Someone recently asked me this question. While the question seems relatively easy to answer, I was amazed by the vastness of the things that I could think of. And then I realized that based on personal experiences, the answer can vary considerably. Here I will list the technologies that I could think of, have changed the way we do business, technologies that have fostered new companies and drove some businesses out of the market place. I will also discuss two of my favorite companies glassdoor and linkedin which are changing the dynamics of skilled labor market.
While it is always difficult to notice a change as it occurs gradually but an easier way to understand what has changed in our lives due to technology, just imagine how we did business ten years ago and how we do it today. Think about the percentage of online purchases you have done in last year and try to compare that with what you did back in 2002. Some great companies like Circuit city have gone bankrupt because they were not able to adapt to the changing market place. Best buy is in no better shape and I personally would not be surprised at all if Best Buy declares bankruptcy in next couple of years or even sooner. It is already closing several stores across US as part of restructuring its business. That being said, I think a failed business like Circuit City and Best buy has to do with more than just new technology. While Amazon definitely has grabbed a big chunk of Best buy customers, but there is more to the story than just online competition. Otherwise, how do you explain the continuous growth of Bed, Bath and Beyond? It has at least just as much competition as Best Buy. In my opinion the answer lies in customer service. I do not have any market surveys but in 2003 I decided I would never go back to Best Buy and I have not. Similarly sites like craigslist have faciliated a used goods market and reduced search costs to virtually zero, thereby eliminating some buyers who would have otherwise bought new products from brick and mortar stores. This not only has affected the retailers but also the manufacturers. Combine all this with review websites like Yelp and Google reviews who have significantly reduced information asymmetry, you have a consumer who is more informed and could make better decisions about the products or services he or she is in the market for. So, in case of Best Buy, what technology has done is that it has provided consumers an alternate reseller of the same products at not only a cheaper price but also good and reliable service. They not only pay lower prices for same products but also do not have to deal with an associate who is more interested in selling warranties and extra services that the buyer believes he does not want especially after reading reviews on websites like yelp. If it was only for technology and online competition that Best Buy was going down, then I would ask a simple question and that is "Explain Bed, Bath and Beyond to me?".
Now look at another aspect of how technology has affected the businesses. How we were getting our news ten or fifteen years ago and how do we get it today? This has literally drove some newspapers out of business. However, Wall St Journal while going through a difficult period has adjusted and its future still looks bright. Here we can give Wall St Journal the benefit of being a leading player in a niche market but I don't think excuses given by Chicago Tribune or similar companies have much weight. Tribune said that it needed to go into bankruptcy protection so it can adapt its marketing to the new technology. The question is, what took it so long? Why didn't they do it when they could have done it without going into bankruptcy protection. In the beginning of this paragraph I said, think about how we were getting our news ten or fifteen years ago and how we are getting it today. I didn't said think how we were getting our news last year because this change like all other changes has been gradual over a number of years. It is not an over night change. So, technology definitely drove newspapers out of business including some really big names but it was because of poor management and their failure to adjust when they could have rather than technology alone. Management of these news companies had an option to change and adapt to new technologies and they decided to do nothing.
Next I would like to talk about mobile computing. How smartphones have changed everything we do today. While Blackberry has been around for a longtime (it probably won't be for too long), love or hate, it was actually Apple that revolutnized the smartphone industry. Today we have two dominant players, Apple and Google, who have the biggest share of smartphone market. Thousands or probably millions of apps are downloaded everyday around the world. While developers have financially benefited from the smartphone revolution, smartphones, since still in growing phase are revolutionizing the way we do traditional business. Many people today deposit checks using their smartphones, they buy and sell shares and use their phones as GPS. There are several free apps which provide voice activated navigation including new social media GPS app called Waze. Going into the details of how waze works is out of the scope of this discussion but would you be surprised if Garmin or other GPS companies run into financial difficulties. What about paid apps like the one provided by your cellular service provider? Should your service provider make these apps free and make money in the same way as other apps are making? Well may be or may be not, because these big companies have higher cost and it may not worth it for them to get into advertising business using apps. But one thing is for sure, sooner than later, people will not be paying $10 monthly fee for their GPS app so they can either drop it altogether or try to market their service having a free mapping application. Verizon already does that. AT&T does not. Discussion about mobile technology would be incomplete if we don't talk about location based services. Today, many small businesses have grown because they show up on result when you are searching for certain type of business around you. Not only that they show up, their star ratings based on their reviews also shows up next to their names and if product or services are rated high by consumers then this further helps increase sales for the business. What this does is that it makes good businesses more profitable and bad businesses will eventually be driven out of business. Great thing for us consumers.
Another business affected due to new technology is TV and Video. Blockbuster, your neighborhood video store is history and Netflix, the company responsible to drive blockbuster into bankruptcy, itself is having a difficult time to grow its business. You can watch your favorite TV shows on hulu, while many people also spend a lot of time on youtube. You just have twenty four hours in a day. If you want to watch newly released movies, you can go to your nearest Walgreen's or a grocery store and get it from Redbox. Cable operators are another segment of business affected by this change but due to their monopoly and high barriers to entry into this business, they are still doing fine. However, I wouldn't be surprised if Comcast or some other cable provider is having problems in retaining customers due to internet and the rumored Apple TV.
