The Winston-Salem Chamber of Commerce hosted their annual “State of the Economy” luncheon at the Benton Convention Center in Downtown on February 22. The event attracted over 1,000 business and community leaders from companies, non-profits, government, and educational institutions that all have a deeply vested interest in the local economy.
The keynote speaker was Tim Lowe, President of Lowes Foods, and unlike most economic presentations that may be littered with statistical analysis, numbers, and predictions – Mr. Lowe spent a half hour highlighting shifting consumers’ habits and the impact those changes are having on the retail industry. Not a week goes by without a retailer announcing major layoffs and shuttering units in response to consumers migrating to buying online.
Lowe has an extensive background in the retail industry with over 26 years in various executive roles at Supervalu, Walmart, and Meijer. He delivered an informative presentation that centered on the disruption in the macro economy from companies that don’t produce anything or have any physical infrastructure.
Amazon is the country’s largest retailer, but they own no stores; Uber is the country’s largest taxi company, but own no vehicles; Airbnb is the country’s largest hotel chain, but own no real estate; and Facebook, the country’s most popular media owner, creates no content.
Disruption innovation is a term in the field of business which refers to an innovation that creates a new market and eventually disrupts an existing market, displacing established market leading firms, products, and strategic alliances.
The practice has existed since the dawn of time, but revealed itself more pronouncedly in business during the early 20th century’s Industrial Revolution. Henry Ford’s Model T disrupted the market for transportation in 1908 because the mass-produced automobile lowered costs, reduced barriers to entry for ordinary families, and eventually altered the way cities were developed.
Historically disruptive innovation was produced by market outsiders and serial entrepreneurs, rather than existing market leading companies. Well performing companies struggle to be innovative because they are focused on maintaining current market share.
Railroad companies were the first leaders in transportation, but failed to predict the impact personal vehicles or airlines would have on passenger volume. IBM was a driver in technology long before Apple, Google, and Facebook – but lacked the ability to see around the corner like some of the later startups.
Amazon however is on a different pathway, the company generates $2,000,000 in gross sales daily, so they are clearly a market leader – but they refuse to be disrupted and remain concentrated on being the disruptor. President and CEO Jeff Bezos say, “The outside world can push you into day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind.”
Bezos corporate philosophy simply means that every company must focus on being excited about the business and constantly seek out unmet needs in the marketplace. Not to mention Bezos shares that entrepreneurs need to focus on results and not process, make decisions quickly, look outside the company, and do less customer focused market research.
Small businesses are driving the U.S. economy – with over 70% of the new jobs created by this sector. My advice to rising entrepreneurs is don’t fear change, embrace it, and then use changing attitudes, habits, and desires to build a great business that delivers value to the marketplace. Our nation would not be the most advanced country on the planet without disruption innovation.
My grandfather used to say, “All we know about change is that it’s coming.”
