Andy Grove, the legendary CEO of Intel Corporation, once said that bad companies are destroyed by crises, good companies survive them, but great companies are improved by them. And it’s true. History teaches us that companies which see change as an opportunity evolve and grow. Those that keep doing the same old things in the same old way are highly likely to be out of the market sooner or later.
“Bad companies are destroyed by crisis. Good companies survive them. Great companies are improved by them.”
- Adam Grove
Just consider that in the last twenty years, 52% of the S&P 500 (the 500 US companies with the largest capitalisation) have shut down. Some of these were businesses that had existed for almost a century, but failed to cope with the technological, social and cultural revolution that marked the start of the third millennium. They stopped innovating and gave way to new companies. Netflix gained the market shares lost by Blockbuster; iTunes gained those lost by the record industry; the digital camera replaced the analogue one, and so on.
Technological innovation has often played a fundamental role in this transformation. And this is shown by the fact that in 2001, the five companies with the highest market value were General Electric with a valuation of 406 billion, Microsoft with 365 billion, Exxon with 272 billion, Citi with 261 billion and Walmart with 260 billion. So, energy, oil, finance, large retailers – but only 20% technology. Just fifteen years later, in 2016, the scenario had changed completely and the five companies with the largest capitalisation all belonged to the technology sector: Apple in first place with 582 billion, followed by Alphabet (or rather Google) with 556 billion, then Microsoft with 452 billion, Amazon with 364 billion and finally Facebook with 359 billion. These are companies that continue to grow and evolve, increasing their value (some have exceeded 1,000 billion) and revolutionising the sectors they operate in.
Digital, and more generally technology, is a key tool in a company's innovation process. Once upon a time, rethinking your business model from a digital perspective was a possibility. Today, it is increasingly a necessity. Whatever the size of our company or the sector we operate in, today we have to be digital. Or at least also digital. Technology can help us to reduce production costs, in some cases bringing us closer to zero marginal cost. It can help us innovate our service, improve our Customer Relationship Management and optimise our processes. And this helps us to be more streamlined, flexible and dynamic.