots in your own organization.

Famously, in 1999, Pets.com sought to muscle in on the dot-com boom by offering free shipping for pet food ordered online. The idea seemed smart on paper; after all, isn’t this the business model for Amazon Prime today? But there was no way to make a profit from that model. Because the profit margin on pet food is relatively low and the transportation costs of heavy bags of kibble and litter are high, embracing the new technology accelerated Pets.com’s bankruptcy. The more they sold, the more losses they took. Had they taken the opportunity to look at their business plan first, Pets.com rather than Petsmart might rule the pet food market.

But once your flanks are secure, the possibilities begin to open up. Pets.com had a decent idea about expanding into the internet to reach new customers. According to E-commerce sales, pet food accounts for 36% of all sales, a whopping 30 billion dollars. With a more conservative business plan, Pets.com could have dominated that share.

As a converse to Pets.com, let’s look at Amazon.com, another E-commerce company from roughly the same era. Amazon has eschewed reckless adventurism while embracing modern technology. Amazon began as a humble online book marketplace operating out of a garage in 1994 but seized the opportunity e-commerce presented and has become a market-disrupting juggernaut. In 2022, Amazon took in half a trillion dollars in revenue.

Between Amazon and Pets.com, there is an entire spectrum of winners and losers, but overwhelmingly, the winners were unafraid to explore the possibilities that new technology offered, while losers hesitated or were too reckless.

If you want to ride the wave of new technology instead of being dunked, reach out to pfreeman@condotty.com for a free consultation on how to integrate new technology into your business.