The quickening pace of technological change, in retailing and across the business world, puts a big burden on leaders to stay focused on where trends are headed, according to a presentation by Dan Schulman, president and CEO, PayPal.
Schulman, who spoke during the PLMA’s Private Label Trade Show in Chicago, said leaders tend to view developments through the rear-view mirror, a particularly dangerous move when it comes to the impact of technology.
“We look at what got us to the dance and extrapolate from what was, not from what could be,” he said. “It’s up to us as leaders to have the courage to think expansively. Where is the world going? How could we be disintermediated?”
Schulman warned PLMA attendees, “Digital is changing every industry, yours is not immune. It sucks up and spits out new models. Commerce will fundamentally change.”
He said mobile phones will continue to alter interactions between retailers and consumers, who now have the ability to buy products anywhere. One impact of mobile is that retailers can form more intimate relationships with their customers.
Schulman, whose past business roles included leadership stints at American Express, Sprint and Virgin Mobile, took the audience on a trip down the past hundred years of the business world. He emphasized how the pace of change has swallowed up the great majority of big companies. Among the factoids he offered:
• Ninety-eight percent of the Fortune 500 companies from 100 years ago are out of business
• More than 80% of the Fortune 100 from the 1950s are now out of business
• The lifespan of an S&P 500 company today is 12 years, compared with 75 years in the 1930s.
• Most of the leading companies from the early years of the PC revolution are out of business.
Schulman said companies fail because they suffer from ‘situational bias,’ extrapolating only from what has come before. He said companies ranging from Smith Corona to Blockbuster were victims of this.
He pointed to how accurate Moore’s Law has been in predicting the surge in processing power and the decline in costs.
“Today the cost to innovate is low, there’s lots of experimentation and you can reach scale quickly,” he said. “There are now 15 billion interconnected devices in the world, from refrigerators to the devices we carry around. In five years there will be 50 billion interconnected devices.”
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