Pushed out by Technology

There has been some talk on MaineBusiness lately on how certain improvements in technology can push small business owners out of a market. For instance, Carl’s blog on photography made the point that since digital cameras are inexpensive and readily available, competition has increased and pushed some photogs out of the market. I made the point that it was up to the photographer to set himself of herself apart by offering great pictures, prints, and service. Carl said I am usually right on another blog (Carl, try telling my wife that).

But what if new technology actually replaces what you do altogether rather than just broadening competition. For example, what if you made buggy whips when the Model T became available. What if you made typewriters when the PC became readily available?

More recently, what if you rent videos to customers in a store in an age of online rentals, dvd kiosks, and iTunes? I have been calling for the demise of Blockbuster for a while, but this video had me in stitches. It was produced by The Onion, a satirical news network.

So, what could blockbuster have done? For starters, they should have invented movie downloads. With their capital and access to movie production houses, they had the best chance of getting it done quickly. Instead, while iTunes was telling the world they would be eventually offering movies for download and *gasp* rental, they were coming up with outlandish rental policies and confusing even their best customers. After the fact, they entered the Netflix-dominated movie-by-mail market and lost a bloody battle.

The bottom line is that business owners and managers need to constantly evaluate new technology coming down the pike and see how it applies to their businesses. Invest heavily in technology that will cause a paradigm shift in your industry, so when the dust settles, you have the advantage. A good example of this is Walmart, the company we all love to hate. In the early days, they invested heavily in computerized inventory management. Today, many experts see Walmart’s revolutionary distribution system, a biproduct of the inventory system, as the main reason they have stayed on top so long. If they had declined to invest, the new wave of retailers like Target would have easily overtaken them.

Mike Freeman
I embrace new technology

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