We Are All Going Out of Business

Google announced they are giving away Nik, a set of Photoshop plug-ins that used to cost $500. In November 2015, they open sourced the code for Tensorflow, their machine learning system [AI]. Of course, they already provide a giant list of products and services that are accessible at little or no cost.

And it’s not just Google. Tesla released all their patents in 2014. Khan Academy launched a free online education in 2006. Oh, and in case you suspected this was all about giant tech companies or those crazy startup kids, six US universities like Stanford and Duke have teamed up to provide free learning at Coursera. Alternately, you could go to Germany and get a full traditional bachelor’s degree in English for free.

And one more example to scare the attorneys: we can all make legal contracts at no cost, thanks to Shake.

When talking with a friend, I realized that four of the last six companies I’ve worked for directly have closed or were acquired/absorbed. A fifth closed their physical office and terminated all employees in favor of on-demand contractors. It’s not safe out there.

When advising corporations, NGOs, universities, and governments, I repeat one undeniable fact: someone is actively trying to eliminate your operating model. Every sector is vulnerable to challengers, especially — and this is important — from outside the sector itself. The digital revolution did more than digitize; it neutralized the defenses that organizations had developed over hundreds of years.

I argue that the concept of “sustainability” is inherently unsustainable. Sustainability is focused on keeping an environment in a consistent zone for its inhabitants. What’s been stable in your industry during the past 20 years or 20 months? Organizations are constantly changing the rules of the game. Is it you or somebody else?

My replacement for sustainability is adaptability.* In order for an organism to survive in an environment, it needs to be compatible with that environment. When the habitat changes, three main things happen to a resident population: relocation, genetic alteration, or extinction. Move, change, or die.

The modern organization is challenged to read changes in its environment and make changes that keep it alive and prosperous. This function is more complicated and complex than it was before because the challengers are coming from outside industries. Education is being contested by non-education companies. Transportation is being disrupted [yes, I said it] by non-transportation companies. Governments? By non-governments.

Without regard to his politics, I will always love something Donald Rumsfeld said: “Reports that say that something hasn’t happened are always interesting to me, because as we know, there are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know. But there are also unknown unknowns — the ones we don’t know we don’t know. And if one looks throughout the history of our country and other free countries, it is the latter category that tend to be the difficult ones.”

The truth: what you don’t know will hurt you. The old strategy of becoming valuable or irreplaceable through expertise was extinguished when Google [and the rest of the web] replaced the experts. Humans have dumped as much information as possible into the system, and we can all access it. The education system is churning out smarter 22 year-olds every year. TED talks provide short updates on the advances of any industry. The value of what you know is diminished. Advantages now come from your ability to identify changes in the environment, combine ideas, and modify your behavior. In short, your adaptability.

We are all going out of business. Every day, the environment changes a little bit. New regulatory requirements, new business models, new ways of looking at the world. A friend in the insurance business told me that his company sees medical doctors retiring early because they can’t keep pace with the changes in the field. When they left medical school, they didn’t expect the world they inhabit now. Nobody really knows what the future brings, so we have to pay close attention to every little shift.

“We are still the masters of our fate. Rational thinking, even assisted by any conceivable electronic computors, cannot predict the future. All it can do is to map out the probability space as it appears at the present and which will be different tomorrow when one of the infinity of possible states will have materialized. Technological and social inventions are broadening this probability space all the time; it is now incomparably larger than it was before the industrial revolution — for good or for evil.

The future cannot be predicted, but futures can be invented. It was man’s ability to invent which has made human society what it is. The mental processes of inventions are still mysterious. They are rational but not logical, that is to say, not deductive.” — Dennis Gabor, Inventing the Future, 1963

*[I realize that the scientific definition of adaptation is not a point-to-point match to business, but we’re using it in context of human activity. The correct terms are learning and acclimatization. I can change the rules.]