In his book, Thinking, Fast and Slow, Nobel laureate Daniel Kahneman explained that there are two modes of thinking that we use to make decisions, which he calls “System 1” and “System 2.” The first is more instinctual and automatic, the second more rational and deliberative. We need to use both to make good decisions.
Businesses also have two systems, which can sometimes conflict. One is immediate and operational. It seeks to optimize processes, gain market share and maximize profitability. The second builds capacity for the long term, by investing in employees, building trustful partnerships and creating new markets to compete for the future.
Obviously, these are not mutually exclusive. Just as we can step back and think rationally about instinctual urges, we can invest for both the short and the long term. Yet given that every business eventually matures and needs to renew itself, many end up taking the wrong path. Here are four signs that your industry might be in the process of being disrupted.
1. Maturing Technology
Fifteen years ago hardly anyone had a smartphone. Social media was in its infancy. Artificial intelligence was still science fiction. Yet today all of those things are somewhat mature technologies that have become an integral part of everyday life. Anywhere you go you see people using them as a matter of habit.
It’s become conventional wisdom to look at these developments and say that technology is accelerating. It certainly seems that way. Nevertheless, look a little closer and it becomes clear that’s not really true. Buy a computer or smartphone today and its capabilities are not that different to those that came out five years ago.
The truth is that every major technology has a similar life cycle called an S-curve. It emerges weak, buggy and flawed. Adoption is slow. In time, it hits its stride and enters a period of rapid growth until maturity and an inevitable slowdown. That’s what’s happening now with digital technology and we can expect many areas to slow down in the years to come.
In the 1920s and 30s there was a time of explosive growth in the automobile industry and electronic appliances. The 1950s and 60s was a golden age for antibiotics, with a number of…