If you work in technology and even if you don't, chances are you have heard the term cloud (computing). Many companies including Google, Amazon and Microsft are offering cloud services. It basically allows customers to let cloud providers host services including web services if they so desire. Cloud computing has enabled small businesses who cannot afford a technology infrastructure of their own to benefit from technology. For example, health care sector which has traditionally lagged in benefiting from technology can now use cloud services and improve its customer service and reduce cost by having online records, referrals, appointments, prescriptions and much more. And they can do all this without having any technology infrastruture and very few to no technical staff of their own. While still growing, it is well known that this is a very lucrative market which has tremendous potential for growth. In case you haven't already noticed, soon you'll start noticing changes in how your physicians and hospitals will be handling your prescriptions, appointments, referrals and other data inclduing billing. In case you don't know, Netflix runs on Amazon's EC2 cloud.
Finally I'll talk about my favorite topic and it is labor market. How is technology affecting labor market for skilled labor? We talked about how product reviews on websites like Yelp are affecting consumer's buying habits. Similarly company reviews on glassdoor are affecting labor market, though its affect may not be as visible today as it might be ten years from now. With company reviews on glassdoor, skilled labor has much more information about prospective employer. If companies have not already started noticing this, they'll soon realize how their employer brand is being affected by sites like glassdoor. We'll see exactly the same effects in labor market as what we are seeing in consumer market. Employers with good reviews and good reputation will be able to attract best talent and those with not so good reputation will get not so good talent. This in the long run will affect their products and services and ultimately their returns. Would you hire a consulting company if it has significantly higher number of unhappy employees? I can't speak for everyone but if I am submitting a resume for a position I am interested in, the first thing I do is look for its glassdoor reviews. And if a company is rated 2 star by its employees then I just tell myself that I can do better than this. Linkedin on the other hand has changed the way people search for jobs and recruiters search for talent. Connections on linkedin have facilitated networking enabling job market candidates to connect with recruiters who specialize in the area they are looking for a new job.
This is an amazing long list and no doubt quite incomplete. In conclusion I would only say that businesses that failed due to technology did so because of poor management. We are moving towards an economy where effecient and good businesses thrive and poorly managed businesses are driven out. Customer service has become more and more important and unless you have a monopoly and high barriers to entry for new competition, you want to make sure that your customers remain happy or word will get out much sooner than you think and it might be either too late or it may cost you a fortune to fix the issue and correct the image. Consumers are biggest winners of all this change and overall society has benefited from technological advances.
While it is always difficult to notice a change as it occurs gradually but an easier way to understand what has changed in our lives due to technology, just imagine how we did business ten years ago and how we do it today. Think about the percentage of online purchases you have done in last year and try to compare that with what you did back in 2002. Some great companies like Circuit city have gone bankrupt because they were not able to adapt to the changing market place. Best buy is in no better shape and I personally would not be surprised at all if Best Buy declares bankruptcy in next couple of years or even sooner. It is already closing several stores across US as part of restructuring its business. That being said, I think a failed business like Circuit City and Best buy has to do with more than just new technology. While Amazon definitely has grabbed a big chunk of Best buy customers, but there is more to the story than just online competition. Otherwise, how do you explain the continuous growth of Bed, Bath and Beyond? It has at least just as much competition as Best Buy. In my opinion the answer lies in customer service. I do not have any market surveys but in 2003 I decided I would never go back to Best Buy and I have not. Similarly sites like craigslist have faciliated a used goods market and reduced search costs to virtually zero, thereby eliminating some buyers who would have otherwise bought new products from brick and mortar stores. This not only has affected the retailers but also the manufacturers. Combine all this with review websites like Yelp and Google reviews who have significantly reduced information asymmetry, you have a consumer who is more informed and could make better decisions about the products or services he or she is in the market for. So, in case of Best Buy, what technology has done is that it has provided consumers an alternate reseller of the same products at not only a cheaper price but also good and reliable service. They not only pay lower prices for same products but also do not have to deal with an associate who is more interested in selling warranties and extra services that the buyer believes he does not want especially after reading reviews on websites like yelp. If it was only for technology and online competition that Best Buy was going down, then I would ask a simple question and that is "Explain Bed, Bath and Beyond to me?".
Now look at another aspect of how technology has affected the businesses. How we were getting our news ten or fifteen years ago and how do we get it today? This has literally drove some newspapers out of business. However, Wall St Journal while going through a difficult period has adjusted and its future still looks bright. Here we can give Wall St Journal the benefit of being a leading player in a niche market but I don't think excuses given by Chicago Tribune or similar companies have much weight. Tribune said that it needed to go into bankruptcy protection so it can adapt its marketing to the new technology. The question is, what took it so long? Why didn't they do it when they could have done it without going into bankruptcy protection. In the beginning of this paragraph I said, think about how we were getting our news ten or fifteen years ago and how we are getting it today. I didn't said think how we were getting our news last year because this change like all other changes has been gradual over a number of years. It is not an over night change. So, technology definitely drove newspapers out of business including some really big names but it was because of poor management and their failure to adjust when they could have rather than technology alone. Management of these news companies had an option to change and adapt to new technologies and they decided to do nothing.
