How to cope with new technology & disruption
Every couple of years a new piece of software or hardware disrupts the industry and completely changes the playing field. While this happens, existing technologies become obsolete. Before I talk about how to cope with this(a humble effort as experts far more smarter than I have gone wrong too!), let’s have a look at the case of Nokia – the guys who got it all wrong and paid the price, even though everything seemed perfectly well.
Nokia was a really big company and before it manufactured its first smartphone in 1996, the Nokia umbrella contained several companies. In the late nineties, executives decided to shelve all other businesses and focus on mobile phones. Nokia spent heavily on R&D but it didn’t quite translate into products that people wanted to buy towards the end when Nokia sold its mobile phone business to Microsoft for a meagre $7.5 Billion.
Right from the beginning, Nokia positioned itself as a hardware company. Its engineers were adept at building devices, giving less importance to the software that made those devices work. For a company that made most of the profits in the cell-phone business in 2007, it was natural for Nokia to get used to their own success. At that time, smartphones were a high-risk investment and Nokia still believed that the design of their phones would ride over the usability of smartphones. Not just that, Nokia made a fatal mistake in assuming that they could turn up late to the smartphone party and still make it.
Another source examines the cause of Nokia’s downfall and says that it was because of a lack of clear and honest communication between top and middle level managers. Everyone was so afraid of reporting bad news fearing reallocation of their resources or getting demoted.
As most of us would be aware of by now, Tesla Motors is one of the only companies in the world who manufacture electric cars which are top of their class. Now before you argue about how this is relevant to the topic at hand, consider this – By producing electric cars, Tesla is taking on the automotive industry itself. They are challenging the dominant technology, i.e, cars that run on gas and are winning(very slowly though!).
Tesla Motors was founded by Martin Eberhard and Marc Tarpenning in 2003. It was only in 2004 that Elon Musk led the company’s Series A funding round $7.5 Million and became the Chairman of the Board. In 2006, it officially became a car company when it released the Tesla Roadster, a fully electric, high performance sports car.
In 2013, Tesla unveiled the Tesla Model S. It was a game-changing moment for Tesla Motors as it set the standard for electric automobiles. Priced at $69,000, over 10,000 units were sold by 2015.
In contrast to Nokia’s complacent attitude towards smartphones, Tesla realised the challenge of selling electric cars on a mass level and rose up to it. They have even started building a gigafactory in Nevada in partnership with Panasonic to facilitate the production of a mass market vehicle called Model 3. An SUV type model called Model X and Model E($20,000 cheaper than Model S) are also in the pipeline. Though Mercedes and BMW have also jumped into the fray, Tesla has a clear lead. All this clearly shows how Tesla is aware of what the market wants and focuses on one product at a time in its own signature way.
Others would do well to follow the same sense of anticipation & urgency that Tesla demonstrated to take a lead into new market openings.
Pravir Ramasundaram is our in-house content writer at ContractIQ. Keep coming back to read more of his articles on mobility, outsourcing and the tech industry.