Dealing with change is as fundamental to running a business as sales and marketing and operations.
Companies are again selling at record multiples, waking everyone up to the possibility of the “big financial score.” Facebook purchased WhatsApp for $19 billion (this isn’t a typo) — a company which employs 55 people and was founded in 2009. And these multiples aren’t limited to technology companies. A local M&A firm recently told me they are seeing the same phenomenon in other industry sectors.
It is anyone’s guess whether this current rise in company valuations will be more sustainable than the last time around. I do know it feels different. There is no talk of a “new economic reality—own the eye balls, don’t worry about profit.” In spite of the headline news of record deals like WhatsApp, there is generally less of a hype versus what we saw in the late 90s. Too many people are still worried about finding and keeping their job and just getting by.
But in many ways the “boom vs. bust debate” is not the essential question. The real question is, has something fundamentally changed over the last 15 years? I believe the answer is yes!
The pace of change is going up exponentially. The introduction of the Internet and associated forms of communication have created a new “revolution.” Try living without daily access to the Internet in your personal and professional life. Revolutions are literally being started with a tweet or Facebook post. Enabling technology has become the life-blood of most companies.
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The sacred product/service/process eggs in most industries are cracking and there is no choice but to go along with change or become irrelevant in the market. What has worked in the past is no longer a good excuse to not continually question the approach going forward. If you aren’t, your competition is. Worse yet, it could be someone outside your own industry that is going to make you irrelevant.
3-D printing is starting to revolutionize manufacturing, medicine and distribution. Drones are rapidly becoming a commercial reality. The book publishing industry is going through what the music industry faced not too many years ago. Even bastions of tradition like education are being transformed. There is no safe haven from change—it is here to stay and must be better understood. As Albert Einstein is quoted as saying, “we can’t solve problems by using the same kind of thinking we used when we created them.”
Innovation, entrepreneurship and dealing with change are as fundamental to running a business as sales and marketing and operations. These are core competencies that need to be better understood and institutionalized in every company, regardless of size.
Different companies in different industries have found various ways of institutionalizing it in their culture as evidenced by Google, Proctor & Gamble and Parker Hannifin. The key commonality is that their leadership teams have embraced it in their culture. They understand innovation and entrepreneurship are not one-time events but a continuous process of change.
While many larger corporations are starting to wake up to this new reality, smaller companies have been slower to embrace the new demands of the market. They have less resources to devote to the challenge but are often additionally encumbered with their traditional roots, particularly if they are a family business. Honoring the prior generation for their accomplishments is often part of the culture but thriving in today’s marketplace is still critical to sustainability.
Resistance to cracking the product/service/process eggs of the past must be broken and rebuilt to reflect the demands of today’s and tomorrow’s market. As I tell my entrepreneurial students, the market will tell you if you are relevant—your job is to be a great listener and a responsive, thoughtful executioner of change.
Steve Brilling, Executive MBA Lecturer, former Executive Director of the Innovation & Entrepreneurship Center.
The Seattle University Albers School of Business develops exceptional business leaders who are values-driven and committed to advancing the common good.