Panic Early or Get Left Behind: What Big Companies Can Teach Us About Surviving Disruption
Tesla’s Model Y hatchback was the highest-selling car in the first quarter of 2023.
It is the first time an EV is taking that spot.
There’s a story behind the success.
The Roadster was Tesla’s first EV, but the company’s journey began in 2004–5. Back then Musk made it known that the company’s goal was to build affordable mass-market electric cars.
To the auto industry, that dream was hubristic.
Here is an industry dominated by century-old players like Ford, VH, General Motors, and hotshots like Toyota, Mercedes, and BMW, yet unable to produce mass-market electric cars. Tesla was a new kid and lacked the spine to work that out.
So they thought.
Tesla would go ahead to pioneer the EV industry; the other brands ignored it.
Now Tesla is prospering and other car brands are creating good EVs to catch on. But here’s the thing:
- Mercedes is known as a luxury car.
- Toyota is known for its durability.
- Ford is the first automaker to automate production with assembly lines.
But Tesla has become the first thing we think of when we hear “EV.”
This is the thing about entrepreneurship, those who believe in a certain product or trend more than others get rewarded. They enjoy what’s called the “first mover advantage.”
In the face of a trend that threatens the status quo, these first movers panic early, those who don’t get left behind.
History is full of examples:
- Blockbuster lost to on-demand streaming video services like Netflix.
- Blackberry failed because it did not build its own touchscreen and app store after Apple launched the iPhone in 2007.
- General Motors failed because it didn’t invest in new car tech.
- Nokia was a hardware-first company and didn’t believe in smartphones. They were late on the trend and out of business.
A big reason why some of these companies fell was the inability to tell fads and the next big thing apart.
This is due to the dilemma of whether or not to dive in on every new trend. Nobody knows which will turn out to be a fad or a change that will eventually disrupt an industry.
And since there’s safety in sticking to what we know and uncertainty in walking uncharted waters, these big names stayed with the familiar.
They lost.
Losers are lessons
Those who lose serve as lessons for others. This is evolution at its finest —survivors learn what not to do from the mistakes of those who become victims.
The lesson left by failed businesses: it is better to panic early than late.
Both failed and successful businesses are faced with the same problem: how to tell fad and the next big thing apart. However, successful businesses are not successful because they get better at predicting compared to failed ones; they only learn to panic early.
The present-day business landscape is filled with examples. Nobody wants to be late on a trend because nobody wants to be the next Nokia, BlackBerry, or Blockbuster.
So every shiny buzz now gets as much attention as if it’s the next big thing since companies now understand that the effect of misjudging a fad for the next big thing isn’t the same as misjudging the next big thing for a fad.
The former will only cost you money, but the latter can cost you your place in the market.
The creator economy
Vine failed because it didn’t innovate around creators.
In the creator economy, creators and influencers get to earn money from their content. By creating content on a platform, creators rack in more visits, thereby driving engagement.
The beauty of making money from their content caused creators to flock to platforms that allow them to do just that, leaving those that don’t.
As a result, most platforms factored in creator earnings in their business models.
They launched:
- Partner Programs
- Ad-sharing Programs
- Tipping
- Subscriptions.
Among others.
Nobody wanted to be late on this trend, since losing users could mean going out of business.
NFTs and metaverse
NFTs turned out to be a fad.
This is twice as true with the metaverse.
But while the hype lasted, companies invested billions into it, with others including it in their business model.
- Facebook became Meta is a bold bet on NFTs and the metaverse becoming the next big thing.
- Twitter introduced a feature that lets users use their NFT as their profile picture.
- Nike launched NFT sneakers.
- Adidas launched NFT drops with digital and physical products.
- Coca-Cola introduced NFT collectibles.
- Tickedmaster used them for tickets.
The list can be stretched.
These investments involved millions of dollars. But while there was the possibility of losses should NFT turn out not to be the next big thing, these losses meant little compared to the possibility of business failure should a business ignore them.
Artificial Intelligence
This is where we are.
The biggest buzz yet.
But the focus is not on whether AI is a fad or not. The focus is that companies are panicking early, finding ways to include AI in their products.
- Text-to-text models.
- Text-to-image models.
The two are the biggest applications of AI across industries.
During Meta’s Connect last year, the focus was the Metaverse. Meta Connect 2023 was yesterday and the event was all about AI add-ons to existing products.
In less than a year since ChatGPT’s launch, which set AI abuzz, 9 in 10 leading businesses are investing in AI, and 77% are already using or looking into it.
Should AI turn out to be less trendy in time to come, there will be no harm to those who gave it a try, but if the current disruption is sustained, those waiting for that to happen before they act will be late, and risk failing because early movers must have captured the market.
Nassim Taleb famously said: “The central rule in life is that it is much, much better to panic early than late.”
