Tech company’s life span at 10 years
Gartner, the information technology research and advisory company, says the natural life cycle of a technology-driven company is now less than 10 years.
The firm argues that the pervasive role of technology now exposes every company, not just technology companies, to increasingly rapid technology-driven life cycles, which are typically less than 10 years.
“Long-term expansion cycles influence all businesses, and your major competitor in 10 years – if you survive that long – probably does not exist today,” said Steve Prentice, vice president and Gartner Fellow.
He cited examples of IBM Personal Systems Group, Nokia, MySpace, Kodak, Borders, HMV and other companies which have struggled or even failed to remain relevant. He said history indicates that the leaders in one wave rarely survive to dominate the next.
“To compete in this environment business leaders must destroy and rebuild the very businesses they helped create,” said Prentice.
“Nokia’s metamorphosis is an example of embracing the concept of destruction and reinvention, while the current business model still remains successful. The divestiture of IBM Personal Systems Group to Lenovo and subsequent changes of company’s focus is another example.”
“Apple is another company which almost came to extinction several times over its life, and then dominated the next technology wave through significant changes to its operations.”
To survive and even prosper beyond the first decade requires continual reinvention, Gartner said. However, the challenge with reinvention is timing, it added.
“The idea to ‘quit while at the top’ or to regenerate, may seem counter-intuitive, but may be the only winning strategy,” said Prentice.
“It requires total commitment from the board of directors and other stakeholders, ongoing support from the workforce, but above all, the conviction in the correctness of the course of action being taken.
“The most challenging aspect is the need to destroy or walk away from what appears to be successful, but will rapidly turn into a crippling legacy which prevents regeneration.”
Gartner said that business and IT leaders need to prepare for the disruptive promise of “smart machines”, which include autonomous vehicles, intelligent personal assistants, smart advisors and advanced global industrial control systems.
“Over the coming years, we expect to see dramatic growth in the availability, sale and use of smart machines. We predict that smart machines will be the most disruptive change ever brought about by IT,” said Prentice.
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