The industrial age tricked us. It taught us that the path to success was to take a business, run its operations with absolute efficiency, and grow it to take advantage of scale effects. This plan worked well… until the advent of digital technologies – cloud, machines and data – which enabled companies to operate and grow in vastly different and more efficient ways.
Suddenly, companies could produce intangible goods, like software, which could be sold infinitely, and networks which could reinforce growth and value or zero or near zero marginal cost. With this change, companies that offered goods and services were at an extreme disadvantage as investor dollars, customers, and employees started streaming to digital unicorns and trillion-dollar tech giants.
Unfortunately, in the face of this challenge most leaders of product and service legacy firms are doubling down on their current business models by trying to improve operations, cutting costs and updating products. But it’s not working. They need a new path forward, one that addresses three distinct horizons of innovation.
Since the dawn of the industrial age, companies have competed on a level playing field, everyone either made physical goods or offered services. What differentiated the good from the great companies was their execution. In this world of physicality, operating efficiently was the key differentiator.