COVID-19 Pushes Companies To Embrace Technology Or Go Extinct

Do you remember Blockbuster video? If you’re over the age of 30, chances are you answered “yes.” Young readers, however, might be stumped.

Blockbuster was a video rental store that opened in Dallas, Texas in 1985. The owner, David Cook, used his experience in computer software to streamline and digitize the check-out process, giving him an edge over other video rental companies. Cook’s tech savvy combined with the convenience and economics of renting a movie for a short amount of time for several dollars, opposed to purchasing the VHS at up to 10x as much were the perfect storm that launched the company that would soon become a household name.

By the year 2000, the movie rental company had expanded across the US and was raking in profits. Fast forward 20 years and Blockbuster has been reduced to a single store. A relic. So, what happened? Netflix (a tech-based company) disrupted Blockbuster out of existence.

The rise and fall of Blockbuster is not an anomaly. Many companies in the past have been disrupted by technology companies, and that trend is only going to increase in the future.

Digital cameras and phones disrupted Kodak, the film producer out of existence. We don’t read paper newspapers anymore because we get our news including the classified ads digitally, online and on our phones. We’re also finding that retailers that rely heavily on their physical stores for sales and customer relationships are increasingly going out of business. Retailers who want to keep their foot in the game are having to develop a digital platform that not only delivers the product, but also helps deliver and enhance the experience that the customer has with that retail brand.

This doesn’t mean that every company is destined to go extinct. Rather, we should look at the common theme of the companies that have survived these disruptions: resilience. In other words, companies that have developed a resilient business and business model have strengthened their offering and strengthen their ability to enhance their offering to customers over time.

What we’re seeing globally with the COVID-19 crisis, is a need for companies to be more resilient. Therefore, they will need to depend on more technology than they have in the past. From enabling employees to work from home to pushing online sales, tech ability has become an increasingly important part of the average company’s business model.

Many companies that were not previously tech enabled will be required to invest in technology and, in many cases, in technology companies. They have the opportunity at this point in history to become more resilient and efficient, and ultimately more like technology companies themselves. Companies that cannot or will not adapt to technology may see a negative impact in business for years to come.

Having used Blockbuster as a company that did not adapt (and paid the price), an example of resilience and tech adaption would be Walmart. Back in 2015, Walmart was predominantly a bricks and mortar retailer with over 5,000 large retail stores in the US. Today, after having acquired Jet.com in 2016, and over 10 digital platforms and tech companies since, Walmart has become a technology company with a focus on making its end-to-end value chain as resilient and as valuable as possible.

Through tech acquisitions and an in-house team dedicated to innovation, Walmart has automated many of its processes and expanded its digital offerings such as grocery pick-up and delivery. Alongside, Walmart has filed numerous patents, and continues to innovate and stay ahead of its competition. The company has strengthened its position in a time when it very easily could have failed, as the other large retailer, Sears, has done.

As we look to the current global situation, we can learn something from both Blockbuster and Walmart. Tech disruptors aren’t a possibility, they are an eventuality – for many, COVID-19 just accelerated the inevitable. The question business owners and leaders must ask themselves is how resilient they will be when change comes.

The main challenge that companies will face as they reboot themselves coming out of the COVID-19 lockdown crisis is adapting their mindset for the future.

Modifying companies to limp along during this pandemic isn’t enough. Resilient companies will acknowledge that long term change is needed to adapt to tech (and life) disruptors. They will make the informed decision and required investments to forge ahead into technology so that they build long-term resilience. Companies that do not execute on the required adaptation will end up either having to exit the market, face stagnation or worse.

Optimizing Your Company

The best way for companies to adapt and protect themselves from the current and future disruptions is to partner with, invest in and acquire companies that are already technology enabled.

Whilst that might sound straightforward, there are some things to consider before a company can move forward:

Change needs to start at the top. Tech acquisitions can’t be done without the buy-in of the senior executive management team. The first step towards building a resilient company is acknowledging the tech disruptors in your arena and top management agreeing to make technology adoption and acquisitions a strategic priority for the company.

You need the right team to effect change. Once the decision is made to acquire technology companies and/or practices, the next step is to build your innovation team. The innovation team may include internal team members, an external expert or a mix of the two. The goal is to create a strong team that is informed and well equipped to deliver on their strategic initiative. Team members should be considered with the following attributes in mind.

  • Have clarity on the strategy and approach to tech companies
  • Bring perspective to identify in which parts of a company’s value chain exponential growth is possible
  • Know how to find the right tech company targets and translate to company’s profile into value creation only that that offer in depth insights to tech company candidates on the intangibles
  • Know how to grow exponential market value from each deal considered
  • Use innovation and creativity to appeal to potential partner companies

Tech adaption isn’t exclusive to large companies. Small and self-owned businesses may not be in the position to acquire another company, but they can still adapt and build resilience by partnering with technology companies.

A prime example of this is family owned restaurants that have partnered with companies like Uber Eats or DoorDash. While partnering with third party delivery companies is considered a bit of a risk under normal circumstances, the opportunity to boost sales during widespread stay at home orders is worth it for some.

If your company is not in a position, for whatever reason, to invest in or acquire a technology company during this time, then the next best thing you could do would be to embark on an innovation sprint with your own team. Ask yourself, what can you automate, what can you enhance, how can better serve your market and your employees.

Once you acknowledge areas for improvement, consider how tech adaption can help your company grow. This could take anywhere between one week and 10 weeks with the objective of emerging as a more resilient, more tech enabled company.

If your company or self-owned business has been hit hard by COVID-19, know that the changes we’re seeing now were coming anyway. Growth is seldom easy or comes without a few growing pains, but it is possible, even in times like this. In the end, will you decide to adapt, or exit?

Paul Cuatrecasas is the founder and CEO of investment banking firm Aquaa Partners and the bestselling author of “Go Tech, or Go Extinct” in which he shares his revolutionary approach to transforming legacy companies into forward-thinking industry leaders through the strategic acquisition of disruptive technology companies.

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Tanveer Naseer is an award-winning and internationally-acclaimed leadership writer and keynote speaker. He is also the Principal and Founder of Tanveer Naseer Leadership, a leadership coaching firm that works with executives and managers to help them develop practical leadership and team-building competencies to guide organizational growth and development. Tanveer’s writings and insights on leadership and workplace interactions have been featured in a number of prominent media and organization publications, including Forbes, Fast Company, Inc Magazine, Canada’s national newspaper “The Globe and Mail”, The Economist Executive Education Navigator, and the Ritz-Carlton Leadership Center.

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