|Forbes.com, Spring, 2018. This article was written with Jim Cahn, the Chief Investment Officer at Wealth Enhancement Group. It was part of a series of articles developed under an agreement with Forbes to work with a variety of contributors and assist them in delivering actionable investment ideas each week. The site forbes.com is one of the top 500 sites in the world with nearly 10 million subscribers and nearly 100 million page views a month.|
A company called Cadabra, Inc. was getting ready to launch as an online bookstore in 1995. Today, that same company has ballooned into an empire, selling everything from online video streaming services to grocery delivery to nearly any retail product you could think of, all under the name Amazon.
Founder Jeff Bezos originally wanted to name the company Cadabra, as in “abracadabra”, the magician’s mantra when they make items disappear. While that name didn’t make the final cut, it did foreshadow the affect Amazon would eventually have on its competitors across numerous industries.
From the humble beginning of trying to shake-up the bookselling business, Bezos’ Amazon has always had its’ eye on other industries, despite critics who doubted the business model of an online book seller. As Amazon has shifted dramatically into other industries, it has become the third most valuable publicly-traded company in the world. In fact, the price of Amazon’s stock today is over 900x higher than it was at the company’s inception 21 years ago, and that’s in part because the online retail giant’s uncanny ability to eat up market share in just about any sector it dips into. Many argue that Amazon’s strategy to forego profits in order to reinvest in new areas has failed to truly test the business model, but there is no debating Amazon’s ability to leverage technology and provide a marketplace for others to conduct business has been a win for consumers.
Part of what makes Amazon so successful is their ability to provide convenience, lower prices, instant or nearly- instant fulfillment and a wide selection to consumers. It’s those pillars that have helped Bezos and company leap into new industries. Take Amazon’s newest venture, healthcare, for example. We don’t know Amazon’s ultimate game plan for this venture, but who wouldn’t want more choices, lower payments, convenience and quick access to providers when dealing with a medical issue?
But for all of Amazon’s success, there are thousands of smaller companies out there who are falling behind or shutting down altogether. That’s in part because what allows Amazon to make those services possible is their technology infrastructure. And while Amazon is clearly one of the best at what they do, they are far from the only threat facing businesses around the globe today.
Many companies have had to drastically change the way they do business to keep up with changing landscape. For example, door-to-door salesman have been virtually wiped out, instead companies use marketing and advertising to let consumers know about their products and services. That’s to say that in order to stay relevant, companies have to innovate.
While many businesses, like Best Buy and Walmart, have adapted, others have been forced to either join the Amazon ecosystem—think Kohl’s and Mastercard—or become crippled by the wake of the commercial giant. The chain of companies that failed to innovate include the likes of RadioShack, Blockbuster, CircuitCity and the premier retailer during much of the 1900s, Sears. It’s remarkable how Sears had the Amazon blueprint of providing customers with choice and convenience via their famous catalog business, but simply failed to bring that advantage to the online world. It’s stark reminder for all businesses that the things that used to work will not always bring in customers. Innovation is a key to staying relevant and profitable.
Amazon and technology advancements have also illuminated the importance of adaptability at the individual level. When we imagine technology displacing workers, we probably think about robots replacing auto assembly workers or bank tellers replaced by ATMs and online banking. The reality is that many different careers have been altered by innovation, ranging from store clerks to journalists to surgeons. These careers have changed both directly and indirectly thanks to technological innovation.
Let’s take the surgeon for example. Today, practitioners can examine x-rays, give care recommendations and in some case perform minor surgeries all from remote locations via the internet. Remote surgery, while it may be a concern for some, means surgeons can work on patients from hundreds of miles away thanks to the help of robotic instruments, the internet and an extremely advanced technological infrastructure. This feeds back into the pillars that brought Amazon its success. In this situation, the patient has a wide selection of surgeons from all over the country, the option for quick fulfillment and convenience for both the patient and surgeon in that both can limit their travel.
On the other hand, the implementation of self-checkout machines at super markets has eliminated jobs for cashiers, which clearly has a more negative effect on those employees. Because of these changes, employees should also be cognizant of how the industries they work in are being impacted when thinking about their own futures. Just as technology will change and evolve, it will force the workforce in the U.S. and around the globe to evolve as well.
With apologies to James Earl Jones’ character Terrance Mann in Field of Dreams, the only constant in America is change. On a long enough timeline, the survival rate for almost every industry, as we know them today, will likely be zero. If you aren’t continuously improving your business and/or yourself, you’re likely to be Amazon-ed at some point by the rapidly changing world, too.