Information technology has become a part of our daily lives. Whether for social and personal purposes or business we rely on technology to do our bidding. The fact that we can communicate with each other almost at any time and from any place has brought irreversible changes to the way we conduct business and it influences every company from the small family business to giant corporations. This paradigm shift is creating many changes in today’s business world, it is making some jobs obsolete and on the other hand it is creating lots of new career opportunities. Information technology has become a disruptor of the “order” of things and changed the old ways where giant enterprises due to their sheer size, financial resources and grip on the market could direct, change and set trends, now even a small startup can influence the market and shake things up.
The business strategy and tactics are changing because they simply must if your business wants to stay on top of the game and actually be able to reach the strategically set goals. These alterations are more common than ever before and they are the only way to leverage the opportunities that technology continues to create and to keep up with the shifts on the market. The common and easy access to information technology solutions and especially access to infrastructure by leveraging cloud technology opens new ways for modern era entrepreneurs and startups to access the most recent IT perks with little to no capital expenditure and allows them to be agile like never before. Leveraging IaaS, PaaS and SaaS businesses can allocate their budgets with much more flexibility and focus on core tasks while purchasing IT as commodity needed for their operations.
Today’s startups are lean and mean competitors and are able to leverage technology to their advantage and challenge even the biggest enterprises. The way we build and manage startups today has changed drastically from how we did that 30 years ago. Based on the mistakes of the past where startups were treated like smaller versions of bigger companies but lacking their resources they often struggled to execute their business model. Luckily enough as a human race we are able to analyze data and learn from our past mistakes (although this is not always the case looking at the history of our species).
In the case of building and running startups we have learned from our failures and reinvented the way new businesses need to be build and operated before they can become successful companies. Experience has taught us that the scientific approach to startup management in the MBA style was wrong and that instead of executing a business model a startup needs to search for one and make sure it has the right value proposition that fits their targeted market. Although At some point when a startup becomes a successful company the founders should look for (if they aren’t themselves) qualified executives that can help them run the company. Starting businesses require direct involvement of founders (decision makers) to keep agility and to make pivots based on real customers feedback. When done right this permits a startup to develop a minimum viable product that fits the right market. This approach allows new businesses to keep nimbleness and requires a lot less startup capital which used to be wasted on sales, marketing, executives and often waterfall development which evolved around a product that was nothing more or less than an idea of the founders without actual customer confirmation.
On top of technology becoming a commodity the access to fundraising for startups has also been revolutionized by information technology. Next to being financed by family and friends, angel investors, venture capitals or bank loans and many other ways there is a fairly new approach to get funded by collective effort via crowdfunding. This method has been enabled by information technology itself and has drawn countless numbers of startups to funding sites like kickstarter.com , indiegogo.com , rockethub.com or fundrazr.com. Not going any deeper into the business models of startups now we can see the potential of new businesses to quickly adjust to customer needs and market changes.
Multinational corporations lack this agility and freedom to pivot. They are giants that move slowly and each of their moves requires a lot of energy and takes time. This limits their options to adapt in today’s ever-changing world and markets. Because of these technology based paradigm shifts no one is safe and even the giants can fall to new challengers, but the giants aren’t sleeping and even though they are slow to move or change their direction they have the luxury to employ other means to correct their set course. Multinational enterprises break into horizontal markets and leverage their capitals to invest in buying up equally startups and established companies to gain agility and instead of making the slow and expensive changes in the direction of the entire corporation they simply use the new additions to either supplement their main products or work as separate business units and operate on different markets to correct the course of their entire venture. These companies by making the acquisitions are also securing their position on the markets where they are in fierce competition with each other. Let’s take as an example a few of the familiar multinationals: Amazon, Google and Microsoft and see how they have been keeping their business growing with acquisitions.
Amazon.com, Inc. founded in 1994 which started as an online book store, expanded to other goods and to technology, has grown to be the biggest in the world public cloud services provider. Amazon has been acquiring not only its competitors but it has expanded its business in many directions. Amazon has taken over companies like: IMDb, Zappos, GoodReads and Liquavista. See a list of Amazons acquisitions on Wikipedia.org.
Google Inc. started as a search engine and grew to one of the biggest companies in the world specializing in internet-related services and IT. Google is getting into everything from cloud solutions and datacenters to mobile technologies and other horizontal markets via acquisitions of startups. Google is divided into 7 groups: search, chrome and apps, mobile, youtube, ads, geocommerce and social, and has been acquiring on average 1 company a week in the past few years. Up to date Google has taken over more than 130 companies which included: Picasa, Android, YouTube and Motorola Mobility. See a list of Google’s acquisitions on Wikipedia.org.
Microsoft Corporation has made its way to the top of corporate world shipping OEM software with personal computers, but they have changed their strategy in the many years of their existence and expanded greatly into other markets. Microsoft has been acquiring businesses like Hotmail (now Outlook), Skype, Yammer and Nokia Corporation. See a list of Microsoft’s acquisitions on Wikipedia.org.
Microsoft is far beyond its OEM software days and has become one of the most valuable companies in the world while expanding their business into building datacenters, gaming devices, office software and mobile phones, and offering public and private cloud services with Windows Azure.
This trends will surely continue and looking at predictions from Gartner, Inc. which has identified top 10 strategic technology trends, the listed above and similar corporations will keep on looking into acquisitions of companies that have their core business around or are major contributors to these technological trends:
- Mobile Device Diversity and Management
- Mobile Apps and Applications
- The Internet of Everything
- Hybrid Cloud and IT as Service Broker
- Cloud/Client Architecture
- The Era of Personal Cloud
- Software Defined Anything
- Web-Scale IT
- Smart Machines
- 3-D Printing
Chances are that if your business fits this description and you are a key player or on the verge of ground breaking discovery in one of these areas you either have been approached or shortly will be approached by a corporation looking to expand. Businesses and our private lives alike have been invaded and taken over by technology. There is no denying that this fact and our need for communication, access to information and mobility create new opportunities and evolving information technology drives change in how we satisfy these needs. Companies which are able to leverage this knowledge will be a part of the future others will fall and be forgotten. This brings us to a conclusion that the way we conduct business but also live our lives has been drastically changed by information technology. Ask yourself: is your business keeping up with the changes and leveraging knowledge and technology to truly secure its future?
Written By: Martin Wielomski
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