Next I would like to talk about mobile computing. How smartphones have changed everything we do today. While Blackberry has been around for a longtime (it probably won't be for too long), love or hate, it was actually Apple that revolutnized the smartphone industry. Today we have two dominant players, Apple and Google, who have the biggest share of smartphone market. Thousands or probably millions of apps are downloaded everyday around the world. While developers have financially benefited from the smartphone revolution, smartphones, since still in growing phase are revolutionizing the way we do traditional business. Many people today deposit checks using their smartphones, they buy and sell shares and use their phones as GPS. There are several free apps which provide voice activated navigation including new social media GPS app called Waze. Going into the details of how waze works is out of the scope of this discussion but would you be surprised if Garmin or other GPS companies run into financial difficulties. What about paid apps like the one provided by your cellular service provider? Should your service provider make these apps free and make money in the same way as other apps are making? Well may be or may be not, because these big companies have higher cost and it may not worth it for them to get into advertising business using apps. But one thing is for sure, sooner than later, people will not be paying $10 monthly fee for their GPS app so they can either drop it altogether or try to market their service having a free mapping application. Verizon already does that. AT&T does not. Discussion about mobile technology would be incomplete if we don't talk about location based services. Today, many small businesses have grown because they show up on result when you are searching for certain type of business around you. Not only that they show up, their star ratings based on their reviews also shows up next to their names and if product or services are rated high by consumers then this further helps increase sales for the business. What this does is that it makes good businesses more profitable and bad businesses will eventually be driven out of business. Great thing for us consumers.
Another business affected due to new technology is TV and Video. Blockbuster, your neighborhood video store is history and Netflix, the company responsible to drive blockbuster into bankruptcy, itself is having a difficult time to grow its business. You can watch your favorite TV shows on hulu, while many people also spend a lot of time on youtube. You just have twenty four hours in a day. If you want to watch newly released movies, you can go to your nearest Walgreen's or a grocery store and get it from Redbox. Cable operators are another segment of business affected by this change but due to their monopoly and high barriers to entry into this business, they are still doing fine. However, I wouldn't be surprised if Comcast or some other cable provider is having problems in retaining customers due to internet and the rumored Apple TV.
If you work in technology and even if you don't, chances are you have heard the term cloud (computing). Many companies including Google, Amazon and Microsft are offering cloud services. It basically allows customers to let cloud providers host services including web services if they so desire. Cloud computing has enabled small businesses who cannot afford a technology infrastructure of their own to benefit from technology. For example, health care sector which has traditionally lagged in benefiting from technology can now use cloud services and improve its customer service and reduce cost by having online records, referrals, appointments, prescriptions and much more. And they can do all this without having any technology infrastruture and very few to no technical staff of their own. While still growing, it is well known that this is a very lucrative market which has tremendous potential for growth. In case you haven't already noticed, soon you'll start noticing changes in how your physicians and hospitals will be handling your prescriptions, appointments, referrals and other data inclduing billing. In case you don't know, Netflix runs on Amazon's EC2 cloud.
Finally I'll talk about my favorite topic and it is labor market. How is technology affecting labor market for skilled labor? We talked about how product reviews on websites like Yelp are affecting consumer's buying habits. Similarly company reviews on glassdoor are affecting labor market, though its affect may not be as visible today as it might be ten years from now. With company reviews on glassdoor, skilled labor has much more information about prospective employer. If companies have not already started noticing this, they'll soon realize how their employer brand is being affected by sites like glassdoor. We'll see exactly the same effects in labor market as what we are seeing in consumer market. Employers with good reviews and good reputation will be able to attract best talent and those with not so good reputation will get not so good talent. This in the long run will affect their products and services and ultimately their returns. Would you hire a consulting company if it has significantly higher number of unhappy employees? I can't speak for everyone but if I am submitting a resume for a position I am interested in, the first thing I do is look for its glassdoor reviews. And if a company is rated 2 star by its employees then I just tell myself that I can do better than this. Linkedin on the other hand has changed the way people search for jobs and recruiters search for talent. Connections on linkedin have facilitated networking enabling job market candidates to connect with recruiters who specialize in the area they are looking for a new job.
This is an amazing long list and no doubt quite incomplete. In conclusion I would only say that businesses that failed due to technology did so because of poor management. We are moving towards an economy where effecient and good businesses thrive and poorly managed businesses are driven out. Customer service has become more and more important and unless you have a monopoly and high barriers to entry for new competition, you want to make sure that your customers remain happy or word will get out much sooner than you think and it might be either too late or it may cost you a fortune to fix the issue and correct the image. Consumers are biggest winners of all this change and overall society has benefited from technological advances.
