Business Lessons from History
The Headstart Curse and Digital Wars
How traditional retailers can win in the new digital landscape
In the last two months, I have heard or read the following two related statements more than a hundred times.
“The future is digital”
Every so-called thought leader worth their salt has prophesied on this subject as if they were modern day oracles.
“You guys ( I work at CaratLane, which is a digitally native business ) are in such a great position as you are already digital” You have such a big head start over traditional retailers.
I have also already started seeing signs of hubris amongst the digital folks. They feel they are invincible in this digital battle.
I personally feel that this is a flawed assessment and likely to create a sense of entitlement and complacency. In today’s post Corona world, being complacent (for any business) is like being without a mask.
Before I explain why I feel this way, I want to tell you a story about another guy with a big headstart This is an interesting story, so bear with me. Even if you don’t like my argument. Trust me.
The year was 1939. World War II is raging in Europe. The odds of winning the war was heavily in favour of Nazi Germany and its Axis partners. Germany had been preparing for this war in full earnest. They had a huge advantage over the rest of Europe when it came to modern warfare technology. Their new submarines, called U-boats, were dominating the Atlantic Ocean and had strangled the supply lines to Europe. The superior planes of the Luftwaffe, were bombing the rest of Europe into submission. The discovery of nuclear fission, by two German scientists, had put Hitler within reach of a weapon with almost unfathomable power.
America had entered the war after the German U-boats sunk one US passenger ship too many.But they were also getting pummelled by the Germans. They had no answer for German U-boats. The R&D department of the US defence services was under financed and doing a poor job. They were not providing their forces with the capability to handle the Germans.
Enter Vannevar Bush. Dean of MIT and from a family of Navy people.
He quit his job to help America and talked his way into a meeting with President Roosevelt.
The US military, Bush told FDR, trailed far behind Germany in the technologies that would be critical to winning the coming war, and was incapable of catching up in time. He handed FDR a single sheet of paper with a proposal: FDR should authorize a new science and technology group within the government ( and outside the military), to be led by Bush, reporting only to the president. FDR listened, read the proposal, and signed it “OK — FDR.” The meeting lasted all of ten minutes.
He then created a new structure to combine the strengths of the scientific community that America had and the military forces. An independent group of top scientists and a system for dynamic and rapid exchange of ideas and projects between the scientists in the lab and the soldiers in the field.
Vannevar had a unique background as he understands technology and also knows how to deal with military people. He stayed out of the technical research but ensured that information flew back and forth without a hitch. He just facilitated.
He recognized that the weak link in the chain of innovation was not the supply of new ideas, but the transfer of those ideas to the field. So he managed the transfer rather than the technology: ensuring that new innovations were brought into the field neither too early nor too late. He ensured that the innovations were tried out and the feedback was quickly made available to the researchers . He intervened only when that transfer broke down.
Bush’s system helped develop the new technologies that created decisive advantages for the Allies. The best example was the development of the aircraft radar which could spot the U-boats
Early aircraft radar, for example, nearly failed. Bush nudged scientists into cockpits to see why pilots weren’t using it. In the heat of battle, the scientists discovered, the pilots had no time to use the complicated switches in the boxes. The technology was fine but the user interface was lousy. Scientists quickly created a simpler custom display — the sweeping line and moving dots now called PPI.
America now had the advantage of technology. Within four weeks, Allied planes sank one third of the German U-Boat fleet. Six weeks later, the head of the German Navy declared defeat in the Battle of the Atlantic. The lanes were cleared for an Allied invasion of Europe. The rest was history.
(I have borrowed this story from Safi Bahcall’s best selling book on innovation , Loonshots)
If you are still reading this, then I think you liked the story. You would have also figured out why I told you this story and why I am vary of assuming that our digital headstart will give us a massive insurmountable advantage.
Like the Americans, traditional retailers have never felt the pressing need to make digital solutions their top priority. But they have the resources and if they put all their might behind it, there is no reason they can’t. Like Germany, the ecommerce or omnichannel companies had the digital space all to themselves till now. It all changes now.
The traditional retailers have lots of other advantages — better business processes and controls, a bigger more loyal customer base, a stronger brand, more money and so on. The R & D inside the military was weak. But the US could call on their great academic institutions and their forces beat the German army and navy once the technology advantage was nullified.
Would you rather bet on them overcoming their digital shortcomings (given the new realities and priorities) or digitally native businesses learning to run a business better. Something they have actually been trying to do for quite some time.
There is only one challenge. It’s not about developing digital capability. It’s also not about a shortage of digital ideas. It’s more about being able to use them effectively and drive agile innovation.
The challenge will be to create a system like the one Vannevar Bush had created. Which allows for better information flow. Ideas and digital solutions flow quickly to the business and operations team and the feedback flows back just as fast.
The chances of a Vannevar Bush landing on the President’s doorstep to build that system are next to zero. They will have to find their own man and build their own system.
Unless they do that, they will be stuck with radars with faulty switches which no one will be able to use.
But if they do, then like the U-boats, (who weren’t safe in the depths of the ocean), we will have no place to hide.
